Malaysia to power green energy projects with US$430 million fund in 'decade of action'
Oil-rich Malaysia will establish a US$430 million seed fund for its ambitious plan to turn energy transition into the country's next growth generator, Prime Minister Anwar Ibrahim said on Tuesday, in a "decade of action" to meet climate targets while creating new jobs.
With an economy that is largely driven by its depleting oil and gas industry, the Southeast Asian country is also blessed with a year-round sun and other natural resources, which means it now sees potential to be a leading renewable energy producer in the region.
The seed fund is aimed at providing financial resources to private and state energy transition projects that would otherwise yield below-market returns.
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It is, however, a blip compared to the 1.2 trillion ringgit (US$260 billion) that Anwar said Malaysia needs to invest by 2050 to execute its energy transition master plan which includes expansion of public transport, strengthening grid infrastructure and reskilling its workers.
"Within this decade alone, the government requires between 60 billion ringgit and 90 billion ringgit to be allocated for [those] crucial projects," said the prime minister, who described financing the "paramount challenge" in the energy transition.
Speaking at the launch of the National Energy Transition Roadmap, Anwar insisted that Malaysia would be able to balance the "energy trilemma" of sustainability, security and affordability in the energy sector.
In May, the government set a target of producing 70 per cent of its energy through renewable sources by 2050 and lifted the ban on cross-border trade in renewable energy, especially to Singapore.
Currently, the figure is at 25 per cent, with the country on track to reach 31 per cent by 2025 and 40 per cent by 2040.
While Malaysia's ambitious goals have been positively received in political and public circles, the oil and gas lobby has blamed the country's environmental, social and governance (ESG) pivot for a funding crunch.
"The implementation of ESG initiatives has practically destroyed the ability of our oil and gas businesses to raise funds from domestic banks and investors," said Tengku Ngah Putra from the Malay Economic Action Council. "How stupid can our authorities get by curtailing the growth of the largest natural resource that can be exploited safely to make Malaysia a huge gas economy?"
With plans to sunset its coal power plants, Malaysia hopes its supply of clean and renewable energy will attract forward-looking economic investments such as data centres that will provide high-paying jobs for its people.
"Ultimately, this will make Malaysia a regional leader in the clean energy industry," Anwar said.
Under the road map, Malaysia expects to see an uplift of up to 15 per cent of its GDP, as well as the creation of 350,000 jobs with 70 per cent of the income gains going to its burgeoning low and medium-income households.
Minister of Economy Rafizi Ramli said that better technology, economies of scale and investments from governments "that had the conviction of a better world" had led to the rapid decline of renewable energy costs, which would likely be lower than the cost of fossil fuels soon.
"Net zero is not a zero-sum equation. Reducing our carbon emissions must not come at the expense of economic growth," Rafizi said.
The government is planning a retrofit programme to enhance energy efficiency in government buildings, which includes the installation of solar panels on public buildings.
Together with the national sovereign wealth fund Khazanah Nasional and two private entities, Malaysia is developing a 1 gigawatt hybrid solar photovoltaic power plant, which has been described by Rafizi as the "largest of its kind in Southeast Asia".
Speaking on the same stage as the prime minister, Rafizi said that for many decades, developing countries like Malaysia could not be faulted for prioritising economic growth as the primary motivation despite it coming at the expense of the environment as until recently, carbon emissions and economic growth were not compatible.
"Although Malaysia only contributes 0.8 per cent of the global greenhouse gas emissions, we are ready and willing to participate in the global effort to climate action," the minister said. "Behind our ambition is a high degree of practicalness; behind our idealism for a hopeful future is an economic realism waiting to be actualised."
This article originally appeared on the South China Morning Post (SCMP).
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