Prime Minister Anwar Ibrahim has unveiled Malaysia's plan to allocate a substantial US$430 million seed fund towards its ambitious goal of harnessing the energy transition as the nation's forthcoming growth engine. This initiative is in line with the nation's commitment to the "decade of action," seeking to align with climate targets while simultaneously fostering job creation.

Malaysia, traditionally reliant on its oil and gas sector for economic sustenance, is now taking steps to leverage its abundant resources, including year-round sunlight, to become a prominent player in the renewable energy domain within the region.

The designated seed fund holds the purpose of furnishing financial support to both private and state-driven energy transition projects. These projects are identified as having potential returns below the market standard, making the fund a crucial facilitator in propelling Malaysia's green energy transformation.

Nevertheless, it represents a minor setback when juxtaposed with the substantial 1.2 trillion ringgit (US$260 billion) investment required by Malaysia as outlined by Prime Minister Anwar. This investment is projected to be made by the year 2050, in alignment with the nation's comprehensive energy transition master plan. This master plan encompasses a range of initiatives, including the expansion of public transportation, enhancement of grid infrastructure, and the imperative task of reskilling the workforce.

“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 the financing as the “paramount challenge” in the energy transition.

During the inauguration of the National Energy Transition Roadmap, Anwar stressed Malaysia's capacity to strike a balance among the three components of the "energy trilemma" – sustainability, security, and affordability – within the energy sector.

In May, Malaysia set a goal to achieve 70% renewable energy production by 2050 and allowed cross-border trade in renewable energy, especially with Singapore. Currently at 25%, the country aims to reach 31% by 2025 and 40% by 2040. Despite the positive reception, the oil and gas sector claims funding challenges due to the nation's ESG pivot.

“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”

Malaysia is set to phase out coal power plants and anticipates attracting eco-forward investments like data centers, resulting in high-paying jobs and positioning the nation as a regional clean energy leader.

This strategic roadmap envisions a potential 15% GDP increase and the creation of 350,000 jobs, predominantly benefiting low and medium-income households. Minister of Economy Rafizi Ramli highlighted the declining costs of renewable energy, soon to surpass fossil fuels, emphasizing that carbon reduction doesn't hamper economic growth.

Additionally, the government plans to enhance energy efficiency through retrofitting and solar panel installations in public buildings.

Malaysia, in collaboration with Khazanah Nasional and two private entities, is constructing a significant 1 gigawatt hybrid solar photovoltaic power plant, lauded as Southeast Asia's largest. Minister of Economy Rafizi highlighted the historic challenge of balancing economic growth with environmental concerns, noting that carbon emissions and economic progress were once considered incompatible.

“Although Malaysia only contributes 0.8 percent 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 practicableness’; behind our idealism for a hopeful future is an economic realism waiting to be actualised.”

Image source: South China Morning Post