The 2024 energy transition playbook

Spotlight on sustainability: Gaps in sustainability reporting

Report
5 minute read
July 2024

Launched in 2023, Malaysia’s National Energy Transition Roadmap (NETR) is a strategic framework aimed at accelerating the country’s race to net zero. While reaffirming the government’s energy transition aspirations, it has provided a guidance on energy transition investment opportunities for Malaysian businesses as well.

The NETR isn’t just a mandate - it is a chance for sustainable business growth.

Financing net zero

Making the transition to a net zero economy will need multilateral cooperation and significant financial support. NETR estimates that Malaysia will need up to RM1.85 trillion to support the nation’s energy transition initiatives - 18% of funding is required primarily in renewable energy power generation and green mobility.

Despite being a major undertaking for the country, there are value creation opportunities for forward thinking companies. But, are Malaysia businesses ready to grab these investment opportunities?

Estimation of Malaysia’s energy transition financing needs based on NETR

To thrive, Malaysian businesses will need to reinvent

Based on PwC’s 27th CEO survey, 85% of Malaysian CEOs are in progress of energy efficiency improvements and innovation of new, climate-friendly products, services or technologies respectively. That being said, Malaysia’s current decarbonisation rate is still at 2.5% - behind what is required to meet the nationally determined contributions target of 7.2%.

The imperative to accelerate decarbonisation efforts is clear. In light of rising inflationary costs and investor pressure, companies will need to find the right areas to invest for a greener future.

Through our work, we found that….

Corporate Malaysia generally had a greater understanding of net zero initiatives after NETR was launched. However, they still face difficulties in their energy transition journey.

Main hurdles companies face in their energy transition journey are:

Budget financing
Unaware of impact
Uncertainty in return on investment

Key factors that keep companies at the preliminary stage of their energy transition journey:

Lack of resources
Lack of awareness
Not impacted by energy transition regulations
Lack of incentives

Companies in the intermediate stage of their energy transition journey do not have a sufficient level of understanding in terms of skills/jobs required to operate under a lower-carbon model.

Opportunities in the value chain

Retrofitting existing buildings to meet energy efficiency standards, such as Building Energy Intensity and thermal transfer values, presents substantial market opportunities. The unique requirements of each building necessitate bespoke systems that effectively address the needs of both owners and occupants.

The current value chain stops at the user level. This indicates high-potential market for responsible disposal of out-of-commission products like solar panels and batteries.

The broad application potential of hydrogen has fueled a growth in interest across the different sectors which involves both primary and secondary economic sectors. Accessibility to clean energy and established logistical infrastructure that can support hydrogen would benefit greatly from this growth.

Rather than being discarded in landfills, solid biomass holds potential as a valuable raw material for bioenergy production via a Waste-to-Energy (WTE) process. Besides that, embracing liquid biofuel and biogas usage has the potential to significantly reduce reliance on fossil fuels, enhance energy security, and lower greenhouse gas emissions in land transport and aviation.

Within the domestic market, specific interests in the EV sector include leveraging Malaysia's robust electric and electronic industry to manufacture EV components (e.g. semiconductor, wiring loom for BEV architecture and charging infrastructure). Besides that, as battery electric vehicles become predominant, so would its waste with the battery pack being the largest component, requiring specialist recycling.

Malaysia has the opportunity to position itself as a regional green fuel hub for across the different modes of transportation. Besides being a major port destination in Southeast Asia - accounting for 24% to 25% of annual container in the region, Malaysia can be leverage its existing biofuel ecosystem to advance the development sustainable aviation fuel and green diesel in the country.

Multi-user Carbon Capture and Storage (CCS) networks allow shared transport and storage infrastructure to provider smaller emitters access to the required infrastructure. This enables economics of scale and fosters growth in the sector. As CCUS mature with time, there will be a market for utilisation of carbon dioxide as most flagship projects in Malaysia are focusing on storage.

Download The 2024 energy transition playbook (PDF)

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