The recent threat of climate change has urged us to decarbonise and shift our energy generation from oil and gas to sustainable zero-carbon sources, mainly renewable energy.
Energy transition typically refers to the evolution of the global energy sector, from one form of energy production to another in terms of supply and consumption. This is driven by several factors, including the growing demand for more energy and the need for cleaner energy alternatives.
The recent threat of climate change has urged us to decarbonise and shift our energy generation from fossil fuel to a more sustainable, zero-carbon sources, mainly renewable energy. With the projection of a doubled energy demand by 2040 and the energy sector currently responsible for approximately 89%* of GHG emissions, the importance of energy transition becomes clear.
* ‘Global Energy Review: CO2 Emissions in 2021’, International Energy Agency
The energy transition agenda is prompting companies to reassess their operations with greater scrutiny. As policies and regulations intensify, a strategic embrace of sustainability and a shift toward cleaner energy sources become imperative. This proactive approach goes beyond meeting environmental and social expectations; it positions organisations for enduring sustainability and resilience in a swiftly changing business landscape.
Embarking on this transformative journey now positions your organisation as a frontrunner in the pursuit of a sustainable future. Crafting a well-defined energy transition roadmap, complete with tangible milestones and timelines, not only enhances risk management but also empowers your organisation to create value that propels you towards achieving net zero. Here are the key benefits you will gain.
As regulations evolve, companies that proactively adopt sustainable practices are better positioned to navigate compliance challenges and avoid potential penalties
Transitioning to renewable energy can lead to long-term cost savings through reduced energy expenses and operational efficiencies
Embracing energy transition enhances corporate reputation, attracting environmentally conscious consumers and investors, providing a competitive advantage in the market
To fully reap the benefits, your organisation needs to overcome these common challenges:
High initial costs:
The upfront investment for energy transition related projects can be substantial, posing financial challenges for companies.
Through our work, almost a third of companies we have worked with found that resource constraint was the biggest hindrance to expanding energy transition initiatives.
Capabilities gap:
As Malaysia progresses with its energy transition agenda through the National Energy Transition Roadmap, companies may struggle to find and develop talent with expertise in sustainable technologies.
This challenge is compounded by the complexity of energy transition strategies, which involve diverse initiatives, making it difficult for companies to implement and sustain these transformations without the right talent.
Return on investment (ROI) concerns:
Organisations may be hesitant due to uncertainty about the timeline for realising returns on their energy transition investments especially if only traditional financial metrics are used.
This uncertainty is compounded if grants and incentives provided by financial institutions, multilateral development banks and/or government are not utilised to minimise financing needs.
As the ever-increasing need to meet the 2030 Climate Pledge draws closer, Malaysia gears up its efforts with the National Energy Transition Roadmap (NETR). Besides estimating that energy transition initiatives would require up to RM1.85 trillion in financing, NETR reinforces the commitment on reducing greenhouse gas (GHG) intensity against GDP by 45% in 2030 (compared to 2005 baseline).
In line with this, the Pahang state government is committed to achieve net zero by 2030 by developing its own net zero roadmap.
Here's how we delivered impact through the project:
Established baseline GHG emissions which can support the state government to decarbonise, aided by a governance framework for net zero
We opened up new sources of financing through a more diverse pool of funders among our global network’s diverse clientele
Developed a net zero roadmap structured around five transition pathways: Energy, transport and build environment, industry, land use, and nature
Transition partnerships: Design sector-wide commercial models to drive collaboration between different parties which balances risk ownership and returns among stakeholders.
This publication highlights Malaysia’s 2023 National Energy Transition Roadmap (NETR), accelerating the country’s path to net zero emissions and offering Malaysian businesses strategic opportunities for sustainable growth.
The National Energy Transition Roadmap (NETR) Phase was launched in August 2023 to accelerate Malaysia's energy transition. Here's PwC Malaysia's summary and analysis of what NETR means for businesses.
Southeast Asia’s rapid economic growth and urbanisation have given rise to significant environmental challenges in recent years. Malaysia in particular has made encouraging progress in its sustainability commitments, spurred by initiatives outlined in the 12th Malaysia Plan to promote the development of a green...
A MICPA-PwC Malaysia survey report.
Edward Clayton
Deals Partner, Capital Projects & Infrastructure, PwC Malaysia
Tel: +60 (16) 672 3420
