Out-Law News 1 min. read

Malaysia sets out national energy policy for next 20 years

Malaysia has published its national energy policy (NEP) 2022-2040, which provides details of its government’s priorities for the energy sector over the next 20 years - including electricity and thermal energy.

The policy is aimed at streamlining various existing policies, creating a long-term vision which is coordinated across various stakeholders, and providing updated direction for the energy sector, according to the country’s economy minister Datuk Seri Mustapa Mohamed.

Climate change expert John Yeap of Pinsent Masons said: “With Malaysia’s commitment to net zero emissions, the increasing focus on decarbonising the generation sector across southeast Asia is to be expected. Delivering on the ambitions of the plan will however require the support of both public and private sector stakeholders in enabling not just a just transition away from fossil intensive generation but also in championing regulatory progress on commercialising economically marginal technologies”.

“Much remains to be done to get to net zero and the coming few years will determine if we achieve the ambition,” he said.

The NEP (73-page / 2.77MB PDF) establishes a series of new targets to help Malaysia become low carbon by 2040. These include increasing the total installed capacity of renewable energy from 7.6GW (gigawatts) in 2018 to 18.4GW in 2040 and the overall percentage of renewable energy in the total primary energy supply from 7.2% to 17%. The policy also targets reducing the percentage of coal in installed capacity from 31.4% to 18.6%, increasing the percentage share of electric vehicles from less than 1% to 38%, increasing the percentage of residential energy efficiency savings and industrial and commercial energy efficiency savings from less than 1% to 10% and 11% respectively, and increasing the percentage of liquefied natural gas (LNG) as alternative fuel for marine transport from 0% to 25%.

By 2040, the NEP aims to reach an energy mix of 4% bioenergy, 4% solar, 9% hydropower, 27% oil products, 39% natural gas and 17% coal compared to 2018 numbers of 1% bioenergy, 0% solar, 6% hydropower, 30% oil products, 41% natural gas and 22% coal.

To reach these targets by 2040, the NEP sets four strategic goals: optimising energy resources to help with sustainable economic growth; stimulating growth, market opportunities and cost advantages for the economy and people; increasing energy sector's input to environmental sustainability; and making sure energy security and delivering financial sustainability. The NEP also incorporates 31 action plans under these four goals.

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