Malaysia commits RM2 billion in seed funding for energy transition projects
[KUALA LUMPUR] The Malaysian government will allocate RM2 billion (S$582 million) as seed funding for the National Energy Transition Facility, to enable catalytic blended finance for energy transition projects, Prime Minister Anwar Ibrahim said at an energy conference on Tuesday (Aug 29).
“The facility aims to ensure a seamless flow of financial resources towards energy transition projects that are marginally bankable or yielding below-market returns,” Anwar said at the Energy Transition Conference.
Examples of potential investments given were the electric vehicle (EV) value chain and hydrogen, as well as carbon capture, usage and storage technologies.
A National Energy Council will be set up to ensure holistic energy planning and policy development, he added.
The facility is part of the National Energy Transition Roadmap (NETR), which was launched last month to accelerate Malaysia’s energy transition and achieve net-zero emissions by 2050.
Among the initiatives announced during the launch in July was the establishment of an energy exchange by end-2023 or early 2024. The exchange will act as a market aggregator that will enable price discovery, and monetise excess power by exporting it to neighbouring countries.
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The government is also exploring the potential of green hydrogen as a fuel alternative, and hopes to tap the hydrogen economy. Malaysia hopes to be a major export hub for green hydrogen by 2027.
Anwar said Malaysia had recognised the importance of renewable energy as early as the 1990s, naming it as the fifth fuel under the National Energy Policy.
Today, 25 per cent of the country’s energy supply comes from renewable energy sources such as solar, hydro, biomass and biogas.
He said Malaysia is on track to source 31 per cent of its power from renewables by 2025, and 40 per cent by 2040.
From an economic perspective, Anwar noted strong interest in international collaboration related to decarbonisation.
According to an International Energy Agency report, investment in clean energy is expected to reach US$1.7 trillion in 2023.
“There are vast opportunities that will come with clean energy transitions across the supply chain, from manufacturers of solar panels, EV charging facilities, and battery energy storage, to a host of other technologies,” he added.
To achieve this, NETR has identified six energy transition levers, along with 10 flagship projects and 50 initiatives, which will be driven by both the public and private sectors.
The Malaysian government has set an ambitious target to have renewable energy at 70 per cent of installed capacity by 2050. It has also lifted a ban on cross-border trade in renewable energy.
To realise the target, Anwar said, the government estimates it needs an allocation of between RM60 billion and RM90 billion in this decade to fund crucial projects, including the expansion of public transportation, strengthening grid infrastructure and reskilling human capital.
“As the paramount challenge in energy transition is financing, it is estimated that an investment of at least RM1.2 trillion between 2023 and 2050 is needed to enable responsible energy transition.”
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