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National Energy Transition Roadmap (NETR)

2National Energy Transition Roadmap (NETR)

Published by:

Ministry of Economy

Menara Prisma

No. 26, Persiaran Perdana, Precint 3

Federal Government Administrative Centre

62675 Putrajaya, Malaysia

603 8090 2090 | ukk@ekonomi.gov.my | ekonomi.gov.my

©Publisher’s Copyright

any form or by any means-electronic, mechanical, photocopying, recording or otherwise, without prior permission of the

Ministry of Economy, Malaysia.

National Energy Transition Roadmap (NETR)

Foreword .................................................................................................. 4

Foreword by Prime Minister .....................................................................................4

Preface by Minister of Economy ...............................................................................6

Executive Summary .................................................................................... 8

Section 1: Introduction ............................................................................... 9

The Domestic Energy Landscape ..........................................................................10

Section 2: Case for Malaysia’s Energy Transition .......................................... 11

Malaysia’s Carbon Footprint ..................................................................................11

The Global Race Towards Net-Zero .......................................................................12

The Benefits of Energy Transition ..........................................................................13

Malaysia’s Policy Responses ..................................................................................13

Section 3: National Energy Transition Roadmap (NETR) ............................... 15

Guiding Principles ..................................................................................................18

Review of Renewable Energy Policies ...................................................................19

Complementary Plans ...........................................................................................20

Section 4: Energy Transition Ambition And Macro Position ........................... 21

Energy System Pathway .........................................................................................23

Socioeconomic Outcomes .....................................................................................24

Section 5: Energy Transition Levers and Key Initiatives ................................ 28

Energy Eiciency ....................................................................................................29

Renewable Energy..................................................................................................32

Hydrogen ................................................................................................................36

Bioenergy ...............................................................................................................40

Green Mobility ........................................................................................................42

Carbon Capture, Utilisation and Storage ..............................................................49

Section 6: NETR Flagship Catalyst Projects And Initiatives ............................ 52

Section 7: Cross-Cutting Enablers .............................................................. 56

Financing and Investments ...................................................................................57

Policy and Regulations ...........................................................................................60

Human Capital and Just Transition .......................................................................61

Technology and Infrastructure ..............................................................................63

Governance and Implementation .........................................................................64

Section 8: Conclusion ............................................................................... 65

Abbreviation ............................................................................................ 66

Table of

Contents

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1NationalEnergyTransitionRoadmap(NETR)2NationalEnergyTransitionRoadmap(NETR)Publishedby:MinistryofEconomyMenaraPrismaNo.26,PersiaranPerdana,Precint3FederalGovernmentAdministrativeCentre62675Putrajaya,Malaysia60380902090ukk@ekonomi.gov.myekonomi.gov.my©Publisher’sCopyrightAllrightsreserved.Nopartofthispublicationmaybereproduced,copied,storedinanyretrievalsystemortransmittedinanyformorbyanymeans-electronic,mechanical,photocopying,recordingorotherwise,withoutpriorpermissionoftheMinistryofEconomy,Malaysia.3NationalEnergyTransitionRoadmap(NETR)Foreword...................................................................................................4ForewordbyPrimeMinister......................................................................................4PrefacebyMinisterofEconomy................................................................................6ExecutiveSummary.....................................................................................8Section1:Introduction................................................................................9TheDomesticEnergyLandscape...........................................................................10Section2:CaseforMalaysia’sEnergyTransition...........................................11Malaysia’sCarbonFootprint...................................................................................11TheGlobalRaceTowardsNet-Zero........................................................................12TheBenefitsofEnergyTransition...........................................................................13Malaysia’sPolicyResponses...................................................................................13Section3:NationalEnergyTransitionRoadmap(NETR)................................15GuidingPrinciples...................................................................................................18ReviewofRenewableEnergyPolicies....................................................................19ComplementaryPlans............................................................................................20Section4:EnergyTransitionAmbitionAndMacroPosition............................21EnergySystemPathway..........................................................................................23SocioeconomicOutcomes......................................................................................24Section5:EnergyTransitionLeversandKeyInitiatives.................................28EnergyEfficiency.....................................................................................................29RenewableEnergy..................................................................................................32Hydrogen.................................................................................................................36Bioenergy................................................................................................................40GreenMobility.........................................................................................................42CarbonCapture,UtilisationandStorage...............................................................49Section6:NETRFlagshipCatalystProjectsAndInitiatives.............................52Section7:Cross-CuttingEnablers...............................................................56FinancingandInvestments....................................................................................57PolicyandRegulations............................................................................................60HumanCapitalandJustTransition........................................................................61TechnologyandInfrastructure...............................................................................63GovernanceandImplementation..........................................................................64Section8:Conclusion................................................................................65Abbreviation.............................................................................................66TableofContents4NationalEnergyTransitionRoadmap(NETR)AsweembarkonthejourneytobuildabetterMalaysia,theprogressthatwepursuegoesbeyondstronginstitutions,leadingtechnologyandworld-classinfrastructure.Themainobjectiveisfocusedonempoweringtherakyat,soMalaysianswillemergeasacohesivesocietywithhighintegrity,mutualrespectandunity.OneofthekeyprinciplesofMalaysiaMADANIis‘sustainability’,whichbroadlyrelatestogrowingresponsiblyintherealmofenergytransitionandsustainabledevelopment.Ergo,theNationalEnergyTransitionRoadmap(NETR)ispivotaltoacceleratingourgreenandsustainablegrowthagenda.TheNETRisasignificantmilestoneforMalaysia,whichcomprehensivelychartsournation’strajectorytowardsabrighter,cleaner,andmoreresilientfuture.InlinewiththeEkonomiMADANIframework,itisadeclarationofthecountry’scommitmenttofuturegenerationsandatestamenttoourresolveinaddressingthepressingchallengesofourtimes.TheTwelfthMalaysiaPlan,spanningtheyears2021to2025,andtheNationalEnergyPolicy2022-2040,havelaidthegroundworkwhiletheNETRwillensureMalaysiaforgesaheadinthistransformativejourney.Againstthebackdropofadynamicglobalenergylandscapemiredwiththeenergytrilemmaofsecurity,affordability,andsustainabilityatitscore,theworldisracingforsolutions.MalaysiatooisresoluteinovercomingthesechallengesandtheNETRdemonstratesourunwaveringdeterminationinthisregard.ReducingMalaysia’scarbonfootprintisoneofthecatalyststotransformingtheeconomyonamoresustainablepath.Itisalsoanagendatogeneratenewsourcesofgrowth,creatingbusinessandtradeopportunities,andconsequently,knowledgeworkers.ForewordbyPrimeMinister5NationalEnergyTransitionRoadmap(NETR)Inthepursuitofanet-zerofuture,thejourneyrequiresnotjusttechnologicalinnovation,butacomprehensiveshiftinourmindset,strategies,andpolicies.TheNETRencapsulatestheaspirationsofallstakeholders,fromindustryleaders,toordinaryMalaysianswhoenvisionsaharmoniouscoexistencewithourplanet.ItreiteratesMalaysia’scommitmenttosocialjustice,inclusivity,andbalancedprogress.Onthismomentousjourney,itisimportanttorememberthatthetransitiontoalow-carbonfutureisnotmerelyapolicyobjectivebutamoralimperative.Itisacommitmenttothewell-beingofourchildrenandthegenerationstocome.Itisaninvestmentinthesustainabilityofourcommunities,ourindustries,andourenvironment.ThroughNETR,thegovernmentaspirestotrailblazeadevelopmentpaththatisnotsolelyhingedonenergy,butalargercollectiveresolveofstewardshipandresponsibility.Inallsincerity,ItrustthatNETRwillinspireustotakeboldsteps,toforgecollaborations,andtoharnessourcollectivestrengthinthepursuitofasustainableandprosperousfuture.Itaffirmsthatprogressandsustainabilityarenotmutuallyexclusiveandrequirescriticaldecisionsandchangestobemade.IurgeeachandeveryMalaysian,tobeunitedandresoluteasenvisionedintheMalaysiaMADANI,tomarchforwardandleadtowardsamoresustainableandresilientfuture.ANWARBINIBRAHIM29August20236NationalEnergyTransitionRoadmap(NETR)PrefacebyMinisterofEconomyTheTwelfthMalaysiaPlan,spanning2021-2025(TwelfthPlan),articulatesourcommitmenttoachievenet-zeroGHGemissionsby2050.Concurrently,theNationalEnergyPolicy2022-2040(DTN)laysthefoundationforanequitableenergytransitionthatisfairandinclusiveforeveryone.Globally,theenergysectorfacesarapidtransformationwhilebalancingtheenergytrilemmaofsecurity,affordability,andsustainability.Energytransitionisalsogainingmomentumbothdomesticallyandinternationally.Toaccelerateourenergytransitionefforts,wehavedevelopedtheNationalEnergyTransitionRoadmap(NETR).ThisroadmapisvitalforsteeringMalaysia’sshiftfromtraditionalfossilfuels-basedeconomytoahigh-valuegreeneconomy.TheNETRrequiresawhole-of-nationapproach,encompassingfederalandstategovernments,industry,generalpublic,andinternationalcommunity.TenflagshipcatalystprojectsoftheNETR,whichcoversixenergytransitionleversnamely,energyefficiency(EE),renewableenergy(RE),hydrogen,bioenergy,greenmobility,andcarboncapture,utilisationandstorage(CCUS)waslaunchedonJuly27th2023.Theseflagshipprojectsare7NationalEnergyTransitionRoadmap(NETR)expectedtoattractinvestmentofmorethanRM25billion,create23,000jobopportunitiesandreduceGHGemissionsbymorethan10,000GgCO2eqperyear.Additionally,theNETRestablishesthepathwayfornationalenergymix,GHGemissionreductionandenergytransitioninitiatives.ThisreinforcesMalaysia’scommitmenttonet-zeroemissionsasearlyas2050despitecontributingonly0.8%toglobalGHG.By2050,NETRinitiativesareexpectedtodeliver32%reductioninGHGemissionsfortheenergysectorcomparedtothe2019baseline–reaching4.3MtCo2eqemissionpercapita.TheMinistryhasundertakenanextensiveconsultativeapproachinvolvingpolicymakers,industrystakeholders,technologyexperts,andbusinessestoanalyseandappraisebestpractices,lessonslearned,andbothexistingandproposedinitiatives.Aswemoveahead,theNETRwillserveasaguidingbeacon,offeringclarityandcoherenceinformulatingpoliciesandexecutingstrategiesfortheenergysector’stransitionintoalow-carbonfuture.RAFIZIRAMLI29August20238NationalEnergyTransitionRoadmap(NETR)ExecutiveSummaryMalaysiaisblessedwithastrategiclocation,vastamountsofnaturalresources,potentialrenewableenergyandagrowingpooloftalentswhoareappreciativeofagreeneconomy.OneofthetenetsofEkonomiMADANIisspurringMalaysia’sgreengrowthforclimateresilience.MalaysiahasbeenrecognisedasthebestcountryinSoutheastAsiaintheEnergyTransitionIndex2023bytheWorldEconomicForum.ThefeatshowsthatMalaysiaisontherighttracktodriveourstrategicshiftandeconomicrestructuringintonewgrowthareas.Malaysiaiscommittedtolow-carbondevelopmentaimedatrestructuringtheeconomiclandscapetoamoresustainableone.Inthiscontext,theNationalEnergyTransitionRoadmap(NETR)setsthegoaltoaccelerateenergytransitionandchangethewayenergyisgeneratedtoimproveclimateresilience.NETRhasdevelopedtheResponsibleTransition(RT)Pathway2050toshiftMalaysia’senergysystemsfromfossilfuel-basedtogreenerandlow-carbonsystems.TheTotalPrimaryEnergySource(TPES)modellingindicatedthatourenergydemandwillincreasemarginallyat0.2%annuallyfrom95Mtoein2023to102Mtoein2050.TheRTPathway2050hasalsoshownpromisingdecarbonisationresultsasevidencedbythephasingoutofcoalandthereductionoffossil-fuelreliancefrom96%in2023to77%in2050.Naturalgasissettobenotonlyatransitionalfuel,butalsotheprimarycontributorofTPESat57Mtoe(56%)followedbyrenewablesthatincludesolar,hydroandbioenergy,whichcollectivelycontribute23%ofTPESin2050fromamere4%in2023.NETRoutlines50initiativesunderthesixenergytransitionleversandfiveenablers,inadditiontothe10flagshipprojectsandinitiativesannouncedinJuly2023.Theenergytransitionfinancingwillbeundertakenthroughacombinationofgrants,loans,rebates,incentives,andotherinvestmentstosupportthewhole-of-nationapproach.NETRaimstopowerourfuturebyunlockingpotentialsinnewgrowthareasanddeliveringprogressandprosperitytoMalaysianhouseholdsandbusinesses.ThesuccessfulimplementationofNETRwillupliftGDPvaluefromRM25billionin2023toRM220billionandgenerate310,000jobsin2050.NETRisnotjustadocumentaboutmeasurestomeetNet-ZeroGHGemissionstarget.NETRrepresentsanewwayofthinkingtofundamentallytransformMalaysia’seconomyandlivelihoodsforastrongerandmoreresilientfuture.9NationalEnergyTransitionRoadmap(NETR)Malaysiaisasmallopeneconomywithgrossdomesticproduct(GDP)ofRM1.79trillionandgrossnationalincome(GNI)percapitaofUSD11,780in2022.Itspopulationstoodat32.7millionpeoplein2022andisexpectedtoreach40millionby2050.Meanwhile,theurbanisationratewas75%in2020,andisexpectedtoreach85%by2040.Economicandpopulationgrowth,aswellasrapidurbanisation,willdriveariseinenergydemand,whichisexpectedtoincreaseby2%annuallyuntil2050.Theeconomytransitionedfromanagriculturalandcommodity-basedtomanufacturingandservicesinthe1980s.Itcontinuestobeaproduceroffinitequantitiesofoilandgas,whichcontributedapproximately13%toGDPin2021.Availabilityofindigenousgasresourceshaveensuredsecureenergysupplyataffordableprices.Asthenationevolvesandlifestyleschange,environmentalsustainabilitygainsmorefocusinbusinessandpolicydecisions,andthishasimplicationsonpeople’slivelihoods.Rapidurbanisationandclimatechangerequireatimelyadjustmentofthewaywelive,commuteandinteractwithoursurroundings,includingthewayinwhichweconsumeandproduceenergy.Section1:Introduction10NationalEnergyTransitionRoadmap(NETR)TheDomesticEnergyLandscapeDefiningEnergyTransition-energytransitionisastructuralshiftinenergysystems,characterisedbyatransitiontowardscleanersourcesofenergy,increaseduseofRE,andasignificantreductionincarbonemissions.Theenergytransitionisexpectedtooccuratanacceleratedpace,drivenbyrapidtechnologicaladvancesandrobustclimatechangepolicies.BasedontheNationalEnergyPolicy,2022-2040(DTN),theenergysectorcontributedapproximately28%ofGDPandemployed25%ofthetotalworkforceinMalaysia.Inaddition,itisakeysourceofnationalincome,withpetroleum-relatedproductscontributing31%offiscalincome,andenergyexportsconstituting13%oftotalexportvalue.Theenergysectoralsobenefitsmorethan10millioncustomersbyprovidingdailyaccesstoelectricitysupplyandenablingmobilitythroughreliablesupplyoffuels.Jobsandbusinessopportunitiescreatedintheenergysector,aswellaseconomicmultipliersinenergy-relatedsupplychains,alsocontributepositivetothesocioeconomicdevelopmentofthenation.FossilfuelscontinuetocontributethelargestshareofMalaysia’senergysupply,andhaveasignificantinfluenceinshapingthecountry’senergylandscape.Asof2020,fourenergysourcesdominatedthenationaltotalprimaryenergysupply(TPES)mix.Naturalgasconstitutedthelargestportionat42.4%,followedbycrudeoilandpetroleumproductsat27.3%andcoalat26.4%.Renewables,comprisinghydropower,solarandbioenergy,constitutedjustamere3.9%.Historically,thepowersectorinMalaysiahasbeenoperatedasaverticallyintegratedmonopolysystem.Overtime,ithasundergonevariousstagesofliberalisation.Thepowersectorwasprivatisedwiththeaimofattractinginvestmentsaswellasenhancingefficiencyandproductivitytoensureasufficientsupply.Additionally,thegovernmenthasencouragedtheinvolvementofindependentpowerproducers(IPPs)toimprovethereliabilityoftheelectricitysupplyandaddresstheshortageofgenerationcapacityinmeetingthedemand.Naturalgasplaysanimportantroleasatransitionalfuelinenergytransition.ThegovernmenthasimplementedThirdPartyAccess(TPA)in2017toprovidehealthycompetitionamongindustryplayers,includingtheIPPs.Thiswillfacilitatetheshifttowardsmarket-basedpricingforpowerandnon-powersectors,thusensuringreliablegassupplyatcompetitiveprices.Similarly,thegovernmentintendstoreformthepowersectorfurtherbyestablishingaTPAframeworktosupplyfuelsources,andaccesstothegridinfrastructureandtheretailmarket.Inaddition,thegovernmentwillembarkonelectricitytariffrestructuringinitiative.Thesemeasureswillensurecostreflectiveprices,enablehigherpenetrationofREandenhanceMalaysia’scompetitiveadvantage.MalaysiahasbeenrecognisedasthebestcountryintheSoutheastAsiaintheEnergyTransitionIndex2023bytheWorldEconomicForum.Theindexconsiderssystemperformanceandthecountry’sreadinesstoswitchtoamoreenvironmentallyfriendlyenergysources.TherecognitionshowsthatMalaysiaisontherighttracktodriveourstrategicshiftandeconomicrestructuringintonewgrowthareas.ThisisfurthersupportedbyMalaysia’svariousadvantagessuchasastrategiclocation,diverseREsourcesandahighlevelofskillstobecomearegionalleaderinenergytransition.11NationalEnergyTransitionRoadmap(NETR)Malaysia’sCarbonFootprintTheenergysectorhaslongcontributedtoMalaysia’sdevelopmentandgrowth.Yetemissionshavealsoincreasedintandemwiththisprogress,necessitatinganurgentneedtotransitiontowardsalowcarboneconomy.Thiswillinvolvemeetingthecountry’sclimatecommitmenttocut45%carbonintensityagainstGDPby2030comparedtothe2005baseline.Growthintheenergysectordrivesdevelopmentinvariousrelatedindustries,creatingspin-offsthroughemployment,capitalinflowsandinvestments,besidessupportingtheenergyservicecompanies’ecosystem.However,theenergysectorhasbeenthecountry’slargestcontributorofgreenhousegas(GHG)emissions.AsummaryofMalaysia’sGHGinventoryin2019,basedontheFourthEditionoftheBiennialUpdateReport(BUR4)submittedtotheUnitedNationsFrameworkConventiononClimateChange(UNFCCC),isasshowninExhibit2.1.Section2:CaseforMalaysiaEnergyTransition12NationalEnergyTransitionRoadmap(NETR)Exhibit2.2:Numberofcountrieswithnet-zeropoliciesIn2019,theenergysectoremitted259,326.11GigagramCO2equivalent(GgCO2eq),or78.5%oftotalemissions.Thiswasfollowedbyindustrialprocessesandproductuse(IPPU)at10%,wasteat9%andagricultureat3%.TheBUR4reportalsolistedclimatemitigationactionsundertakenintheenergysector,suchastheuseofEEmeasures,energy-efficientvehicles,RE,biodieselandswitchingfromcoaltonaturalgasforpowergeneration.TheGlobalRaceTowardsNet-ZeroThereisapalpableshiftintheworldwidestanceonsustainability.By2022,approximately140countrieshadpledgednet-zerocommitments.OfExhibit2.1:Malaysia’sGHGInventoryin2019thesecountries,86haveformulatedpolicydocumentsandframeworkstoachievetherespectivenet-zeropledges.Increasingadoptionofcleanerenergyalternativeswillbevitaltosteerthistransition.In2022,theadoptionofsolarandwindenergiesandelectricvehicles(EVs),aswellasconservationeffortslimitedtheemissionsgrowthtobelow1%.Despitethesemitigationefforts,theoverallemissionstrajectorycontinuestorise,emphasisingtheneedfornationstodeepentheircommitmentandenhanceadoptionoflow-carbonsolutionsinaddressingtheclimatechallenges.13NationalEnergyTransitionRoadmap(NETR)On29March2023,theUnitedNationsGeneralAssembly(UNGA)passedasignificantresolutionrequestingtheInternationalCourtofJustice(ICJ)tooutlinethelegalresponsibilitiesofstatesconcerningclimatemitigationandadaptation.Thecurrenttrajectoryofclimatechangeposesathreattotheglobaleconomy,tradeandfinancialsystem,withpotentiallossesamountingtonearly10%ofGDPby2050.Acriticalfactorinaddressingclimatechangeistheenergysector,whichaccordingtotheInternationalEnergyAgency(IEA),isresponsiblefor73.2%ofGHGemissionsworldwide.Inlimitingtheglobalwarmingto1.5°Cabovepre-industriallevelasoutlinedintheParisAgreement,IEA’sNetZeroby2050pathwaysuggeststhattheworldeconomyshouldconsume7%lessenergyin2050thanatpresent.In2022,theEuropeanUnion(EU)introducedtheCarbonBorderAdjustmentMechanism(CBAM),aimedatpreventingcarbonleakagesinthetradevaluechain.ThecurrentscopeofCBAMcoversindustriesthatareimportanttoMalaysia,suchasiron,steel,aluminium,fertiliser,electricityandhydrogen.Itisestimatedthat57%ofMalaysia’stotalexportswillbeaffectedbytheimplementationofCBAM.Further,theUnitedStates(US)introducedtheInflationReductionAct(IRA)in2022,whichprioritisestheproductionofanddemandfordomesticallyproducedcleanenergygoodsandservicesoverforeignimports.TheBenefitsofEnergyTransitionTheurgencyforMalaysia’sshifttosustainableenergyisfuelledbyglobalcommitments,particularlytheParisAgreementandtheneedtofortifyeconomicdiversificationandenergysecurity.Inaddition,industryrelatedtotheenergytransitionhasthepotentialtobeanewsourceofgrowththatcanbenefitfromtheglobalmarket.TheIEAreportsthatinvestmentinthedevelopmentofthecleanenergyindustryisexpectedtoreachUSD1.7trillionin2023.ThefocusofglobalinvestmentisonthedevelopmentoftheRE,EEandstrengtheningthegridandenergystorage.Moreover,corporationsandenterprisesconfrontarapidlychangingmarketlandscapewherecarboncostswillreshapebusinessdynamicsandpotentiallystraincompetitiveness.Meanwhile,theimminentrealitiesofclimatechange,exemplifiedbyrisingsealevels,extremeweatherevents,andescalatingheatwaveshighlightthedirectandtangibleimpactsonrakyat’sdailylives.Beyondmitigatingrisks,theenergytransitionpresentsMalaysiawiththeopportunitytorestructureitseconomyandmaximisethepotentialforgreengrowththatbalancessustainability,enhancesGDP,createsjobsandmeettheneedsofrakyatandbusinesses.Malaysia’sPolicyResponsesThefive-yeardevelopmentplancoverssocioeconomicpolicyplanningthatsetsoutthecountry’sdirectionandgrowthtargetsaswellastheallocationofthedevelopmentexpenditure.TheTwelfthPlan,outlinestheaspirationforthenationtoachievenet-zeroGHGemissionsasearlyas2050.TheplanemphasisesMalaysia’sapproachtoeffectivelymanageitsenergytransition.Itrecognisesthecomplexandinterconnectednatureofenergysystemsandacknowledgestheneedtobalancetheenergytrilemma.Theapproachnotonlyensuresthatenergypoliciesandprogrammesareenvironmentallyresponsiblebutalsotakesintoconsiderationthesocioeconomicimplications.TheDTNlaysthegroundworkforatransformationintheenergylandscape.Theenergytransitionisexpectedtooccuratanacceleratedpace,drivenbyrapidtechnologicaladvancementandrobustclimatechangepolicies.TheDTN’sLowCarbonNationAspiration2040(LCNA2040)seekstotransform14NationalEnergyTransitionRoadmap(NETR)WhatistheEnergyTrilemma?Theenergytrilemmareferstotheinterconnectednessofenergysecurity,affordabilityandenvironmentalsustainability.Thesethreeobjectivesareofteninconflictwitheachother.Addressingtheenergytrilemmarequiresadelicatebalancingactandofteninvolvesmakingtrade-offs.Solutionstotheenergytrilemmaalsocommonlyincludeamixofpolicies,innovations,andinvestmentsthataimtoharmonisethesethreeobjectivestothegreatestextentpossiblewhileacknowledgingtheirinherenttrade-offs.Exhibit2.3:TheDTNFrameworktheprimaryenergysupply,movingtocleaner,REsources.LCNA2040emphasiseslow-carbonpolicies,including:•Restrictingthedevelopmentofnewcoalpowerplantswhiletherenewablesshareisbeingincreased•DrivingEEpractices•EncouragingtheadoptionofEVs•Increasingpublictransport’smodalshare•ImprovingcarbonfootprintaccountingandsustainabilityreportingTheseprogressiveaspirationswillensuretheenergysectorisresilienttofuturechallengesandinagoodpositiontoseizetheopportunitiesarisingfromtheenergytransition.TheDTNissupportedbyfourstrategicpillars,12strategies,31actionplansandfiveenablers,asshowninExhibit2.3.15NationalEnergyTransitionRoadmap(NETR)TheMinistryofEconomyleadsthedevelopmentoftheNETRwithinvaluablesupportfromtheSteeringCommitteeandtheTechnicalCommittee.Thesecommitteescompriserepresentativesfromministries,agenciesandprivatesector,asshowninExhibit3.1tohelpensureacollaborativeandcomprehensiveapproachtothedevelopmentprocess.Inaddition,theProjectTeamincludesrepresentativesfromtheEnergyCommission(ST),SustainableEnergyDevelopmentAuthority(SEDA),MalaysianGreenTechnologyandClimateChangeCorporation(MGTC),PETRONASandTenagaNasionalBerhad(TNB)toleveragethediverseexpertiseinensuringNETR’sstrategiesandplansmeettheneedsofthewiderstakeholders.ToensureinclusiveparticipationinthedevelopmentofNETR,theMinistryofEconomyorganisedaworkshopon17April2023asaplatformfordiscussionsandinformationexchangebetweenministries,agencies,theprivatesectorandindustryassociations,includingthosefromSabahandSarawak.Section3:NationalEnergyTransitionRoadmap(NETR)16NationalEnergyTransitionRoadmap(NETR)Theministryhasalsoundertakenmorethan100engagementsandconsultationstogatherfeedbackandensuretheaccuracyandvalidityoftheNETRdataandinitiatives.Thisfeedbackhasplayedacrucialroleinshapingthescopeoftheroadmapandinfine-tuningthecatalystprojects,initiatives,andenablersoftheNETR.TheProjectTeamundertookacomprehensivescopingandstocktakingprocessofmacroandsectoralpolicies,includingtheTwelfthMalaysiaPlan,theDTN,BUR4,theNationalEnergyEfficiencyActionPlan(NEEAP),MalaysiaRenewableEnergyRoadmap(MyRER),MalaysiaEnergyTransitionOutlook(METO),NationalLowCarbonCitiesMasterplan,GreenTechnologyMasterPlanMalaysia2017-2030,LowCarbonMobilityBlueprint,andGHGemissionsreductionplansfromthestategovernmentsandprivatesector.TheteamalsocollaboratedwiththeMinistryofFinance(MOF),BankNegaraMalaysia(BNM)andSecuritiesCommission(SC)toexploresuitableenergytransitionfinancing.ThedevelopmentoftheNETRisdividedintotwopartsasshowninExhibit3.2.Part1outlinesthe10flagshipcatalystprojectsandimpactinitiativesbasedonsixenergytransitionlevers,namelyEE;RE;hydrogen;bioenergy;greenmobility;andcarboncapture,utilisationandstorage(CCUS).Thesixleversarefurthersupportedbyfiveenablers:financingandinvestment;policyandregulation;humancapitalandjusttransition;technologyandinfrastructure;andgovernanceandimplementation.Part2focusesonestablishingtheenergymix,GHGemissionsreductionpathway,selectedtargetsandinitiatives.Targetedinvestments,peoplestrategiesandinternationalcooperationplanning,aswellaspolicyandregulatoryframeworks,willbestrengthenedtodevelopthetalent,technologyandinfrastructureneededtoscale-upandsustaindecarbonisationefforts.Exhibit3.1:TheNETRSteeringCommitteeandTechnicalCommitteemembers17NationalEnergyTransitionRoadmap(NETR)Exhibit3.2:Parts1and2oftheNETR18NationalEnergyTransitionRoadmap(NETR)GuidingPrinciplesTherearefourguidingprinciplesoftheNETR,asshowninExhibit3.3.Thefirstprinciplehighlightstheimportanceofaligningtheenergysectorbasedonnationalaspirationsandcommitmentstosustainabledevelopment.Thesecondprincipleemphasisesthattheenergytransitionmustbejust,inclusiveandcost-effective.Itacknowledgesthechallengesthatexistforlow-incomeandvulnerablepopulations.TheNETRaimstoensurethatthebenefitsandopportunitiesfromtheenergytransitiontrickledowntoeverysegmentofsociety,leavingnoonebehind.Thethirdprinciplestressestheneedforeffectivegovernanceandawhole-of-nationapproach.Collaborationamongallstakeholdersiscrucialtocreateavibrantenergyindustryecosystemthatsupportssustainabilityandfacilitatesthetransitiontoalow-carboneconomy.Thefourthprinciplehighlightsthesignificanceofcreatinghigh-impactjobopportunitiesandenhancingsmallandmediumenterprises(SMEs)involvementintheecosystem.Intermsofprojectevaluation,theNETRsubscribestotheClimateChangeandPrinciple-BasedTaxonomydefinedbyBankNegaraMalaysia(BNM).Inaddition,theproposalsarefurtherassessedinaccordancewiththethemesoftheTwelfthPlan,namely:resettingtheeconomy;strengtheningsecurity,wellbeingandinclusivity;andadvancingsustainability.ProjectsandinitiativesarealsoevaluatedbasedontheirpotentialstoreduceGHGemissions,provideeconomicopportunities,promotecost-effectivesolutionsanddeliverbenefitstotherakyat.ThesixenergytransitionleversandprojectprioritisationcriteriaareasshowninExhibit3.4.Exhibit3.3:ThefourguidingprinciplesofNETR19NationalEnergyTransitionRoadmap(NETR)Exhibit3.4:EnergytransitionleversandprojectprioritisationcriteriaReviewofRenewableEnergyPoliciesInlinewiththedevelopmentoftheNETR,theMinistryofEconomyhasalsocollaboratedwithNRECCtoreviewandupdateexistingpoliciesonRE,leadingtothefollowingdecisions:•IncreasethetargetforinstalledREcapacityfrom40%in2040to70%by2050.Thehighertargetisexpectedtogenerateneweconomicopportunitiesbyattractingmultinationalcompanies,especiallyRE100companies,tooperateinMalaysia•ExpandREdevelopmentbasedontheconceptofaself-containedsystemtoencourageinvestmentintheREvaluechainanddiversifyREprogrammesaccordingtotheprincipleofwillingbuyer,willingseller•Scale-uptheinstallationofsolarsystemsingovernmentbuildings•Allowcross-borderREtradethroughtheestablishmentofanelectricityexchangesystem.TheestablishmentofREexchangesystemwillpositionMalaysiaasaregionalhubforREwhilegivingaddedimpetusto,andbuildingon,theASEANPowerGrid(APG)initiative.MalaysiaiscurrentlyoneofthekeymembersparticipatingintheLaoPDR-Thailand-Malaysia-SingaporePowerIntegrationProject(LTMS-PIP),thepathfindertoadvancecross-borderpowertradeamongASEANMemberStatesundertheAPG.ThegovernmentisalsocognisantoftheneedtobolsterthenationalpowergridtoaccommodatehigherREuptake.Thismaycomeintheformoffuture-proofingMalaysiaElectricitySupplyIndustry(MESI)elements,includingintroducingsmartgridfeaturesandenablingthegridforthirdpartyaccess.20NationalEnergyTransitionRoadmap(NETR)ComplementaryPlansWithinthewhole-of-nationapproach,therehasbeenasteadydevelopmentofnewpoliciesandstrategiestocomplementNETRinstrengtheningMalaysia’slow-carbontransition.Amongothersinclude:•theNationallyDeterminedContribution(NDC)Roadmap,Long-TermLowEmissionsDevelopmentStrategies(LT-LEDS)andFutureProofingMESIbytheNRECC•theCarbonPricingInstrumentdevelopedbytheMinistryofFinance(MOF)•theNationalESGIndustryFramework,theNewIndustrialMasterPlan(NIMP)andtheChemicalIndustryRoadmap(CIR)bytheMinistryofInvestment,TradeandIndustry(MITI)•theHydrogenEconomyandTechnologyRoadmap(HETR)bytheMinistryofScience,TechnologyandInnovation(MOSTI)•theNationalBiomassActionPlanbytheMinistryofPlantationandCommodities(KPK).NaturalgaswillcontinuetoplayapivotalroleinMalaysia’senergylandscapeasthenationmovestowardsalowcarboneconomy.Tothisend,theMinistryofEconomyisinthemidstofdevelopingtheNaturalGasRoadmap(NGR)tooptimisethevalueofindigenousnaturalgasresources,increasethedomesticnaturalgasuse,enhancethesecurityofsupplyandaccesstocost-competitivenaturalgas,andpositionnaturalgastosupportMalaysia’senergytransition.21NationalEnergyTransitionRoadmap(NETR)TheNETRisrootedinMalaysia’soverarchingaspirations,chartingacoursefortheenergysystemthatisalignedwithdecarbonisationtargets.ItstrikestherightbalancebetweenenvironmentalmitigationandtheneedtobolsternetsocioeconomicvaluessuchasGDPandjobcreation.NETR’sResponsibleTransition(RT)scenariowillsupportMalaysia’spursuitofachievingnet-zeroasearlyas2050.RTscenariorepresentsthebest-fitambitionforthenation,consideringcurrenttechnologydevelopments,globaltrendsandlocalcontext.TheNETR’sRTaimstoacceleratethepaceofenergytransition,withimprovedambitionacrossallsixlevers,asoutlinedinExhibit4.1.Movingforward,thegovernmentwillre-calibrateambitionlevelstocapitaliseonnewandemergingtechnologies,potentiallyreviewingtargetswherepossible.ThisapproachfollowstheParisAccord’sGlobalStocktakeprocess,whichevaluatesprogressonmeetingParisAgreementgoalsandidentifiesanyremaininggapsandopportunitiesforincreasedaction.Section4:EnergyTransitionAmbitionandMacroPosition22NationalEnergyTransitionRoadmap(NETR)Exhibit4.1:TargetsacrossNETR’ssixenergytransitionlevers23NationalEnergyTransitionRoadmap(NETR)Thestatedambitionwillgeneratesignificantinvestmentopportunitiesacrossallsixlevers,asoutlinedinExhibit4.2.Therealisationoftheseinvestmentswillcreatetangibleimpactforrakyatandbusinesses.EnergyEﬃciencyRenewableenergyHydrogenBioenergyGreenMobilityCCUSEnergySystemPathwayNETR’sRTpathwayisdesignedtoaccelerateMalaysia’senergytransitionjourneywhilebalancingtheenergytrilemma.Towardsthis,theRTpathwaywillachievethefollowingby2050:•IncreaseduseofREinthepowergenerationmix•Closetofullyphased-outcoalfromthepowergenerationmix•Broadbasedenergyefficiencyinitiativespursued,particularlyfromthedemandsidemanagementthatincludeoptimisingenergyconsumptionacrosskeysectors,namelyresidential,commercial,industrial,andtransporttopreventwastageandindirectlyprolongthelifespanofindigenousresources•Theshifttoelectrificationandbiofuelsexpeditedinthetransportsector.ThisRTwillhelpMalaysiatoshiftfromtraditional,fossilfuel-basedenergysystemstoagreener,low-carbonenergyframework,asshowninExhibit4.3.Withthistransition,coalwillbeclosetofullyphased-out,whileREwillincreasefrom4%in2023to22%in2050.Naturalgasissettoplayasignificantrole,accountingfor56%ofTPESby2050.Exhibit4.2:PotentialinvestmentopportunitiesandimpactofNETR’sRT24NationalEnergyTransitionRoadmap(NETR)Giventheimportanceofenergyinsustainingeconomicgrowthandsocioeconomicdevelopment,theNETRrecognisestheneedtoensureprogressivescalingupofREinmeetingthe70%installedcapacitytargetinthepowermixby2050.Thepotentialrisksofover-relianceonnaturalgaswillbemitigatedbyensuringREcapacityreadinessaswellasdevelopingenergystoragetoaddressREintermittencyissues.Asanadditionalmeasure,Malaysiawillcontinuetoexploreothernon-carbonenergysourcesthatincludeREimportsthroughregionalinterconnectors.SocioeconomicOutcomesTheNETR’sRTpathwayhasbeenevaluatedalongtheenergytrilemma.Overall,thispathwayissettoensureeenergysecurity,energyequityandeconomicdevelopmentaswellasimproveMalaysia’senvironmentalsustainability,asshowninExhibit4.4.Exhibit4.3:Malaysia’sprojectedTPESby2050Exhibit4.4:RTimpactacrosstheEnergyTrilemma25NationalEnergyTransitionRoadmap(NETR)EnergySecurityTheRTaimstoachieveanotable70%REinstalledcapacitymixforpowersector.Despitethis,Malaysiawillcontinuetomaintaindiversificationofitspowergenerationmix,withthepowersystemHerfindahl-HirschmanIndex(HHI)remainingstablethroughoutprojectedperiodto2050.However,thereareconcernsaboutMalaysia’sgrowingdependenceonfuelimportparticularlynaturalgasimports.Giventheanticipatedriseinrelianceonnaturalgasandcrudeoilby2050,thereisaheightenedneedtofocusonensuringenergysecurity.Movingforward,MalaysiawilllooktoreducethisdependenceonnaturalgasbyscalingupofREcapacityandexploringpotentialnon-carbonenergysources.Inthemeantime,proactiveinitiativesarebeingundertakentosecurenaturalgas,suchasnecessaryinfrastructureandcommercialarrangementsforimportation,includinglong-termagreementstostabilisefuelimports.Atthesametime,itiscrucialtoensurethatnaturalgaspricesfordomesticconsumersreflectsmarketparity.ThiswillenhancetheattractivenessofMalaysiaasaninvestmentdestinationforupstreamsectoraswellasincentivisethirdpartysupplierstoenterthedomesticgassupplymarket,spurringtheoperationalisationofTPAforgasmarket.EnergyEquityandEconomicDevelopmentBy2050,MalaysiaisexpectedtofacehighersystemcostsduetotheinvestmentsrequiredtorapidlyincreaseRE’sinstalledcapacitywithinthecountry’spowergenerationmix.Thoughthistrajectorymightseeanuptickinsystemcosts,suchanincreaseisinevitablegiventhepotentialscenariosofhigherrelianceonnaturalgasimportinthepowergenerationmixfollowingtheprojecteddiminishingofMalaysia’sgasreservesby2050.Althoughtherewillbehighersystemcosts,theRTispoisedtosignificantlybolsterMalaysia’seconomicdevelopment.Theenergytransitionwillcatalysegrowthinnascentareassuchasgreenmobilityecosystems,RE,energystorage,andalternativenewenergyecosystems.TakingapioneeringroleintheseemergingareaswillenhanceMalaysia’scompetitiveedge,whichwillyieldpositiveoutcomesforbothGDPandjobcreation.TheRTisestimatedtogenerateinvestmentopportunitiestotallingbetweenRM1.2trillionandRM1.3trillionby2050.TheseinvestmentswillcontributeadditionalGDPofRM220billionandcreateapproximately310,000greengrowthjobopportunitiesin2050.Economicbenefitswillbefeltacrossthesocialspectrum,withmedium-andlow-incomehouseholdsexpectedtobethebiggestbeneficiariesofincomegains,asshowninExhibit4.5.26NationalEnergyTransitionRoadmap(NETR)Thegovernmentrecognisestheneedtocarefullymanagetheenergytransition,giventhevaryingimpactonjobsnationwide.Whiletheenergytransitionwillfosterjobcreationparticularlyinnewgreengrowthareas,othernon-greenareasmayexperienceadecline.Thisfurtherunderscorestheimportanceofgreeningtheeconomyinawaythatisasfairandinclusiveaspossibleforeveryone,especiallyforcommunitiesaffectedbyenergytransition.EnvironmentalSustainabilityTheRTwillsignificantlyimproveMalaysia’sperformanceonenvironmentalsustainability.Notaccountingfortheuseofcarboncaptureintheenergysector,Malaysiawillachieve32%reductioninenergysector’sGHGemissionscomparedtothe2019baseline,asshowninExhibit4.6.Thistranslatestoemissionsreductionto4.3MtCO2eqpercapita,from7.9MtCO2eqpercapitain2019.Exhibit4.5:SocioeconomicoutcomesforMalaysia27NationalEnergyTransitionRoadmap(NETR)SummaryofBenefitsExhibit4.6:ProjectedGHGemissionsreductionExhibit4.7:BenefitsofNETRUtilisingcarboncaptureandstorage(CCS)intheenergysectorwillfurtherbolsterMalaysia’sjourneytowardsattainingnet-zerotodeliveranadditional5%reductioninGHGemissions,whichtranslatesto4.1MtCO2eqpercapita.Scale-upofCCSintheenergysectorwillalsodrivethetechnologytobecomemoreeconomicallyfeasibleinothersectorssuchasindustrialprocessesandproductuse(IPPU).Othersectors,suchasIPPU,agriculture,wasteaswellasland-use,land-usechangeandforestry(LULUCF)willplayacriticalroletowardsachievingnet-zerotarget.GreaterfocuswillbeplacedonadoptingabatementleversacrossIPPU,wasteandagriculture,whileprotectingnaturalassetsinLULUCF,whichfunctionsasanaturalcarbonoffsettingmechanism.RT’sacceleratedambitionaimstonotonlypropelMalaysia’senergyshifttowardsachievingthenet-zeroambition,butalsotogeneratemeaningfulsocioeconomicoutcomesforthenationthroughGDPgrowth,jobscreationandincomegenerationinfutureproofgreenindustries,asshowninExhibit4.7.28NationalEnergyTransitionRoadmap(NETR)Section5:EnergyTransitionLeversandKeyInitiativesNETRemphasisesonsixenergytransitionleversthatwillunlockeconomicopportunitiesandreduceimpacttotheenvironment.Ofthesix,EEstandsoutasthemostimportantleverasitiscosteffectiveandpromotesresourceoptimisation.REoffersdiversificationfromtraditionalfossilfuelsthroughadoptionofsustainableenergysources.Thefocusonhydrogenrecognisesitspotentialasacleanandemergingenergycarrierthatcanbeutilised,particularlybythetransportationsector.Giventhatenergytransitionpathwayiscountryspecific,bioenergyleverleveragesMalaysia’sabundantbiomassresources,particularlyfromagriculture,offeringbotheconomicvalueandacleanerenergysource.Meanwhile,fromdemandperspective,greenmobilityleveraddressesthesignificantemissionsfromthetransportationsectorandalignswithurbanisationtrends,advocatingforcleanerurbantransportation.Lastly,CCUSoffersasolutionforhard-to-abateindustrialemissions,withpotentialrepurposingofMalaysia’sexistingpetroleumfacilities.29NationalEnergyTransitionRoadmap(NETR)EnergyEfficiencyOverviewEEofferseffectivelong-termsolutionstolowerenergyintensityandreduceCO2emissions.Itmeaningfullyimprovesalldimensionsoftheenergytrilemma,byreducingdemandtoimproveenergysecurity,loweringcostsforuserstoenhanceenergyequityandminimisingemissionsfromenergyproductiontoelevateenvironmentsustainability.EEisnotanewconceptforMalaysia.In2015,theGovernmentunveiledtheNEEAP,detailinga10-yearstrategytoimproveEEinpowerconsumptionforresidential,commercialandindustrialsectors.Currently,thePlanisontracktoachieveitstargetofreducingelectricitydemandby8%by2025.Malaysiamustbroadenitsfocusbeyondjustelectricityandincorporateawiderrangeofenergyoutputs,suchasthermalenergy.TheforthcomingEnergyEfficiencyandConservationAct(EECA)bill,expectedtobetabledinParliamentbytheendofthisyear,marksasignificantstepinthisdirection.NETRwilldrivetheattainmentofRTPathway2050thatisbothsustainableandabletopropeleconomicgrowththroughtheefficientuseofenergy.KeyTargetsNETRproposesthefollowingtargets:•By2040,achieveenergysavingsof21%comparedtobusiness-as-usualscenario,specifically:oResidential:15%oIndustrialandcommercial:22%•By2050,achieveenergysavingsof22%comparedtobusiness-as-usualscenario,specifically:oResidential:20%oIndustrialandcommercial:23%ThetargetsmarkasignificantleapfromthegoalspreviouslydeclaredintheDTNat10%forresidentialand11%forindustrialandcommercialby2040.ChallengesInMalaysia,theadoptionofenergy-efficientappliancesishinderedbyalackofawarenessregardingtheirbenefitsandavailability,whichledtoscarcityofdemandandsupplyfortheseproducts.Moreover,thereisadisconnectbetweenbuildingownersandtenants,asownersareburdenedwithinvestinginenergy-efficientupgradeswhiletenantsbenefitfromtheresultingcostsavings.Additionally,thescopeoftheMinimumEnergyPerformanceStandards(MEPS)encompassesonlyanarrowrangeofappliances.Thisconstrainsthepotentialforcomprehensiveenergysavingsacrossresidential,commercialandindustrial.Meanwhile,thenascentmarketofenergyservicecompanies(ESCOs)facesobstaclessuchaslimitedreturnsoninvestmentaswellaslackofdemandandviablefundingopportunities.30NationalEnergyTransitionRoadmap(NETR)EnergyTransitionLever:EnergyEfficiencyCodeInitiativesChampionsEE1ImproveEEawarenessoPromoteawarenessforenergy-efficientappliancesandequipmentthroughpublicawarenessprogrammesoRedesignthe5-starlabellingstandardstoemphasisemonetarysavingsinadditiontothetechnicalenergysavingsNRECCSTEE2ImproveexistingMinimumEnergyPerformanceStandards(MEPS)and5-starratingbandsoIncreasethenumberofMEPS-coveredequipmentoEstablishanacceleratedMEPSprogressiontimelineforkeycriticalappliancesalignwithASEANPlanofActionforEnergyCooperation(APAEC)standardsoRevisethebandsforapplianceswithhigh5-StarratingspenetrationthroughperiodicreviewsSTEE3EnforcemandatoryauditsforlargecommercialandindustrialbuildingsoImplementmandatoryinvestment-gradeauditsfocusingonhigh-energy-consumingcommercialandindustrialsectoroEstablishreportingprotocolaswellasastrictmonitoringmechanismSTEE4Establishgreenbuildingcodesforenergy-intensiveresidentialandcommercialbuildingsoEstablishamandatorynationalstandardthatoutlinesEEparametersforbothnewresidentialandcommercialbuildingsaswellasretrofitforexistingbuildingtomeetaminimumBuildingEnergyIntensity(BEI)leveloMandatedisclosureofbuildingenergyperformanceforcommercialbuildingsSTSEDAEE5EstablishanESCOplatformoEstablishapublicESCOplatformtocoordinatepublicbuildingretrofitswithprivateESCOsostreamlinefundingandcreateasinglefinancialmechanismintheformofarevolvingfundthroughESCOplatformSTEE6LaunchamajorEEretrofitinitiativeamongstgovernmentbuildingsoIdentifyenergyinefficientpublicbuildings(e.g.,officeswithBEI>200=~60-70%8ofexistingbuilding)oDevelopmediumtolong-termEEgovernmentbuildingretrofitprogramandimplementprojectviaESCOplatformKKRJKRKeyInitiatives31NationalEnergyTransitionRoadmap(NETR)Exhibit5.1:ProposedstructureofESCOplatformanditscomplementarymeasures1MalaysiaRenewableEnergyRoadmapESCOPlatformTheESCOplatformisanintegratedplatformforgovernmentbuildingretrofitswhichconnectsprivateESCOswithgovernmentprojects,asshowninExhibit5.1.Thecentralroleofthisplatformwouldbetoserveasanintermediarythatenablesamalgamationofgovernmentbuildingretrofittingprojectsandcomprehensivepublic-privatecoordinationindomesticESCOmarket,andsimplifiestheengagementforprivateESCOs.AthrivingESCOecosystemnotonlydrivesretrofitadoptionforbuildings,butfurthermaximisesenergysavingspotentialtoreduceGHGemissions.32NationalEnergyTransitionRoadmap(NETR)RenewableEnergyOverviewFossilfuelsourcesstilldominatethenationalpowerlandscape,andcontributed33%ofMalaysia’sGHGemissionsin2019.Transitioningtolow-emissionREisvitaltodecarbonisethenationalpowersystem.ItisequallycrucialthatMalaysiastrikestherightbalancebetweensustainability,security,andaffordabilityasitnavigatestheenergytrilemmatowardsamoreresilient,low-carbonpowerecosystem.MalaysiaisblessedwithsubstantialREresources,withalmost290GW1oftechnicalpotentialestimatedacrossthecountry.Solarphotovoltaic(PV)technicalpotentialaloneisestimatedtoreach269GW.JustasmallfractionofthisREpotentialhasyetbeenrealised,withjustover9GWofinstalledcapacity,andgreaterthan95%untappedtechnicalpotential.Overthelastdecade,theGovernmentofMalaysiahasestablishedlong-standingprogrammesandsupportingpoliciestocatalyserolloutofREtechnologies.TheseprogrammeshavehelpedstimulatesignificantREgrowthoverthepastdecade.Since2011,solarPVremainsthemostencouragingsegmentofthenationalRElandscapewithaninstalledcapacitycompoundannualgrowthrate(CAGR)of48%,expandingfrom0.1GWto2.6GW.MalaysiahasalsosuccessfullyestablisheditselfasamajorinternationalhubforPVcomponentsmanufacturing,buildingagloballyrecognisedgreenenergyindustry.Sixoutof10oftheworld’slargestsolarPVcompaniesoperateinMalaysia,listingMalaysiaasoneofthetopexportersintheglobalsolarPVindustry.KeytargetsInMay2023,theGovernmentreaffirmeditscommitmenttounlockeconomicopportunitiesthroughalow-carbontransition,settingouttheambitioustargettoachieve70%REinstalledcapacityinthepowermixby2050.NETRaimstoreinforcethisambitionandinformanacceleratedRErolloutbyaffirmingtwoessentialtargets:•Target1:70%REinstalledcapacityshareby2050•Target2:NonewcoalpowerplantInalignmentwiththesestrongREambitions,anacceleratedpathwayisneededtoscaleREuptakeinMalaysiaoverthenextthreedecades.33NationalEnergyTransitionRoadmap(NETR)Exhibit5.2:Projectedpowersysteminstalledcapacitymix2050NETRoutlinesseveralkeyobservationsforthedynamicsofMalaysia’spowermixasthenationprogressesalongthispathway:•Renewableswillconstitutethemajorityshareofinstalledcapacityby2050.However,thecontributionofREtothetotalgenerationmixwillbecomparativelylowerthanfossilfuels,particularlynaturalgas.Thisreflectstheinherentlow-capacityfactorassociatedwithsolar,comparedagainstthehigh-capacityfactorofgas.•Theshareofcoal-firedpowergenerationisexpectedtorampdownovertime,drivenbynaturalretirementtimelinesofexistingcoal-firedpowerplants.Nonewcoal-firedpowergenerationwillbedeveloped,leadingtoalmostcompletephaseoutby2045.•Gasisexpectedtoactasalower-carbontransitionfuelawayfrombaseloadcoal,andwillbethedominantsourceoffuelforbaseloadpower.•Theambitiontoachieve70%REshareofinstalledcapacityby2050isexpectedtobeachieved,predominantlydrivenbysolarPVinstallation.Significantsolarcapacitygrowthisrequiredinthenextthreedecades,with59GWofinstalledcapacityby2050.ChallengesThecurrentchallengesfacedbylarge-scale-solar(LSS)developmenthavehindereditsscalabilityandefficiency.Thescattereddevelopmentapproachandlengthypermittingprocessesleadtohigherfixeddevelopmentcosts,limitingthepotentialofLSSprojectstosignificantlycontributetoREefforts.Regulatorybarriersandatechnology-agnosticLSSbiddingmechanismfurtherimpedesthegrowthofinnovativesolartechnologieslikefloatingsolarandagrivoltaic.TheselimitationshighlighttheneedformorestreamlinedandsupportiveframeworkstoencouragebroaderadoptionofREsolutions.Additionally,issuessuchasprolongedlandacquisitionprocessesandtheexclusivityoftheNetOffsetVirtualAggregation(NOVA)programmetocommercialandindustrialcustomerslimittheadoptionofRE.Thelackofcommonalignmentontiming,quantificationandfundingmechanismofgridinvestmentpresentschallengesinmeetingREtargets.OvercominggridlimitationstoaccommodatehigherREpenetrationisessential,soisthedevelopmentofaTPAregulatoryframeworktoaddresssupply-demandmismatchesforcorporategreenpower.Furthermore,theabsenceofREexchangeplatforminhibitsthepotentialtocapitaliseonpricepremiumsassociatedwithexportingREandsharingofreserves.Transparentpricediscoverymechanismsforwillingbuyer-willingsellerarealsolacking.AddressingthesemultiplechallengesiscrucialinfosteringthegrowthofREonalargerscale.34NationalEnergyTransitionRoadmap(NETR)EnergyTransitionLever:RenewableEnergyCodeInitiativesChampionsRE1Establishsolarparksforaccelerateddeploymentofutility-scalesolaroIdentifysuitableplotsoflandfordevelopmentofsolarparksthroughclosecollaborationamongfederalgovernment,stategovernmentsandutilitycompaniestoenabledecarbonisationofhard-to-abateindustriesoEnhancecurrentLSSmechanismtoimprovefinancialsustainabilityfordevelopersNRECCSTMEEStyECoSSEDARE2PromotefloatingsolarandagrivoltaictechnologyoRemoveexistingregulatorybarrierinhibitingfloatingsolarandagrivoltaic(e.g.toamendexistinghydropowerpowerpurchaseagreements)oRolloutclearguidelinesforfloatingsolarandagrivoltaicoAdoptdistinctbiddingcategoriesinfutureLSSauctiontoensurefaircompetitionRE3ExpandvirtualaggregationmodelforrooftopsolaroExpandvirtualaggregationmechanism(e.g.NOVAprogram)togovernmentandresidentialbuildingsforleasingandaggregationofrooftopspaceandsaletoofftakersoScale-upcorporateandindustrialsolarrooftopprogrammeRE4DevelopplanforacceleratedinvestmentsoftransmissionanddistributionoEstablishamount,timingandmodeoffundingforgridinfrastructureinvestmenttoreducegridconstraintswhilebalancingenergytrilemma(Exhibit5.3)oProvideincentivesforREdevelopmentandpowerstoragefacilitiestoimprovesystemflexibilityandaddressREintermittencyNRECC,ST&TNBMEESty&SEBECoS&SESBRE5DevelopTPAframeworkforsourcingofREoDevelopTPAframeworkwithtransparentmechanismforwheelingfeecalculationtobridgedemand-supplygapforgreenelectricityoAllowsolardevelopersamongstCorporateGreenPowerProgramme(CGPP)tosellexcesspowertotheSingleBuyer-unlockingadditionalsourcesofrevenueandboostinginvestorinterestNRECCST&TNBRE6SetupREexchangehubtoenablecross-borderREtradingoEstablishphysicalenabler(e.g.specialpurposevehicle)toactasthemarketaggregatoroDevelopregulationsforimplementationofREexchangehubandcross-borderREtradingoEstablishneworupgradeinterconnectionwithneighbouringcountriesoMonetiseexcesspowergeneratedthroughbi-ormulti-lateralpowertradingarrangementswithneighbouringcountriesNRECCSTKeyInitiatives35NationalEnergyTransitionRoadmap(NETR)Exhibit5.3:Projectedpowersystemcumulativeinvestments36NationalEnergyTransitionRoadmap(NETR)HydrogenOverviewHydrogenpresentsitselfasaversatileandfuture-proofsourceoflow-carbonenergycarrier.Thetransformativepotentialofahydrogeneconomynotonlyreducescarbonfootprintbutalsooffersneweconomicopportunities,diversifyfuelsources,andfacilitatestheeffectivemonetisationofnaturalresourceendowments,suchassolarandhydroelectriccapabilities.Hydrogenholdssignificantpromiseasanalternativetonaturalgasinvarioussectorsincludingindustry,transportationandpowergeneration,asshowninExhibit6.6.Byharnessingthepotentialofhydrogen,Malaysiacouldbecomeaforerunnerinadvancingtheenergytransitionwhilediversifyingitseconomyandenhancingitsenergysecurity.Exhibit5.4:Hydrogenwithmultiplepotentialsupplychainandend-useapplicationsThreemaintypesofhydrogensettoreshapeourenergylandscape:GreyHydrogen:Mainlyproducedbyreformingfossilfuels,greyhydrogencurrentlystandsasthemosteconomicallyviableformofhydrogen.However,itsproductionreleasesCO2,makingitalesssustainableoption.BlueHydrogen:Greyhydrogenwithanadditionalstepofcarboncaptureandstorage(CCS).Upto90%ofCO2typicallyreleasedduringtheproductionofgreyhydrogeniscaptured.Bluehydrogenservesasacrucialsteppingstonetowardsafullygreenhydrogeneconomy.GreenHydrogen:Generatedfromrenewablesourcessuchashydroelectricorsolarpowerandproducesonlyoxygenasaby-product.37NationalEnergyTransitionRoadmap(NETR)Malaysiahasembarkedonthisjourneytotapintothepotentialofhydrogen.ThisisparticularlyevidentinSarawak,whereprojectssuchasH2ornbillandH2biscus,incollaborationwithJapaneseandSouthKoreanpartnersrespectively,havemadesignificantstrides.TheseinitiativesarecongruentwithSarawak’sHydrogenEconomyRoadmap,focusingonutilisinghydrogentotransformSarawakintoadevelopedstateby2030.Lookingahead,theforthcomingHETRwillfurtheraugmentMalaysia’shydrogenambitions.GlobalProductionofHydrogenbytypeKeytargetsNETRproposesthefollowingtargets:•BlueHydrogen:Tocompletelyphaseouttheuseofgreyhydrogenasafeedstockby2050.•GreenHydrogen:Toproduceupto2.5Mtpaofgreenhydrogenby2050fromREsuchashydroelectricpowerandsolar.•Low-carbonHydrogenHubs:Toestablishonelow-carbonhydrogenhubby2030,andanadditionaltwohubsby2050,bringingthetotaltothreehubs.38NationalEnergyTransitionRoadmap(NETR)ChallengesDespiteitspotential,hydrogenadoptionisnotwithoutchallengesintermsoftechnicalandcommercialfeasibility.Intermsofproduction,thereisalimitedsupplyofelectrolysersintheglobalmarket,lackoftechnicalcapabilitiesandexpertiseaswellasthehighCAPEXtoproducegreenhydrogen.Electrolysers,whichuseelectricitytosplitwatertoproducehydrogenusingREsourcessuchassolarorhydrointhecontextofMalaysiamakeuparoundathirdofthetotalcostofhydrogenproduction.ImprovementsinelectrolyserefficiencyorreductionsinoverallcostscanprovideMalaysiawithasignificantcompetitiveadvantage.Fromapolicyandregulatoryview,thereisalackofpolicysupport,definedstandards,andregulationsgoverninghydrogen.Forinstance,theappropriateoverarchingacttogovernhydrogenmightbeallottedbetweentheGasSupplyAct1993andtheRenewableEnergyAct2011.KeyinitiativesEnergyTransitionLever:HydrogenCodeInitiativesChampionsHY-1Establishlow-carbonhydrogenstandardsandregulationsoAdoptlow-carbonhydrogenstandardtoensureconsistentdefinitionoflow-carbonhydrogenwithglobaltradingpartnersoEstablishdomesticguaranteeoforigincertificationtomeetthestandardsofimportingcountriesoIntroducehydrogen-specificregulationsrelatingtotransportationandstorageoStreamlinepermittingprocessforhydrogenprojectsforexpeditedapprovalMOSTIHY-2DevelopdomesticgreenelectrolysermanufacturingcapabilitiesoFundelectrolyserresearchanddevelopment(R&D)projectsinlocaluniversitiestargetingeffortsthatreducemanufacturingcostsoProvidefinancialincentivesforelectrolyserR&DactivitiesbytheprivatesectorMOSTIHY-3ReduceLevelizedCostofHydrogen(LCOH)forlow-carbonhydrogenoEstablishhydrogenhubstooptimizeeconomicsoflow-carbonhydrogen(Exhibit5.5)oEstablishfinancialincentivesforlarge-scalemanufacturingoflow-carbonhydrogenandelectrolyseroFacilitatepartnershipsbetweenforeignelectrolysertechnologyprovidersandlocalmanufacturersforknowledgetransferMOSTIMITIHY-4Stimulatedemandforlow-carbonhydrogenoExplorebilateralagreementswithkeyimportingcountriestodeveloplow-carbonhydrogenvaluechain,catalyseprojectdevelopmentandsecurelong-termgreenhydrogenofftakesoProvideincentivesfordevelopmentofhydrogenrefuellingstationsandpurchaseofhydrogenfuelcellvehiclesoExplorehydrogenco-firingwithcoalasatechnologytoreduceGHGemissionsintheshorttermMOSTIMITI39NationalEnergyTransitionRoadmap(NETR)Exhibit5.5:KeycharacteristicsofahydrogenhubMulti-40NationalEnergyTransitionRoadmap(NETR)Malaysiagenerates13.9milliontonnesofMSWannually,withthisnumberexpectedtoriseincomingyears.Therefore,MSWrepresentsasignificant,andexpanding,sourceofbioenergy.Ithasthepotentialtoserveasfeedstockforpowergeneration(waste-to-energy)andforbiofuelintransportation.Additionally,MalaysiaalsohasalargebioenergypotentialfromUCOwithanestimatedpotentialofapproximately240kilotonnesperyear.Interventionsonbothdemand-sideandsupply-sidewilloptimisetheuseofbioenergyinMalaysia’senergysystem.Theseeffortssupportenergysecuritybyintroducingbioenergyasanalternativefuelforpowergenerationandasameansforruralelectrificationvialocalmicrogrids.Additionally,bioenergystandsasacarbon-neutralenergysource,pavingthewayfordecarbonisationintransportation,industrialapplicationsandpowergeneration.Moreover,byenhancingtheadoptionofbioenergy,socio-economicgrowthopportunitieswillemergeforSMEsandruralcommunitiesthroughoutthebiomassvaluechain.Exhibit5.6:BioenergyGenerationPotentialinMalaysia(MW)Source:MyRERBioenergyOverviewBioenergycoversbiomass,biogas,andbiofuels,andoffersakeysourceofrenewableprimaryenergysupply.Biomassandbiogasareusedaszero-carbonenergysupplysourcesforpowergeneration.Biofuel,primarilyintheformofbiodiesel,isusedacrossthetransportindustry.In2019,bio-basedproductscontributed1%ofTPES,comprising648kilotonnesofoilequivalent(ktoe)ofbiodiesel,204ktoeofbiomass,and118ktoeofbiogas.Bioenergyiswidelycategorisedbasedonthetypeoffeedstockusedtoproduceit:•First-generationbioenergyisprimarilyderivedfromfoodcropssuchaspalmoil•Second-generationbioenergyisderivedfromnon-foodbiomasssuchasagriculturalwasteresidue,forestresidue,livestockwaste,fisherieswaste,usedcookingoil(UCO),aswellasmunicipalsolidwaste(MSW)•Third-generationbioenergyisderivedfromalgae,andreflectsatechnologicallynascentindustrythatisnotyeteconomicallyviable,buthasthepotentialtoemergeasacompetingfeedstocksourceofbioenergyDuetoconcernssuchaslandcompetitionandfoodsecurity,secondgenerationfeedstockisviewedasthecurrentmostfavourablebioenergyfeedstock.NETRaimstocapitaliseMalaysia’sstrongbioenergypotential,withfocusontwokeysegments,namelyagriculture-relatedbioenergyandnon-agriculturewastesuchasUCOandMSW.PalmoilrelatedresidueconsistofthemajorityofpotentialbioenergygenerationpotentialinMalaysia,asshowninExhibit5.6.Hence,NETRwillplaceitsfocusonaddressingchallengesrelatingtopalmoilbiomassinagriculture-relatedbioenergy.41NationalEnergyTransitionRoadmap(NETR)KeytargetsBioenergyactsasakeyenablertosupportenergytransition.Giventhis,NETRoutlinestwokeytargetstosupportandenableotherenergytransitionlevers:•Increasebiorefinerycapacityto3.5billionlitresby2050•Increasebiomassandbiogaspowergenerationcapacityto1.4GWby2050ChallengesItiscrucialthatMalaysiaaddressesseveralmajorbottlenecksinordertosupportaneffectiveenergytransition.Foragriculture-relatedbioenergytoachieveitsintendedobjectives,thegovernmentrecognisesthesupplyanddemandchallengesthatmustbeaddressed.Supplychallengesincludepotentialconcentrationriskofbioenergyfeedstock,negativeglobalperceptionandacceptanceofpalmoilbiomass,supplysecurityofbiomassandhighaggregationcostofbio-basedfeedstock.Demandchallengesincludelimitedlocaldemandforbioenergy.Fornon-agriculturalwaste,thegovernmentwilladdressfourkeychallengessuchaslowUCOcollectionrate,highusageofopenlandfills,unattractiveeconomicsofwaste-to-energyplantsandlownationalrecyclingrate.KeyinitiativesEnergyTransitionLever:BioenergyCodeInitiativesChampionsBI-1ExplorealternativebioenergyfeedstockoExplorebambooasafeedstockoSupportR&Dofthird-generationbioenergy(algae)KPKBI-2EnhanceattractivenessofpalmoilbiomassoEnhanceacceptanceofpalmoilbiomass(e.g.crudepalmoilandpalmoilmilleffluent)toreduceindirectlandusechange(ILUC)chargesoObtainsustainableaviationfuel(SAF)certificationfrominternationalbodiesKPKBI-3AddresschallengeofsupplysecurityoFacilitatebiomassclusteringtocatalyseaggregationandreduceaggregationcostoScale-upUCOcollectionviaincreasingawarenesscampaignsandUCOcollectionfacilitiesKPKBI-4CatalyselocaldemandforbioenergyoEstablishSAFblendingmandatesstartingwith1%oEstablishB30mandateforlandtransportby2030whenpalmoilgasoil(POGO)spreadsareprojectedtobeeconomicallyviableoUpgradenodalpointateconomicallyfeasibleclustersofmillsoFacilitateincentivesthroughFeed-in-Tariff(FiT)orothermechanismforco-firingincoalpowerplantKPKSEDABI-5ImprovesolidwastemanagementpoliciesoExplorelandfilltaxandquotaorlandfillbantodrivereductioninopenlandfillsoExploreexpansionofde-riskingrevenuesourcesandco-fundingofwaste-to-energy(WtE)plantstoensurefinancialsustainabilityoAcceleraterecyclingtargetandincreaserecyclinginfrastructureinvestmentsKPKT42NationalEnergyTransitionRoadmap(NETR)GreenMobilityTransportationremainsaprominentcontributortoGHGemissionsinMalaysia,primarilydrivenbytheemissionsfrominternalcombustionengine(ICE)vehicles,asshowninExhibit5.7.Thelandtransportsegmentisakeydriveroftheseemissions,accountingfor55MtCO2eq,constituting85%oftotaltransportemissions.Theadoptionofgreenmobilitypracticesandtechnologiesisimperativetoaddressthesesubstantialemissionsburden.Thissectiondelvesintothetransportsector,segmentedintoseveralcriticalcategories,namelylandtransportconsistingoflightandheavyvehicles,aviation,andmarinetransport.Exhibit5.7:Transportsector’sGHGemissionsLandtransport(Lightvehicle)OverviewMalaysiaboastsasubstantialfleetofprivatepassengervehicles,rankingamongnationsintheEastAsianregionwiththehighestcarownership,asshowninExhibit5.8.Thisprevailingsectordynamicdrivessignificantnegativeimpactstothenation,includingelevatedcarbonemissionswithinthetransportsector,urbantrafficcongestion,andcompromisedairquality.Addressingthechallengesrequiresfocusacrossthreekeyareai.e.transportmodalshift,fueleconomyandelectrification.Exhibit5.8:CarownershipinEastAsia667869:543NationalEnergyTransitionRoadmap(NETR)KeytargetsTheNETRbuildsonexistingnationaltargetsoutlinedbytheLowCarbonMobilityBlueprint(LCMB)andtheDTNtargets.By2050,theNETRaimsto:•Elevatethepublictransportmodalsharetoreach60%•AcceleratethepenetrationofxEV(4W)shareofthevehiclefleetto80%•Acceleratethepenetrationofelectrictwo-wheelers’(E2W)shareofthevehiclefleetto80%•FosterrobustlocalEVmanufacturingcapabilitiestoachieve90%localxEVmanufacturing•ContinueimprovementsinICEfueleconomyEnergyTransitionLever:GreenMobility(LandTransport–LightVehicle)CodeInitiativesChampionsGM-LV1Drivepublictransportmodalshareshiftto40%by2040and60%by2050oFinanciallysupporttheongoingorfuturebuildoutofpublictransportinfrastructuretofacilitatemodalshareshiftsoFacilitateelectrificationofpublictransportMOTGM-LV2ImprovelightvehiclefueleconomyoEstablishrobustmethodologytomeasurefueleconomyoStrengthenfiscalpolicymeasuresbasedonfueleconomyoDeterminelong-termfuelstandardsMOTGM-LV3Accelerateelectrificationoflightvehiclessegment(E4W)oIncentiviseinvestmentstobuildlocalmanufacturingcapacityandcapabilityoContinueco-fundingofpubliccharginginfrastructureoImplementstringentemissionsstandardstolimitnon-EEVmanufacturingoExpandproductawarenessandmodelavailabilitiesofEVsoIdentifykeylocalisationopportunitiesinEVsoReduceregulatorychallengesinrampingupEVadoptionincludingforsettingupofcharginginfrastructure(e.g.,right-to-chargeregulation,approvalprocessforchargepointoperatorlicense,reviewofUniformBuildingBy-Laws)MITIGM-LV4Accelerateelectrificationoflightvehiclessegment(E2W)oIncentiviseE2WpurchaseorleasingcosttoexpeditetotalcostofownershipparitywithICE2W,targetingB40householdoFostertheexpansionofE2Wmodelavailabilitythroughlocalmanufacturingorsupportforforeignmanufacturers’setupoMonitorE2WcharginginfrastructuredevelopmentandestablishbatterychargingstandardsforpublicandhomechargingMITIKeyinitiativesChallengesThetransitiontogreenmobilityinlandtransport,specificallyinlightvehicles,ismetwithseveralchallenges.Theseincludeinadequatepublictransportinfrastructureandconnectivity,slowadoptionofsustainablepublictransportationandtheneedtocomplywiththeASEANfueleconomystandards.Additionally,thelackofaffordableEVmodelsandslowexpansionofcharginginfrastructureaswellasdisparityinupfrontcostsbetweenE2WandICE2Whindersthetransition.44NationalEnergyTransitionRoadmap(NETR)Landtransport(Heavyvehicle)OverviewTheheavyvehiclesectorcanbesegmentedintothreesub-categories:(1)lightcommercialvehicles(LCV)weighingbelowsixtonnes,(2)medium-dutytrucks(MDT)weighingsixto15tonnes,and(3)heavy-dutytrucks(HDT)exceeding15tonnes.Incontrasttolightvehicles,thefeasibilityofalternativefuelsforheavyvehiclesremainslimited.Withinthiscontext,MDTsandHDTsarecurrentlyintherespectivepilotphaseofadoptingalternativefuels.ForMDTsandHDTs,thereexistsuncertaintyregardingthepotentialalternativefuelsofthefuture.Addressingthechallengesofenergytransitioninheavyvehiclesectorrequireemphasisinfourkeyareas,namelytransportmodalshift,fueleconomy,biodieselblendingandfuelswitching.EnergyTransitionLever:GreenMobility(LandTransport–HeavyVehicle)CodeInitiativesChampionsGM-HV1Enhancedemand-sidemanagementwithfueleconomyoSetcommonindicatorsandmethodologiestomeasurefueleconomyoEvaluateandutiliseselectedleverstomeetestimatedfuelefficiencytargetoEncouragevehiclereplacementthroughtargetedincentivesMOTGM-HV2ImplementB30biodieselblendingmandateoComprehensivereviewofbiodieselblendingprogrammetoensureachievableblendingrateoB30tobemandatedby2030whenPOGOspreadsareprojectedtobeeconomicallyviableKPKGM-HV3IntroducefuturepowertrainsforheavyvehiclesoTrackadvancementintechnologyoffuturefuelpowertrainoExploretheutilisationofhydrogenforlong-haultrucksandbatteryelectricvehicles(BEV)forshort-to-medium-haultrucksMGTCKeytargetsTheNETRtargetsareguidedbytheDTNandtheLogisticsandTradeFacilitationMasterPlan.Inlinewiththeseframeworks,theNETRaimsto:•Maintainthepathwaytowardsachieving5%shareofrailfreightmodalutilisationbytheyear2030•Embraceemergingregionalbenchmarkspertainingtofuelefficiency•5%ofheavyvehiclesutilisehydrogenby2050•MaintainDTN’sbiodieselblendingtargetstoB30by2030ChallengesThepotentialforgreaterfuelefficiencyimprovementexistsforheavyvehicles,asadvancementintechnologycanleadtosubstantialemissionsreduction.However,itishamperedbypotentialcostimpactofincreasingmandatedbiodieselblendratesthatcouldaffectindustryplayeruptakeabilities,limitedvisibilityintooptimalheavyvehiclepowertrainandlackofavailableinfrastructuretosupportnewfuelsofthefuture.Keyinitiatives45NationalEnergyTransitionRoadmap(NETR)AviationOverviewInlinewiththeParisAgreement,theInternationalCivilAviationOrganization(ICAO)hasadoptedaLong-termGlobalAspirationalGoal(LTAG)forinternationalaviationofnet-zerocarbonemissionsby2050.Similarly,theInternationalAirTransportAssociation(IATA)hascommittedtoFlyNetZeroby2050.Thesuccessofthesetargetsrelyonthreekeylevers,namelyimprovementofoperationalefficiency,adoptionofsustainableaviationfuel(SAF)andadvancementofnewandemergingaircrafttechnologies.The41stICAOAssemblyadoptedtheLTAGforinternationalaviationofnet-zerocarbonemissionsby2050insupportoftheUNFCCCParisAgreement’stemperaturegoal.MalaysiaasamemberstateofICAO,supportsLTAGasacollectiveglobalaspirationalgoal.Inlinewiththisgoal,NETRispoisedtopromotetheadoptionofSAF,recognisingitspotentialtodeliversubstantialreductioninallemissions.SAFrepresentsavaluablelow-carbonopportunityinMalaysia’sjourneytowardsreducingaviationemissions,derivedfrombiologicalfeedstockssuchasvegetableoilsandUCO.WithinSAF’sproductionframework,twoprimarysourceswereidentifiedaskeyalternatives;biofuelsandsynfuels.Hydroprocessedestersandfattyacids(HEFA)emergedasthefront-runnertechnicalpathwayinthenearterm,whilealcohol-to-jet(ATJ)andgasification-integratedFischer-Tropsch(GFT)harbourimmensepotentialandarepoisedtoshapethelong-termSAFlandscape.KeytargetsNETRproposesthefollowingtargets:•AdoptICAO’sLTAGofnet-zerocarbonemissionsby2050forinternationalaviation•Upto47%SAFblendingmandateby2050ChallengesTheaviationsectorinMalaysiafacesseveralkeychallengesinitstransitiontowardsgreenmobility.Thesechallengesincludelackofclarityandguidanceontheimplementationofaviationdecarbonisationleversdespitecommitmenttowardslong-termglobaltargets.Additionally,thereislimiteddemandsignalthatcouldeffectivelycatalysethedomesticproductionofSAF.CompoundingtheseissuesistheargumentsurroundingthesuitabilityofpalmoilasaSAFfeedstockduetoconcernsrelatedtoindirectemissionsandothersustainabilitycriteria.Thisconsequentlyimpactsthelifecycleemissionvaluesinthesector’spursuitofsustainablealternatives.46NationalEnergyTransitionRoadmap(NETR)EnergyTransitionLever:GreenMobility-AviationCodeInitiativesChampionsGM-AV1EstablishoverarchingaviationdecarbonisationroadmapoDevelopaviationdecarbonisationroadmapcollaborativelyalongsidekeystakeholderswithfourmainelements:(i)fosterindustry-drivenadvancementthroughcollaborationwithprivatestakeholders,(ii)addressessentialdecarbonisationlevers,(iii)outlinepolicyinterventiontailoredtoeachlever,and(iv)establishmilestonesandmonitorprogress.MOTGM-AV2ImplementSAFblendingmandateoEstablishaninitial1%SAFblendingmandatetoencouragedemandoIncentiviseinvestmentsinSAFproductionandinfrastructureoDevelopacomprehensiveframeworkforprogressiveescalationofblendingmandatesinthelongrunKPKGM-AV3Undertakepalmoil-feedstockemissionsstudyoRe-evaluateemissionsrelatedtoPOMEandILUCtobolsteradoptionofSAFderivedfrompalmoiloEnsurepalmoilforSAFproductionissourcedinasustainablemannerKPKKeyinitiatives47NationalEnergyTransitionRoadmap(NETR)KeytargetsNETRproposesthefollowingtarget:•Low-carbonfuelpenetrationof40%by2050inmarinetransportGiventhatInternationalMaritimeOrganisation(IMO)hasshifteditsfocusfromdesulphurisationtodecarbonisation,DTN’stargetofLNGpenetrationtargetof25%inmarinetransportwillbedropped.ChallengesTheprogressionofMalaysia’smarinetransporttowardsgreenmobilityencountersseveralchallengesconcerningtheavailabilityofmoresustainablefuelalternatives.Thesechallengesencompassthelimitedcapacityforbiofuelproduction,whichisfurthercompoundedbythegrowingdemandforsustainablebiofuelsformarinebunkering.Furthermore,theearlystageofdevelopmentofe-ammoniatechnologyandthehighcostofhydrogen,presentlyhindereconomicviabilityofe-ammonia.Additionally,transitioningtoe-methanolnecessitatesadjustmentsinvesseldesignsandenginestoguaranteethetechnicalfeasibilityofthispromisingfuturefuel.MarineOverviewDecarbonisationofthemarinetransportsectorpresentsanopportunityforMalaysiatopositionitselfasagreenfuelbunkeringhubsinceMalaysia’sportsaccountfor24%to26%ofannualcontainerthroughputwithinASEAN.Thissectorcurrentlyemploysacombinationoftwoprimaryfuelcategories—dieselandfueloil.Fueloilcanbeadditionallycategorisedintovariantssuchashighsulphurfueloil(HSFO),lowsulphurfueloil(LSFO),andotherdistillatesincludingmarinegasoil(MGO).Theevolutionofmarinetransportsectoroperationsisexpectedtoincludeadiversifiedfuellandscape,characterisedbythecoexistenceofe-ammoniaande-methanol,withoutadefinitiveconsensusonwhichfuelwillemergeastheindustryfrontrunnerinthelongterm.Bothe-methanolande-ammoniapresentpromisingprospectsforfosteringeconomicexpansioninMalaysia,giventhenation’sstrategicaspirationswithinthehydrogeneconomy.Currently,Malaysia’sjourneyentailsagradual,medium-tolong-termshifttowardstheadoptionofe-methanolande-ammonia,contingentupontheircommercialviability.Biofuelswillcontinuetobeutilisedasashort-termsolutionuntile-ammoniaande-methanolreachlarge-scalecommercialviability.48NationalEnergyTransitionRoadmap(NETR)EnergyTransitionLever:GreenMobility-MarineCodeInitiativesChampionsGM-MA1UnlockmarketopportunitiesofbiofuelinmarinebunkeringoResearch,conductpilots,anddrivetechnicalandcommercialviabilityofdomesticbiofuelsusageinonboardequipmentandmarinebunkeringfueloEncourageearlyadoptionofdomesticbiofuelsinshippingindustrytopositionbiofuelforfuelexportsKPKGM-MA2UnlockmarketopportunitiesoffuturefuelsinmarinebunkeringoKeeptrackandselectivelyadoptpilotprojectsforalternativefuelsanddeterminecountrystrategyforthesefuelsascommercialviabilityisreachedoEnhancecompetitivenessofdomesticportsinfuturefuelmarinebunkeringbyprovidingincentives,loweringcostsoffuelsupplyandenhancingrefuelingefficiencyoDevelopplanfordomesticcoastalshipstoadoptfuturefuelsinthemedium-tolong-termMOTKeyinitiatives49NationalEnergyTransitionRoadmap(NETR)CarbonCapture,UtilisationandStorageOverviewCCUSplaysapivotalroleinenergytransition.TheIEApositsthatreachingnet-zerowillbeextremelychallengingwithoutCCUSanditsrolewillextendtoalmostallpartsoftheglobalenergysystem.ThecontributionofCCUSwillgrowovertimeastechnologyimproves,costreducesandcheaperabatementoptionsinsomesectorsareexhausted.Globally,thereisagrowingtrendtowardsbuildingarobustCCUSecosystemusingaclusterorhubstrategy.ThismethodencouragesemitterswithinthesameclustertoinvestandutilisesharedCCUSinfrastructure,suchasCO2pipelinesandstoragefacilitiestoreducetheoverallcostofCCUS.BasedontheIEA’sprojections,thereisanoticeabledisparitybetweenthecurrentcapacityofCCUSandtheanticipatedfutureneeds.ThecurrentgapsinCCUSadoptioncanbetracedbacktoitsnascentstageandhighimplementationcosts.EstablishingcomprehensiveCCUSsystemsencompassingCO2capture,transport,andstorage,demandssubstantialcapitalinvestment,thusposingasignificanthindrancetowidespreadadoption.However,withthecostsofCCUStechnologiesonasteadydecline,andgiventheforecastedriseincarbonpricing,theeconomicviabilityofCCUSispredictedtogainconsiderablemomentuminthecomingyears.ViabilityofCCUSineachindustryisinfluencedbyfactorssuchasregulations,carbonpricingandproductionprocesses.Emission-intensiveindustries,especiallyinregionswithstringentregulationsandclearpoliciesi.e.carbontax,aremoreinclinedtoadoptCCUStomitigatetheircarbonfootprint.50NationalEnergyTransitionRoadmap(NETR)Asanenergyproducingcountry,thereisapressingneedforMalaysiatobalanceeconomicinterests,energysecurity,andenvironmentalsustainability.CCUSwillhelpMalaysiainmeetingnet-zeroaspirationbyreducingcarbonemissions,especiallyinhard-to-abateindustries.UtilisingcapturedCO2alsocatalysestheemergenceofnewindustries,fuellingMalaysia’sgreengrowthforclimateresilience.Over20countriesworldwidehaveincorporatedCCUSintotheirplanstoreachnet-zeroemissions,highlightingitsprominentroleinenergytransition.WhileMalaysiahasyettodeveloppolicyandregulatoryframeworkonCCUS,Budget2023hasintroducedseveraltaxincentivesforcompaniesundertakingin-houseCCSactivity,companiesundertakingCCSactivityandcompaniesusingCCSservices.ThisapproachhighlightsCCS’roleasanewsourceofeconomicgrowthandinachievingnet-zeroGHGemissions.ChallengesMalaysiafaceschallengesindevelopingCCUSduetothetechnology’snascentstatus.ThecountrylacksregulatoryframeworkandgovernancenecessarytogalvaniseCCUSdevelopment.GiventhehighcostsassociatedwithCCUStechnology,incentivesandaccesstofundingwithcompetitiveratesareneededtomotivateemitterstoadoptCCUS.Internationally,governmentsupporthasbeentheprimarycatalystfortheadoptionofCCUSamongstemittersandforthedevelopmentofCCUShubs.MalaysiahasyettoaccedetoregulationssuchastheLondonProtocolandtheEUCCSDirectivetoenablethetransboundarytransportandstorageofCO2.AlthoughtransboundarytransportandstorageofCO2isapotentialsourceofgrowth,MalaysiahasnotdevelopeditsdomesticpolicyonCCUStoallowfortheintegrationofinternationalregulationsintodomesticregulatoryframework.FortheseamlessimportandstorageofCO2withinMalaysianborders,aligningwiththeseestablishedinternationalregulationsisparamount.WhilstthemainobjectiveofcapturingCO2throughCCUSisgearedtowardsstorage,thereareinstanceswheretheutilisationofCO2provesbotheconomicallyandcommerciallyviable.Suchopportunitiesarestilllackinganddeserveexploration.Strategicgovernmentincentivesandspecificmandatescanactascatalysts,encouragingtheuseofCO2insectorssuchasprecastconcrete,ureaproduction,andotherapplicableareas.KeytargetsNETRproposesthefollowingtargets:•By2030:oDevelop3CCUShubs(2inPeninsularMalaysia,1inSarawak)oTotalstoragecapacityupto15Mtpa•By2050:oDevelop3carboncapturehubsoTotalstoragecapacitybetween40to80Mtpa51NationalEnergyTransitionRoadmap(NETR)••••••Exhibit5.9:InternationaltransboundaryCO2provisionsandlessonsforMalaysiaKeyinitiativesEnergyTransitionLever:CarbonCapture,UtilisationandStorage(CCUS)CodeInitiativesChampionsCC1DevelopCCUS-specificpoliciesandregulationsoDeveloppolicyandregulatoryframeworktofacilitatetheimplementationofCCUSprojectsoEstablishgovernancestructureofCCUSbyclearlydefiningrolesofeachministryandagencyoAmendexistingregulations(e.g.ExclusiveEconomicZoneAct1984[Act311]andNationalLandCode)toincorporatekeyenablersforCCUSdevelopmentMinistryofEconomyCC2StrengthenCCUSadoptionthroughprovisionofincentivesacrossallrelevantsectorsandfacilitatehubdevelopmentoEstablishcarbonpricinginstrumenttodrivetheadoptionofcarboncapturetechnologyforstationaryemittersoEnhanceincentivestoreducecost,enableaccesstofundingandencourageadoptionofCCUStechnologies(e.g.,publiccatalyticfunds,taxcredits,contractfordifference)MOFMinistryofEconomyCC3CC3-FacilitateCCUSHubinfrastructuredevelopmentoExplorecollaborationwithpotentialinvestorsandfinancierstofundandcatalyseinvestmentsinCCUsinfrastructureforhubdevelopmentMinistryofEconomyCC4EstablishtransboundaryCO2agreementoNegotiateandintroducetransboundaryCO2regulatoryagreementencompassingtheprovisionsontransboundarymovementandstorageofcarbon,liabilityandcostsharing(Exhibit5.9)MinistryofEconomyCC5PromotelocalutilisationofCO2inindustryoSetspecificmandateswithinusecase(e.g.curedconcreteandurea)MITI52NationalEnergyTransitionRoadmap(NETR)TheMinistryofEconomyhasreceivedanextensivelistofproposalsforenergytransitionprojectsandinitiativesfromministriesandbusinesses.BasedontheevaluationprocessandguidingprinciplesestablishedbyNETR,10flagshipcatalystprojectsandinitiativeswereidentified.TheseflagshipprojectsareexpectedtogenerateanestimatedtotalinvestmentofmorethanRM25billion,create23,000jobopportunitiesandreduceGHGemissionsofmorethan10,000GgCO2equivalentperyear.Theflagshipcatalystprojectsandinitiativeswillhaveseveralmodalitiestodemonstratethevaryingleveloftechnologyandsolutionsneededtoaddressenergytransition.Assuch,eachmodalitywillbechampionedbydifferententitiesdisplayingtheiruniqueapproachinsupportingMalaysia’senergytransitionadvancement.The10flagshipcatalystprojectsandinitiativesandtheirimplementationmodalitiesareoutlinedinExhibit6.1.Section6:NETRFlagshipCatalystProjectsandInitiatives53NationalEnergyTransitionRoadmap(NETR)Exhibit6.1:FlagshipcatalystprojectsandinitiativesEnergyTransitionLeversFlagshipModalitiesChampionEnergyEfficiency(EE)EfficientSwitchEnergyEfficiencyandConservationAct(EECA)TheEnergyEfficiencyandConservationBilltoregulateenergy-intensiveusers,buildingsandproductswillbetabledinParliamentinthefourthquarterof2023.EnergyAuditforRailSectorRailwayoperatorstoperformenergyauditexerciseundertheEnergyAuditConditionalGrant(EACG2.0)aimedatestablishingthecurrentenergyconsumptionbaseline,identifyingpotentialenergysavingsintheirpremisesandloweringutilitycosts.NRECCMOTRenewableEnergy(RE)RenewableEnergyZone(REZone)IntegratedREZoneAlarge-scaleintegratedsustainabledevelopmentspanningtheentireenergysupplychain,fromgenerationandenergystoragetoefficientdemandmanagementandconsumption.ApilotREZonewillbeestablishedencompassinganindustrialpark,zero-carboncity,residentialdevelopmentanddatacentre.SolarParkCentralisedLSSparksco-developedbyTNB,inpartnershipwithSMEs,cooperatives,andstateeconomicdevelopmentcorporations.Theseparkswillconsistof100MWdeploymentpersiteacross5sitesinseveralstates.HybridHydro-FloatingSolarPV(HHFS)Developmentof2500MWHHFSpotentialatTNBhydrodamreservoirswillincreaseREgenerationcloseto24-houravailability.Thehydroplantactsasenergystoragebyconservingthewaterinthereservoirduringpeakhoursanddischargingitduringnon-peak,whileprovidingquickresponsetotheduckcurve.Lowerinvestmentbyutilisingexistinghydroinfrastructureascomparedtobatteryenergystoragesystem(BESS)andsolarPV.PotentialscalingupforfuturegreenhydrogenfeedstockincollaborationwithotherhydrogenproducerssuchasGentariasthegreenelectronofftaker.ResidentialSolarTheconstructionof4.5MWsolarcapacityacross450homesinCityofElminaandBandarBukitRaja.Upto10kWsolarcapacityperhousethroughrooftopleasingwithofftakewithinthetownshipbyhigh-demandusersfromthecommercialorindustrialsector.KhazanahNasionalBerhadTNBTNBSimeDarbyPropertyEnergyStorageEnergyStorageSystem(ESS)Developmentofutility-scaleESStoenablehigherpenetrationofvariableREinMalaysia.NRECCEnergyCommissionEnergySecureSabahEnergySecurityInitiativeAnintegratedinitiativeisunderwaytosecurethelong-termenergysupplyandsupportthesocioeconomicdevelopmentofthestate.Thisincludes:thedevelopmentofLSSandsmallhydropowerplants;theformulationofpolicyandregulatoryframeworkonbiowastetoensureaconsistentsupplyoffeedstock;andthefeasibilityofgeothermalforpowergeneration.EnergyCommissionofSabah54NationalEnergyTransitionRoadmap(NETR)EnergyTransitionLeversFlagshipModalitiesChampionHydrogenGreenHydrogenSarawakHydrogenHubImplementationofthreeintegratedprojectstoproducegreenhydrogenwillpropelSarawakasaregionalgreenhydrogenhub.TheseprojectsinvolvethedevelopmentofagreenhydrogenproductionplantinKuchingby2025fordomesticuse,andtwoplantsinBintuluby2027,mainlyforexportpurposes.SarawakStateGovernmentthroughSEDCEnergyiscollaboratingwithstrategicpartnerstodevelopthestateintoagreenhydrogenhub.SEDCEnergyHydrogenforPowerCo-FiringofHydrogenandAmmoniaGreenhydrogenandammoniaco-firingincollaborationwithPETRONAStodecarboniseTNBgenerationplants.TNBBioenergyBiomassDemandCreationBiomassClusteringDevelopmentofbiomassclusterswithacentralisedplantusingaggregatedfeedstockfrommultipleneighbouringmills.Biomassclusteringisexpectedtoimproveeconomiesofscaleaswellassecuringlargerandmorereliablefeedstock.BiomassCo-firingCo-firinginitiativeattheexisting2100MWTanjungBinPowerPlantbyburningbiomassalongwithcoal.Biomasssourcesincludeemptyfruitbunch(EFB)pellets,woodchips,woodpellets,bamboopellets,coconuthuskandricehusk.Apilotphaseofco-firingwillcommencein2024withthescale-uppotentialtoaminimumof15%biomassco-firingcapacityby2027.KPKNRECCSEDAKPKMalakoff55NationalEnergyTransitionRoadmap(NETR)EnergyTransitionLeversFlagshipModalitiesChampionGreenmobilityFutureMobilityEVChargingStationsInstallationof10,000EVchargingstationsby2025alonghighwaysandatselectedcommercialbuildingsincollaborationwithstrategicpartners,amongothers,TNB,PlusMalaysiaBerhad(PLUS),PermodalanNasionalBerhad(PNB),GentariandSunwayGroup.MobileHydrogenRefuellingStationIntroductionofthefirstmobilehydrogenrefuellingstationfortransportationinPeninsularMalaysia,incollaborationwithNanoMalaysiaBerhad,PETRONAS,UnitedMotorWorks(UMW)andtheMGTC.PublicTransportElectrificationThisprojectinvolveselectrificationoffirstandlastmilepublictransportandupgradinginfrastructureandelectricallinesatbusdepotsforcharging,withmaintenance,repairandoverhaul(MRO)opportunitiesforlocalSMEs.SolarPhotovoltaic(PV)InstallationforRailOperationsTheRailSectorEnergyManagementandRenewableEnergy(EMRE)ActionPlanentailstheinstallationofSolarPhotovoltaic(PV)systemsfornon-tractionelectricityusageinrailoperationssuchasstationsanddepots.MITIMOSTIMOTPrasaranaMOTFutureFuelBiofuelsHubAbio-refinerywillbedevelopedinPengerang,Johor,toserveasacatalystforcreatinghubstoproducearangeofbio-basedproducts,includingSAF,hydrotreatedvegetableoil(HVO),advancedsustainablefuel(ASF)andbiochemicals.PETRONASCCUSCCSforIndustryRegulatoryFrameworkDevelopmentofpolicyandregulatoryframeworktofacilitatetheimplementationofCCUSprojects,includingtransboundarycarbonmovement.KasawariandLangLebahCCSImplementationofCCScatalystprojectsforKasawariandLangLebahhigh-CO2gasfieldsincollaborationwiththeSarawakGovernment,whichareexpectedtobeinoperationby2026and2028respectively.CCStechnologywillbeusedtocaptureCO2fromthegasproductionfieldandstoreitinthedepletedfields.MinistryofEconomyPETRONASCOCOCOCOCO56NationalEnergyTransitionRoadmap(NETR)Aseriesofcross-cuttingenablerswillbevitaltoexpediteMalaysia’senergytransitionjourney.Theseenablersassumeacrucialroleinaddressingunderlyingstructuralimpedimentsanddisparitiesinherentinthenation’sshifttowardsalow-carbonenergymix.Assuch,fivekeycross-cuttingenablersandtwelveinitiativesthatseamlesslyalignwithenablershighlightedinDTNhavebeenidentified(Exhibit7.1).Section7:Cross-CuttingEnablersExhibit7.1:Cross-cuttingenablersandinitiatives57NationalEnergyTransitionRoadmap(NETR)Exhibit7.2:Malaysia’senergytransitionfinancingneedsFinancingandInvestmentsOverviewFinancingMalaysia’senergytransitionconstitutesasignificantundertakingthatrequirestheadeptutilisationofawidespectrumoffundingchannels.Theoverarchingobjectiveistoachieveenergytransitiontargetswhileensuringfiscalsustainability.ThisenableridentifiestheexistingfinancinggapsandrecommendsaseriesofinitiativesaimedatexpeditingtheinfluxofcapitalinvestmentsandleveragediversecapitalpoolstoachieveNETRtargets.EstimationofinvestmentneedsNETRanticipatesthatMalaysiawillrequireaninvestmentofRM1.2trilliontoRM1.3trillionby2050,basedonthefinancialrequisites,asshowninExhibit7.2.Inthisdecade,18%offundingisrequiredprimarilyinREpowergenerationandgreenmobility.InvestmentinREpowergenerationentailstheexpansionofsolarPVandhydropower,andstrengtheningofgridinfrastructure.Forgreenmobility,theinvestmentsarefortheexpansionofpublictransportation,amplificationofdomesticEVproductioncapacities,andincreasedmanufacturingofEVcharginginfrastructure.HydrogenandCCUStechnologieswillalsorequiresignificantinvestmentsconsideringtheirnascentstatus,necessitatingsubstantialscale-upefforts.Thecommitmentinimprovingenergyefficiency,advancingsustainableaviationandmarinetransportcapabilities,andestablishinggreenskillingprogrammesalsodemandssubstantialinvestments.Theutilisationofdiversecapitalpoolswillbeleveragedtofacilitateenergytransition,asshowninExhibit7.3.Energytransitionprojectsarecategorisedaccordingtotheirpotentialfinancialyieldsandthenatureoffundingthatcouldbemobilised.58NationalEnergyTransitionRoadmap(NETR)FocusingonMalaysia’simmediateenergytransitionneeds,asignificantproportionofprojectswillbeclassifiedasmarginallybankableoryieldingbelow-marketreturns.ThisisprimarilyduetosignificantinvestmentsintheEVvaluechain,hydrogeninfrastructure,CCUStechnologies,aswellastherapidadvancementoftheenergyefficiencysectorinMalaysia,whichmostlyareatanascentstage.InvestmentsinREpowergeneration,suchassolarPVandhydropower,alongwithgridenhancements,arecategorisedascommerciallyviableorwithmarket-ratereturns.Theseprojectstypicallypossessthecapacitytosecurefundingfromcapitalmarketsanddomesticfinancialinstitutionsbutrequirerobustpolicysupporttoaccelerateadoption.Projectsthatyieldnofinancialreturnspertaintoinvestmentsfulfillingpublicserviceobligationsorthosethatarealignedwithasocial-focusedmandate.Thisencompassesinitiativessuchasupskillingandreskillingprogrammesaimedataidingtheworkforceimpactedbytheenergytransitionaswellasenhancingnationwidepublictransportationinfrastructure.ChallengesGiventhatenergytransitionisacapital-intensiveendeavour,energytransitionprojectsarestillsurroundedbyapprehensionsonthecommercialviabilityofinitiativesthatmightbecharacterisedastechnologicallyimmatureorthosethathavenotyetreachedcommercialscale.InthecontextofMalaysia,theunprovenmarketsrefertoCCUS,greenhydrogen,BESSandSAF.Certainprojectsaredeemedsmall-scaleinitiativesandfailtoattracttheattentionofmajorinvestorsandfinancialinstitutions.Thistranslatesintohigherdevelopmentcoststhatdirectlyaffecttheprojectdevelopers.Notableexamplesofprojectsareenergyefficiencyandbioenergy,whichfrequentlyfacescalabilitychallenges.Exhibit7.3:Short-termnationalenergytransitionfinancingneeds59NationalEnergyTransitionRoadmap(NETR)KeyInitiativesEnabler:FinancingandInvestmentCodeInitiativesChampionsEN1LaunchaNationalEnergyTransitionFacility(NETF)oLaunchinitialseedfundamountingtoRM2billionoExplorethecatalyticblendedfinanceplatform,aimedatexpeditingthemobilisationanddeploymentofcapitaltoenhancetheaccessibilityoffunds,streamlineinvestmentprocesses,andensureaseamlessflowoffinancialresourcestowardsenergytransitionprojects.MinistryofEconomyEN2MobiliseandattractprivatecapitalforenergytransitionsectorsoAttractprivatecapitalfromthegreenforeigndirectinvestments(FDI),internationalanddomesticcapitalmarkets,venturecapital(VC),andprivateequity(PE)oAccelerateadoptionofinnovativesustainablefinanceinstrumentse.g.sustainability-linked/green/SDGfinancing,bondsandsukuk,blendedfinancestructuresoDevelopcapacitybuildingprogrammetoupskillFIsandfundmanagersincollaborationswithJointCommitteeonClimateChange(JC3)andfinancialindustrytraininginstitutesoScale-upsustainablefinanceliteracy,awarenessprogrammesandtechnicalcapacitybuildingtargetingSMEsbyJC3includingthroughpilotprogrammessuchasGreeningtheValueChainoExpediteVCinvestmentsinhigh-risk,early-stageenergyventuresinsuitableareasMITIBNMSCEN3RolloutcarbonpricingmechanismoImplementaphasedandmeticulouslycalibratedcarbonpricingmechanismthatsendsclearmarketsignalsondecarbonisationwhilesimultaneouslycreatinganadditionalcapitalpoolforinvestmentsinenergytransitionoRolloutcommunicationstrategytoseekbuy-infromthebusinessesandrakyatMOFNRECCSomeprojectsarefacedwithimplementationriskssuchasconstruction-relateduncertainties,developmentalrisks,andthevulnerabilityofofftakerarrangements.Examplesincludehydropowerandbioenergy,whichfurthercomplicatetheprojects’roll-out.Thelastchallengeisthescarcityofviableprojects.Theexistingpipelineoffeasibleenergytransitioninitiativesfailstoprovideclearandcompellingopportunitiesforprospectiveinvestorsandfinancialinstitutions.Consequently,thediscrepancyinareasdeemedreadyforcommercialfinancing,suchassolarfarmspersistsbetweenshovel-readyprojectsandtheactualallocationoffinancialresources.60NationalEnergyTransitionRoadmap(NETR)PolicyandRegulationsOverviewTheDTNplayspivotalroleasthefoundationalcompassandprincipalpolicyreferencefortheenergysector,whileNETRoperationalisesDTNforanacceleratedenergytransition.Strengtheningthegovernanceandregulatoryframeworkwillensurecontinuedgrowthandenhancedinnovationalongwiththeevolvingcompetitionandmarketdynamics.ChallengesTheenergytransitionisconfrontedwithasetofintricatepolicyandregulatorychallenges.Economicdistortionsarisingfromenergysubsidiescanhindertheadoptionofsustainableenergypracticesandtechnologies.Balancingenergyequityforlow-incomehouseholdsposesanothercomplexissue,requiringpoliciesthatensureaccesstocleanenergywithoutexacerbatingfinancialburdens.Moreover,addressingtheincreasingdemandfornaturalgaswhilestrivingforreducedrelianceonfossilfuelsnecessitatescarefullydevelopedregulationsthatsteertheenergylandscapetowardsasustainablefuture.KeyInitiativesEnabler:PolicyandRegulationCodeInitiativesChampionsEN4RationaliseenergysubsidiesoDevelopatargetedsubsidymechanismbasedonneedsoEnsuretransparencyandeffectivecommunicationonsubsidyremovaloLeveragePangkalanDataUtama(PADU)tofacilitatetargetedsubsidiesMOFMinistryofEconomyKPDNNRECCEN5LaunchtheNaturalGasRoadmap(NGR)oOptimisecountryvalue-addofindigenousnaturalgasresourcesoEnhancecompetitivenessofupstreamoilandgastomeetdomesticdemandandenergytransitionneeds(sustainabilityandsecurity)oPlanandexecutetimely,andcost-effectivebuild-outofgasinfrastructureMinistryofEconomy61NationalEnergyTransitionRoadmap(NETR)HumanCapitalandJustTransitionOverviewThegrowthofcapacityandcompetenciesiscrucialinaugmentingtheenergysector’sworkforce.Theabilityoftheworkforcetoadaptwillalsoplayakeyroleinensuringemploymentgrowthandajustenergytransition.Intermsofsocioeconomicramifications,alocalisedandfocusedapproachisneededtoaddressenergytransitionchallengesatanationalandstatelevel,asshowninExhibit7.4.Thisunderscoresthenecessityforcoordinatedeffortswithineachstatetoeffectivelyaddressandleveragegreeneconomicprospectsandchallenges.Exhibit7.4:IllustrativeviewofgreeneconomicopportunitiesandchallengesatastatelevelChallengesNavigatingthehumancapitalaspectsoftheenergytransitionpresentsmultifacetedchallenges.ThediminishingjobopportunitiesinGHG-intensivesectorslikeoilandgas,ICEvehiclemanufacturingandfossilfuel-basedpowergenerationnecessitatestrategiestotransitionworkerstonewemploymentopportunities.Bridgingthegapbetweenexistingworkforceskillsetsandtheemergingdemandforgreenskills,suchasinhydrogenandCCUS,requirestargetedtrainingandupskillinginitiatives.Moreover,addressinglowenergyliteracylevelsisvitaltoensureinformeddecision-makingandactiveparticipationinthetransitiontoamoresustainableenergylandscape.Anequitableandjustenergytransitionmustaddressthesechallengestocreateaworkforcepreparedforthefuturewhileupholdingsocialinclusivity.62NationalEnergyTransitionRoadmap(NETR)KeyInitiativesEnabler:HumanCapitalandJustTransitionCodeInitiativesChampionsEN6EstablishgreenskillstaxonomyandensurestrategicworkforceplanningoDevelopgreenskillstaxonomythatdefinestheessentialskillsneededforajusttransitiontowardsasustainableworkforceoFacilitateastrategicalignmentbetweenworkforcedemandandsupplybasedonthegreenskillstaxonomyandcompetencystandardsofpresentandfutureindustryrequirementsoEstablishataskforcetodevelopstrategicplansforthefutureoftheenergysector’sworkforceSector-specificagenciesEN7DevelopandrollouttargetedgreenskillingprogrammesoImplementreskillandupskillprogrammesforaffectedworkforceoEstablishstrategicpartnershipswithlocaluniversitiesandindustrypartnerstoenhancegreenskillsoEnhanceTVETandtertiaryprogrammesfornewgreensectorsSector-specificagenciesEN8DevelopandimplementcommunitysupportprogrammesoDevelopaclearmitigationandcommunicationplanforaffectedcommunityandregionoImplementtargetedcommunitysupportprogrammesSector-specificagenciesEN9Enhanceenergyliteracyandenergyefficiencyawarenessamongstudents,SMEsandconsumersoStrengthentheMalaysiaEnergyLiteracyProgram(MELP)tocatalyseasignificantchangeinpublicperceptionandbehaviourtowardsenergyutilisationoEncourageSMEstoincorporateEEpracticesintheirbusinessoImplementenergyliteracyandawarenessprogrammesateducationalinstitutionsSector-specificagenciesTNBSummaryofkeyinitiativesforhumancapitalandjusttransition63NationalEnergyTransitionRoadmap(NETR)TechnologyandInfrastructureOverviewTechnologyisakeydeterminantofsuccessinunlockingneweconomicopportunitiesacrossthenation’senergytransitionjourney.Itiscrucialtofacilitateconditionstofosterinnovationandnewtechnologyapplicationstocreatetechnologicaladvantagesacrosstheenergysector.Inaddition,thescalingupofmajorenergyinfrastructureinvestmentswillberequiredtosafeguardenergysecurity,improveenergyaccessandenhanceenvironmentalsustainability.Supportwillalsobeneededtoencourageinnovationespeciallyfortechnologiesatearlystagesofthematuritycurve,butwithhighpotentialbenefitsandscalability.ChallengesTheenergytransitionencounterssignificanttechnologicalandinfrastructurechallenges.Theslowgradualuptakeofsustainablepracticeswithindomesticindustriesimpedestheswifttransitiontocleanerenergysources.TheabsenceofarobustenergyknowledgeplatformtailoredforSMEsandbusinesseshindersthedisseminationofeffectiveenergytransitionstrategies.Addressingthesehurdlesisessentialtoacceleratetheintegrationofsustainabletechnologiesandtheestablishmentofsupportiveinfrastructure,fosteringamoreefficientandeffectivetransitiontowardsagreenerenergylandscape.KeyInitiativesEnabler:TechnologyandInfrastructureCodeInitiativesChampionsEN10AcceleratedevelopmentofdomesticindustriesforgreenmanufacturingandadoptionofgreentechnologiesoDevelopprogrammestailoredtosupportSMEinvolvementinthegreenvaluechainintheformoftechnicalexpertiseandfinancialsupportMITIEN11DevelopaNationalEnergyKnowledgeHubforpublicaccessoEstablishaone-stopcentreforenergytransitiondata,informationandprogrammesunderthepurviewofMTNMinistryofEconomy64NationalEnergyTransitionRoadmap(NETR)Enabler:TechnologyandInfrastructureCodeInitiativesChampionsEN12EstablishNationalCommitteeonEnergyTransitionundertheNationalEnergyCounciloIntroducetheNationalCommitteeonEnergyTransition(NCET)spearheadedbytheMinisterofEconomytomonitortheimplementationofNETRprojectsMinistryofEconomyExhibit7.5:NationalCommitteeonEnergyTransitionundertheNationalEnergyCouncilGovernanceandImplementationEnergysectorgovernanceandplanningrepresentacomplexandmulti-facetedundertakingduetothewidescopeandcross-sectoralnatureofenergyrelateddecision-making.Theenergysectorisgovernedbyministries,agenciesandregulatorsbasedonresponsibilitiesdefinedinrespectivelegislations.Energydemandplanningintersectsacrosskeysectors,namelytransport,industrial,residentialandcommercial.Meanwhile,cross-sectorcollaborationwithrelevantstakeholdersisneededforenergysupplyplanningcoveringmultipleenergysourcessuchasoil,naturalgas,coalandRE.ChallengesTheintricatenatureofenergy-relatedconcernsandthefragmentedgovernanceofenergymattersposesignificantchallengesduringenergytransition.Currently,theenergysectorisgovernedbyvariousministrieswithdifferentsectoralpoliciesandpriorities.Thishasledtoinefficientenergyplanninganddecisionmaking.KeyInitiatives65NationalEnergyTransitionRoadmap(NETR)TheNETRiscriticalforMalaysiatonavigatethecomplexityofenergytransitiononalargescale,especiallytheshiftfromatraditionalfossilfuel-basedeconomytoahigh-valuegreeneconomy.Itwillalsoreinforcethecountry’scommitmentasaresponsiblestakeholderaimingtoachieveitsnet-zeroGHGaspirationsasearlyas2050,despitecontributing0.8%toglobalGHGemissions.Futureenergypathwayswillbenationallydeterminedandbasedonthecountry’suniquecircumstancesandpriorities.Overthenextthreedecades,ResponsibleTransitionpathwaysetsthedirectiontomeetgrowingenergyneedsandreduceGHGemissions.Malaysiawillfocusonimprovingenergyefficiency,enhancingREandbioenergy,reducingGHGemissions,greeningmobility,acceleratinginnovationtocommercialisehydrogenandCCUStechnologiesaswellasstrengtheningenergyinfrastructure.Theseactionswillbeaccompaniedbystrategiestounlockcapitalflowsinsupportoftheenergytransitionwithenergysecurityasthecornerstone.NETRwillsettheagendaandsignaltothemarkettheintendeddirectionofthegovernmentinexploringnewenergysources,developingfuturecapabilitiesandshapingmarketdemandingreeneconomy.ThisfurthersupportsMalaysia’scommitmenttoajustenergytransitionthatbenefitstherakyat,createsbusinessopportunitiesandsupportstechnologicalinnovationthroughacoordinatedwhole-of-nationapproach.MinistryofEconomyPUTRAJAYAAugust2023Section8:Conclusion66NationalEnergyTransitionRoadmap(NETR)AbbreviationsDefinitionASFAdvancedsustainablefuelATJAlcoholtoJetACAlternatingcurrentAPApprovedPermitAPAECASEANPlanofActionforEnergyCooperationAPGASEANPowerGridAZECAsiaZeroEmissionCommunityADBAsianDevelopmentBankIF-CAPInfrastructureFinancingandCapitalMarketProductsforAsia-PacificASEANAssociationofSoutheastAsianNationsBNMBankNegaraMalaysiaBEVBatteryelectricvehiclesBESSBatteryenergystoragesystemB40Bottom40%incomegroupBEIBuildingenergyintensityBAUBusinessasusualCVCalorificvalueCAPEXCapitalexpenditureCBAMCarbonBorderAdjustmentMechanismCCSCarboncaptureandstorageCCUCarboncaptureandutilisationCCUSCarboncapture,utilisationandstorageCO2CarbondioxideCORSIACarbonOffsettingandReductionSchemeforInternationalAviationCIRChemicalIndustryRoadmapCCPTClimateChangeandPrinciple-basedTaxonomyCCGTCombinedcyclegasturbineCAGRCompoundannualgrowthrateCGPPCorporateGreenPowerProgrammeDFIsDevelopmentfinanceinstitutionsDCDirectcurrentUSD/GJDollarpergigajouleproducedDefinitionECRLEastCoastRailLinkE4WElectricfour-wheelersE2WElectrictwo-wheelersEVElectricvehiclesxEVElectrifiedvehicles,includinghybridsEFBEmptyfruitbunchSTEnergyCommissionECOSEnergyCommissionofSabahEEEnergyefficiencyEECAEnergyEfficiencyandConservationActEEVEnergyefficientvehicleEMREEnergyManagementandRenewableEnergyEPCEnergyPerformanceCertificateESCOsEnergyservicecompaniesESSEnergystoragesystemEUEuropeanUnionFiTFeed-in-tariffFIsFinancialinstitutionsFDIForeigndirectinvestments4WFour-wheelvehicleFTEFull-TimeEquivalentGFTGasificationFischer-TropschGgCO2eqGigagramofCO2equivalentGtGigatonnesGWGigawattGLICsGovernment-linkedinvestmentcompaniesGHGGreenhousegasGDPGrossdomesticproductHDTHeavy-dutytrucksHHIHerfindahl-HirschmanindexHSFOHighsulphurfueloilHOAsHome-ownerassociationsHRHumanresourcesHHFSHybridHydro-FloatingSolarPV67NationalEnergyTransitionRoadmap(NETR)DefinitionH2HydrogenHETRHydrogenEconomyandTechnologyRoadmapHEFAHydroprocessedestersandfattyacidsHVOHydrotreatedvegetableoilILUCIndirectlandusechangeIPPUIndustrialprocessesandproductuseIRAInflationReductionActICEInternalcombustionengineICAOInternationalCivilAviationOrganizationIEAInternationalEnergyAgencyIMOInternationalMaritimeOrganizationISCCInternationalSustainabilityandCarbonCertificationJC3JointCommitteeonClimateChangektoeKilotonnesofoilequivalentkWKilowattLULUCFLand-use,land-usechangeandforestryLTMS-PIPLaoPDR-Thailand-Malaysia-SingaporePowerIntegrationProjectLSSLarge-scalesolarLCOHLevelisedcostofhydrogenLCVLightcommercialvehiclesLNGLiquefiednaturalgasLGe/100kmLitresofgasolineequivalentper100kilometresLTAGLong-termGlobalAspirationalGoalLCMBLowCarbonMobilityBlueprintLCNA2040LowCarbonNationAspiration2040LSFOLowsulphurfueloilMESIMalaysiaElectricitySupplyIndustryMELPMalaysiaEnergyLiteracyProgramMETOMalaysiaEnergyTransitionOutlookMyRERMalaysiaRenewableEnergyRoadmapBUR4Malaysia’s4thBiennialUpdateReportUndertheUnitedNationsFrameworkConventionOnClimateChangeDefinitionMGTCMalaysianGreenTechnologyAndClimateChangeCorporationMGOMarinegasoilMRVMeasurement,reporting,andverificationMDTMedium-dutytrucksMtCO2eqMegatonneofCO2equivalentMWMegawattMtoeMilliontonnesofoilequivalentMTPAMilliontonnesperannumMEPSMinimumEnergyPerformanceStandardsMEEStyMinisterofEnergyandEnvironmentalSustainabilitySarawakKPDNMinistryofDomesticTradeandCostofLivingNRECCMinistryofNationalResources,EnvironmentandClimateChangeMOFMinistryofFinanceMITIMinistryofInvestment,TradeandIndustryKPKTMinistryofLocalGovernmentDevelopmentKPKMinistryofPlantationandCommoditiesMOSTIMinistryofScience,TechnologyandInnovationMOTMinistryofTransportKKRMinistryofWorksMDBsMultilateraldevelopmentbanksMSWMunicipalsolidwasteNCETNationalCommitteeonEnergyTransitionMTNNationalEnergyCouncilNEEAPNationalEnergyEfficiencyActionPlanDTNNationalEnergyPolicy2022-2040NETFNationalEnergyTransitionFacilityNETRNationalEnergyTransitionRoadmapNGRNationalGasRoadmapNTPNationalTransportPolicyNDCNationallyDeterminedContributionNOVANetOffsetVirtualAggregationAbbreviations68NationalEnergyTransitionRoadmap(NETR)DefinitionNEBNewEnglandBiolabsNIMPNewIndustrialMasterPlanOEMsOriginalequipmentmanufacturersPOMEPalmoilmilleffluentPOGOPalmoilvslow-sulphurgasoilPADUPangkalanDataUtamaPNBPermodalanNasionalBerhadPPAsPowerpurchaseagreementsPEPrivateequityPLUSBerhadProjekLebuhrayaUtaraSelatanBerhadJKRPublicWorksDepartmentRERenewableenergyR&DResearchanddevelopmentRTResponsibleTransitionRMRinggitMalaysiaLT-LEDSRoadmapLong-TermLowEmissionsDevelopmentStrategiesSESBSabahElectricitySdn.Bhd.SEBSarawakEnergyBerhadSCSecuritiesCommissionSEDCSarawakEconomicDevelopmentCorporationEnergySMEsSmallAndMediumEnterprisesPVSolarphotovoltaicSWFsSovereignwealthfundsSTSuruhanjayaTenaga/EnergyCommissionSRISustainableandresponsibleinvestmentSAFSustainableaviationfuelSDGsSustainableDevelopmentGoalsSEDASustainableEnergyDevelopmentAuthorityTVETTechnicalandvocationaleducationandtrainingTNBTenagaNasionalBerhadIATATheInternationalAirTransportAssociationTwelfthPlanTheTwelfthMalaysiaPlan,2021-2025TPAThirdPartyAccessDefinitionTCOTotalcostofownershipTPESTotalPrimaryEnergySupply2WTwo-wheelersUKUnitedKingdomUNFCCCUnitedNationsFrameworkConventiononClimateChangeUNGAUnitedNationsGeneralAssemblyUTMUniversitiTeknologiMalaysiaUTPUniversitiTeknologiPETRONASUNITENUniversitiTenagaNasionalUCOUsedcookingoilVCVenturecapitalWtEWaste-to-energyWWFWorldWildlifeFundAbbreviations69NationalEnergyTransitionRoadmap(NETR)70NationalEnergyTransitionRoadmap(NETR)

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