December 8, 2022

Why is Sustainable Energy Vital for Malaysia and What are the Main Challenges?

Malaysia, one of the economic hubs of Southeast Asia, has reported huge economic growth over the last few decades. However, this growth is largely driven by oil and gas, which make the country not just dependent on fossil fuels but also addicted to them. Now, the realities of modern energy dynamics and shifting demands by different stakeholders have left Malaysia with no option but to shift to sustainable energy. However, this is proving to be a major challenge. Is there a way out? Keep reading to learn more about Malaysia's ambitious sustainability energy drive and the challenges ahead. We will also highlight some expert solutions that Malaysia should adopt along the way.


Why is Sustainable Energy Critical for Malaysia?

Most countries across the globe are working on adopting sustainable energy sources. For Malaysia, sustainability is even more critical. Let’s find out some of the reasons for this: 

  • The Declining Natural Gas and Global Fossil Fuel Supplies 

Malaysia has been a major supplier of liquefied natural gas (LNG), especially to countries in the neighborhood. Its production peaked in 2017 when it reached 1.4 TcF and then took a major decline. By 2019, Malaysia was the 5 biggest exporter, but the decline, which coincided with the drop in LNG prices, has made Malaysia start thinking of alternatives. 

The decline means a significant loss of major income for Malaysia as an economy and a drop in energy production capacity to drive the rapidly growing economy. To produce more energy for the local economy, the country has turned to coal, which is considered a cheaper alternative. However, this is still not considered a reliable alternative because of its major negative impacts, especially on the environment. The next alternative is renewable energy.

Although Malaysia has large deposits of natural gas, concerns have been raised over the declining fossil fuels across the globe. At the current exploration rates, scientists predict that we are likely to run out of petroleum by 2052 and natural gas by 2060. Therefore, it is vital for Malaysia to start developing its renewable energy right away. 

The good thing about renewable energy is that its capacity is not limited. For a country like Malaysia, which is strategically located in Southeast Asia, where it experiences a lot of sunshine during the better part of the year, there is an unlimited capacity to generate solar energy. It might be the best way to support the rapidly growing Malaysian economy. 

  • Growing Demand for Renewable Energy from More Stakeholders

Malaysia largely relies on coal and natural gas for its surging energy demand to support its industrial, residential, and other sectors. However, more people have become aware of the dangers that are posed by fossil fuels, making them demand to work only with firms that use clean energy. From customers to partners, it is not enough to simply look at the profit profile of a company’s product description to decide to work with it. 

Additionally, checking the commitment to sustainability is becoming vital. For example, people are looking for sustainability or ESG ratings before making the decision to work with a certain company in Malaysia. The energy that a company uses is crucial in defining this rating. This is why Malaysia is working hard to offer a clean source of energy to cut down both companies’ and the entire country's carbon footprints and raise ESG rating. 

  • More Investors Prefer Countries and Companies Using Renewable Energy 

There is nothing as important as investors in any business. The Malaysian administration understands this and wants companies and corporations to use every strategy to stay attractive to investors. However, investors are today only interested in companies that help them address the problems facing the planet. Of primary concern to them is global warming

Malaysia, with its respected investment credentials as a leading business hub, wants to lead the way by showing investors that they can rely on its companies for higher ESG ratings. Therefore, the country's administration is in a race to adopt renewable energy to continue attracting more investors in all sectors. 

  • The Growing Threat of Global Warming 

For years, the concept of global warming was thought to be a mystery or unclear to many people. The argument was that the planet has an unlimited capacity to take up the emissions that we release into the atmosphere. However, this is not true. Scientists have proven that the release of excessive carbon emissions results in a phenomenon referred to as the greenhouse effect, where the sun's radiation in the form of heat is trapped in the lower atmosphere.  

To address this problem, the Paris Accord required countries to find every possible way to cut down or limit global warming to below 2 degrees Celsius, preferably to 1.5 degrees Celsius in comparison to the pre-industrial levels. Indeed, Malaysia, as an island, stands to gain so much from the reduction of global warming because it is faced with an imminent threat from rising water levels. Therefore, the country has to be at the front line in countering the danger of global warming by adopting sustainable energy. 

These are only a few of the reasons why Malaysia is working so hard to adopt sustainability in all of its systems. Remember that the process of ingraining sustainability requires clear planning, resources, and accuracy. 

The Main Challenges on the Path for Malaysia’s Sustainability Energy Efforts

While Malaysia has expressed its intent to adopt sustainable energy, there are a number of challenges. Let us highlight some of them: 

  • Monopolization of the Power Industry 

For Malaysia to realize the full benefits of sustainable energy, one of the major obstacles is the monopoly. For years, Petronas has remained the dominant player in the gas sector and has been central in the policy formulation for gas and other types of energy in the country. Although other companies, such as Petros, Sarawak's State-owned oil and natural gas company, have surfaced, there is a strong preference for fossil fuels because they are cheaper and readily available. 

If Malaysia can allow more players, especially those with an interest in clean energy, to get into its market, this might help to change the current focus on fossil fuels. To do this, the country could even add incentives to promote such companies and the adoption of clean energy. 

  • A Rapidly Growing Economy that Needs Rapid Energy Production 

When a government is faced with a rapidly developing economy, the goal is to search for a source of energy to meet the rising demand within the shortest time possible. This is the scenario in Malaysia.

Back in the 1970s, Malaysia started imitating the Asian Tiger economies and committed to transitioning from reliance on agriculture and mining to manufacturing. This meant intensifying energy production to drive the manufacturing industry. By the 1990s, the country became a net exporter with a GDP of 7% and low inflation. 

Late in the 20th century and early in the 21st century, Malaysia experienced an economic boom and massive development. In 2009, Malaysia's GDP reached USD 383.6 billion. Today, the country has a GDP of USD 439.3 billion and is ranked 34th globally. This is enormous. Now, Malaysia has to look for an alternative, perhaps solar energy, to sustain the economy on a growth trajectory, which is a huge challenge, but not impossible.

  • High Cost of Shifting to Renewable Energy 

Although Malaysia and most companies appreciate the benefits that come from using sustainable energy, the associated cost is pretty high. Today, many companies are particularly working with tight budgets as they try to spring back from the shocks of COVID-19. Therefore, most of them find changing their energy consumption model to renewable sources a challenge. 

For a company that targets to install solar panels on its roofing, the effort might require changing machinery and redoing the electrical systems. This comes at a huge cost, which piles alongside the money needed to buy the panels. This means that it might take some time before Malaysia and every company can shift to the best sustainable energy sources. 

  • The Concept of Sustainability is Still Relatively New 

Although the concept of sustainability has been around for some time, it is still relatively new. Its history can be traced back to the first UN Conference on Environment and Development (UNCED), which was held in Brazil in 1992. However, it has been built on over the years to help demonstrate how every party can be involved in sustainability. Implementing it has, however, become a challenge for most companies both in Malaysia and the rest of the globe.

Medium and small enterprises have been arguing that sustainability is for large firms. This is incorrect because every action matters. Even if a small company does not emit a lot of greenhouse gasses, the cumulative impact of thousands of small companies in Malaysia is huge. Therefore, they must get involved too. 

Expert Solutions for Improving Sustainable Energy   

Now that we have highlighted some of the main challenges facing Malaysia's effort to shift to sustainable energy, it is prudent to appreciate that there is a way out. Indeed, it might be way easier to achieve sustainability in Malaysia than previously thought if all stakeholders are involved. Here are some expert suggestions that can be employed by different parties in Malaysia.

  • Adopt Training for Sustainability: Identify a good international organization, such as Climate Fresk, to help train managers, staff, and other parties on sustainability. Climate Fresk can help companies and parties to adopt the best practices, actions, and decisions for sustainability.  
  • Pass Objective Laws to Help Ingrain Sustainability in All Companies: As we have demonstrated, Malaysia has grown rapidly with its economy powered by fossil fuels. With this strong connection, the government has to craft reliable policies to promote sustainable energy adoption.
  • Use Every Avenue to Increase Energy Efficiency: At the corporate level, companies should look for and use different avenues to improve energy efficiency. For example, it is prudent to have CONTINEWM installed in all HVAC systems of different companies and offices. CONTINEWM clears positive electrostatic charges, helping to make airflow smooth. The ultimate impact is improved energy efficiency and lower electricity bills. 

Malaysia, like other rapidly developing countries, is at crossroads, trying to ensure that its huge manufacturing sector has enough energy and to remain sustainable. With the reality that failing to adopt sustainability is risky for the entire planet, it is crucial that Malaysia develops supportive policies to promote sustainable energy development and use. The expert suggestions we have listed in this post can help the country and individual companies to get started, but a good plan is needed to make every move objective and cumulative.