MALAYSIA has an abundance of renewable energy (RE) resources, particularly in the form of solar, mini hydro, biogas and biomass. 

Despite the country’s potential to generate RE, progress has been painfully slow in transitioning to a more efficient and sustainable energy mix due to several reasons. 

This is where strong political will and actions are needed to wean off populist policies, namely, subsidies, which are counter-productive in the long-term. 

The price subsidy mentality is killing us and we cannot afford to be affirmative only during a brink of collapse. 

Malaysia needs to bite the bullet! This is the need of the hour. 

It is imperative that the Environment and Climate Change Ministry and the Economy Ministry revisit current policies and the regulatory framework, and engage the various stakeholders instead of working vertically in silos. 

How do we future-proof the energy grid? 

Retiring fossil fuel assets smartly 

We must retire our fossil fuel assets smartly and focus on distributed generation while decarbonising the grid. 

Our indigenous biomass and biogas needs to be further exploited against non-indigenous coal. 

The Renewable Energy Act 2011 and grid connecting policies can be further revisited with utility focusing on making grid resilient to distributed generation or DG connectivity. 

In terms of RE resources, the RE policy had always shown greater inclination towards solar instead of biogas and biomass. 

This lopsidedness needs to be addressed. 

Biogas and biomass are RE sources that produce significantly lower carbon emissions compared to fossil fuels. 

The use of these resources can help to reduce waste and promote sustainable waste management practices in the country benefitting particularly our palm oil industry directly. 

One of the main challenges in adopting RE sources is the initial high cost of installation and maintenance. 

Biogas and biomass power plants require significant investment, making them less attractive to investors compared to solar or traditional fossil fuel-based power plants per-MWh of generation. 

However, it is important to note that the cost of traditional fossil fuels is not static and can fluctuate greatly. 

This is depending on factors such as supply and demand, geopolitical events, and environmental regulations. 

In some cases, the cost of biomass or biogas may be competitive or even cheaper than traditional fossil fuels. 

Rising coal prices take a toll 

The rise of coal prices had taken a toll on the electricity tariff recently with the imbalance cost pass through or ICPT hitting an all-time high of RM0.20 sen per kilowatt hour. 

Furthermore, the use of biomass or biogas can have significant environmental benefits, including reducing greenhouse gas emissions and promoting sustainable land use practices. 

These benefits can provide additional value that may offset the higher cost of production. 

One other immediate solution to this problem is the implementation of RE certificates (RECs). 

RECs are tradable certificates that represent the environmental attributes of one megawatt-hour of RE generated. 

These certificates serve as proof of RE generation and can be bought and sold by companies looking to meet their RE targets. 

By implementing a carbon tax regime, the government can incentivise companies to invest in RE projects, particularly in the solar, biogas and biomass sector, which are readily abundant in Malaysia. 

This would not only help to reduce the country’s carbon emissions but also spur further economic investment, growth and create job opportunities in the fast-growing RE sector. 

Achieving our climate goals 

The implementation of RECs would help Malaysia to achieve its climate goals. 

The country has committed to reducing its carbon emissions by 45% by 2030 under the Paris Agreement. 

However, as of now, the country is still heavily reliant on fossil fuels, particularly natural gas and coal, for its energy needs. 

The use of biogas and biomass as a RE source would significantly reduce the country’s carbon footprint and help it achieve its climate targets. 

More importantly, the biogas and biomass sector has the potential to create a significant number of jobs, particularly in rural areas where these resources are plentiful. 

The use of RECs for Scope 2 emission mitigation could help to diversify Malaysia’s energy mix. 

Currently, the country is heavily reliant on natural gas and coal for its energy needs. 

Biogas and biomass 

The use of RE sources, particularly biogas and biomass, would reduce the country’s dependence on fossil fuels and make it less vulnerable to price fluctuations in the global energy market. 

RECs provide a valuable revenue stream for RE asset owners, enabling them to reinvest in their facilities and expand their operations. 

Large corporations can purchase RECs to offset their Scope 2 carbon footprints, helping them to meet their sustainability goals and comply with carbon tax regulations in their home countries. 

Malaysia needs to position itself as a leader in sustainability and attract international investment. 

RECs provide a valuable opportunity for Malaysia to meet its RE targets, attract foreign investment and generate income from its surplus RE. 

By participating in cross-border REC trading, Malaysia can take advantage of the growing demand for RE and position itself as a leader in the RE market. 

As the world moves towards a more sustainable future, countries that invest in RE will reap the economic and environmental benefits of this transition. 

We cannot afford to be left behind, given the abundance of RE resources in the country. 

Nirinder Singh Johl is the founder and CEO of Asia Carbon XChange PLT. 

He was formerly the managing director 

of TNBX, a subsidiary of Tenaga Nasional Bhd. The views expressed here are the writer’s own.