Renewable Energy in Malaysia: Ways to Encourage Sustainable Development

Renewable Energy in Malaysia: Ways to Encourage Sustainable Development

As societies around the world experience energy shortage and environmental dilemmas, there is an urgent need for transformation in the way we produce and use energy. As countries are swapping out fossil fuels for greener energy sources, renewable energy in Malaysia is gaining traction.

At the recent 26th UN Climate Change Conference of the Parties (COP26), over 100 countries, including Malaysia, agreed to strive to limit temperature rise to 1.5°C along with net-zero 2050 commitments. This movement is shifting the world away from the consumption of fossil fuels, transitioning toward cleaner, renewable forms of energy.

The rapid deployment of renewable energy in Malaysia has been driven mainly by a wide range of objectives, including advancing economic development, improving energy security, enhancing energy access and mitigating climate change.

The switch to renewable energy may bring about fresh opportunities for early adopters. Thus, it is important for businesses and individuals to monitor the latest news and identify emerging needs to stay ahead of the curve. Here, we consider different ways to encourage the sustainable development of renewable energy in Malaysia.

Four Ways to Encourage Sustainable Development for Renewable Energy in Malaysia

Rise in Affordable Solar Power for Businesses

Renewable energy in Malaysia, especially solar power, has come a long way. From complex and inefficient systems in the past, Malaysia has now developed modern solar setups along with the latest technologies such as AIoT.

Therefore, experts predict a rise in solar adoption. In fact, solar systems have seen an 85% cost decline and an increase in efficiency of over 20% today. This is the main reason why business owners are becoming increasingly interested in installing solar power systems.

However, if the costs of installing a solar power system may be too much to bear, Malaysia has several incentives for business owners. One example is the Green Investment Tax Allowance (GITA).

The GITA is a fiscal incentive from the government to promote increased investments in renewable energy sources. It provides companies with a 'double tax deduction' for the costs incurred in their capital expenditure when installing a solar system on their premises.

When businesses switch to solar power systems, they promote clean and sustainable energy while reinforcing Malaysia’s commitment to be carbon neutral by 2050. As a result, this increases government support to spur Malaysia’s renewable energy industry.

Raising Awareness for Renewable Energy Initiatives in Malaysia

To achieve Malaysia’s ambitious goal to be carbon neutral by 2050, Malaysia’s Finance Minister, Zafrul Aziz, announced plans to develop a sustainable economy by launching the Voluntary Carbon Market (VCM) and expanding green technology tax incentives.

There are also existing policies such as the Smart Automation Grants (SAG), and the Green Investment Tax Allowance (GITA). The policies have contributed significantly to the renewable energy industry in Malaysia.

In terms of technological advancements, the SAG’s RM100 million allocation has contributed to the digitalisation of the manufacturing and services industry. It has helped adopters of smart AIoT energy solutions translate insights into energy saving.

Furthermore, the Green Investment Tax Allowance was established to encourage investment and motivate companies to acquire green technology assets. Examples include LED lighting, solar panels, electric vehicles and more.

It is essential for both the private and public sectors to be aware of the initiatives developed to increase the usage of renewable energy in Malaysia and to work together to realise Malaysia’s net-zero 2050 commitments.

Enforcing Business-Friendly Measures

A recent initiative to encourage renewable energy in Malaysia is carbon pricing. The 12th Malaysia Plan introduces carbon tax and a domestic emissions trading scheme (DETS), taxing companies burning fossil fuels by volume or weight of emissions.

These tools make it a necessity for businesses to reduce emissions to remain competitive and sustainable. Under a carbon tax framework, businesses would pay a tax or price for every tonne of GHG released, and the DETS sets a limit on the GHG emissions allowed for each business.

With its coming implementation, businesses will leverage sustainable practices to avoid these costs. Although not much has been revealed on how Malaysian policymakers will implement carbon pricing, businesses can start first by assessing their exposure to climate change-related risks, plan, and be ready to embrace this push for a carbon-neutral economy.

Green Buildings for Sustainability

Green buildings present a solution that not only encourages economic development, but also takes responsibility for the environment. As there is a growing need to deal with climate change, sustainable development and green technology play a vital role in driving the economy, creating jobs, and attracting investments.

However, it can be challenging for Malaysia to adopt the concept of green buildings. Currently, over 90% of Malaysia’s electricity comes from polluting fossil fuels. Furthermore, not many are aware of green buildings, with citizens prioritising the price and the condition of the property without considering whether the property is green or even energy-efficient.

The Malaysian administration is committed to a greener Earth by advocating a sustainable development agenda and launching green initiatives under Budget 2021. Examples include cooperating with the United Nations to establish the Malaysia-Sustainable Development Goals (SDGs) Trust Fund and providing RM40mil over five years to strengthen environmental quality monitoring enforcement activities.

Furthermore, Emir Research (an independent think tank) recommends the following to promote green buildings:

  1. Encourage businesses to switch to renewable energy by providing small grants.
  2. Organise promotional campaigns with the Malaysia Green Building Council to educate Malaysians on the benefits of having and using green buildings.
  3. Attract investors by promoting and emphasising the strengths and opportunities of green buildings.

We can only tackle the worldwide climate crisis through concerted efforts across all nations. It is time for businesses and individuals alike to switch to greener practices and be ready to embrace renewable energy in Malaysia.

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