National Energy Transition Roadmap (NETR): Charting a Path to a Sustainable Energy Landscape

In today’s rapidly evolving global condition, the pressing need for sustainable and renewable energy sources have become increasingly evident. Acknowledging this urgency, a growing number of nations have embarked on a pursuit towards a sustainable energy landscape. In an effort to further amplify this agenda for Malaysia, the Government has launched the National Energy Transition Roadmap (NETR) as a comprehensive strategic plan to steer the energy systems away from conventional, fossil-fuel-based sources and towards cleaner, more sustainable alternatives. Designed to address the challenges posed by climate change, enhance energy security, and ensure long-term sustainability, this roadmap spans multiple sectors, encompassing electricity generation, transportation, industrial processes, and residential energy consumption.

The NETR sets ambitious targets for Malaysia, aiming to achieve net-zero emissions by 2050. The plan is comprehensive and outlines a gradual increase in renewable energy shares, targeting 31% by 2025, 40% by 2035, and an impressive 70% by 2050.

To efficiently transition towards cleaner and more sustainable energy sources, six (6) energy transition levers, namely Energy Efficiency (EE), Renewable Energy (RE), Hydrogen, Bioenergy, Green Mobility and Carbon Capture, Utilisation and Storage (CCUS), have been strategically structured into 10 flagship projects.

These flagship projects are expected to attract substantial investment exceeding RM25 billion, fostering the creation of 23,000 employment opportunities. Simultaneously, these initiatives are projected to reducing the greenhouse gas (GHG) emissions by over 10,000 Gg CO2eq (gigagrams carbon dioxide equivalent) per year.

The Responsible Transition (RT) initiative, a key component of the NETR, is poised to deliver substantial positive impacts on Malaysia’s economy. By diversifying away from fossil fuels and actively nurturing growth in green mobility, renewable energy, energy storage, and other emerging energy technologies, Malaysia is positioned to enhance its competitiveness and attain significant economic gains.

Projections indicate that the RT initiative could yield investment opportunities between RM1.2 trillion to RM1.3 trillion by 2050. This trajectory foresees an additional contribution of RM220 billion to the Gross Domestic Product (GDP) and generate approximately 310,000 green growth job opportunities by 2050. Notably, these economic advantages are expected to be inclusive, benefiting medium and low-income households, and facilitating widespread societal advancement.

In line with its commitment to sustainability, the Malaysian Government through the National Budget 2024, lays the foundation to encourage industries to transition towards a low-carbon economy. The Green Technology incentives, namely the Green Investment Tax Allowance (GITA) and Green Income Tax Exemption (GITE) for companies undertaking qualifying green activities, which were initially set to expire on 31 December 2023, have been reviewed and enhanced in the 2024 Budget.

The enhancement of the tax incentive package will be based on a tiering approach. It also includes the introduction of new qualifying activities, namely green hydrogen, electric vehicle charging station and wind energy. Effective 1 January 2024, businesses can submit applications for the GITA Project for business purpose and GITE Solar Leasing to MIDA until 31 December 2026. Meanwhile, applications for GITA Asset for own consumption should be submitted to the Malaysian Green Technology and Climate Change Corporation (MGTC) effective 1 January 2024 until 31 December 2026.

Malaysia endeavours to achieve its renewable energy objectives underscores its commitment to serve as a responsible global citizen making a substantive contribution to addressing climate change. By prioritising renewable energy and reducing its reliance on fossil fuels, Malaysia can set a guiding example for other nations as they embark on their unique energy transition journeys.

While the NETR outlines a clear trajectory for Malaysia’s energy transition, it remains vital to anticipate and address the potential challenges and obstacles along the way. MIDA stands firmly committed to assuming a pivotal role in advancing these goals, facilitating and supporting the implementation of green and renewable energy investment projects. Moreover, fostering collaborative efforts between MIDA, other Ministries and Government agencies, private sector entities, and civil society will be crucial to ensure the success of the roadmap and overcome any potential hurdles.

The successful execution of the NETR requires resolute political will, robust partnerships, and substantial investments in infrastructure and technology. This comprehensive approach represents a crucial step towards realising the goals set in international agreements such as the Paris Agreement and the United Nations Sustainable Development Goals, laying the groundwork for a more sustainable and environmentally friendly future for generations to come.