by SHAZNI ONG / graphic by MZUKRI

THE Institute for Democracy and Economic Affairs (IDEAS) stated that Malaysia’s energy policy should seek to replace coal-based power generation with gas and turbo-charged renewable in order to meet pledges to curb climate change.

IDEAS senior fellow Dr Renato Lima de Oliveira (picture) said replacing coal with gas is a low hanging fruit as Malaysia plans its next energy policy.

“Beyond that, Malaysia needs to pivot its strengths in oil and gas (O&G) into renewable and reform the energy framework to further promote the use of renewable,” he said in a statement yesterday on the think tank’s latest report titled “The Future of Malaysia’s Energy Mix”. The paper is co-authored by Mathias Varming.

Lima de Oliveira said Malaysia has made good progress towards reducing emissions and increasing the share of renewable in the country’s energy mix over the last few years. However, the country needs more ambitious policies to meet its reduced carbon commitment under the United Nations Framework Convention on Climate Change in Paris 2015.

He said more broadly, Malaysia’s energy transition faces a number of challenges as solar power prices fall dramatically.

“Malaysia’s options for dispatchable renewable energy are hampered by a lack of infrastructure and technology. Therefore, conventional fuels — coal and natural gas — will continue to play a role in Malaysia in the medium term,” he said.

The paper recommended for coal to be replaced with gas in the short term as the country takes ambitious steps to adapt and seize opportunities of the transition to renewable and reduce the overall dependency on fossil fuels.

It said Malaysia, as a country with significant wealth built around the fossil fuel industry including fiscal resources extracted from O&G and the economic activities generated by Petroliam Nasional Bhd, will be at risk if it fails to anticipate and react to global changes on energy consumption.

“Besides, the transition also brings new growth opportunities along the renewable supply chain and mobility — opportunities that can represent new pillars of economic growth and knowledge creation.

“Therefore, a national energy policy that takes into account emerging global trends and aims to position Malaysia as a leader will need to focus on two key objectives,” the two authors said.

On adapting the business and fiscal environment, the report suggested supporting the upgrading of capabilities in the O&G supply chain to unlock new resources and promote international expansion, thus becoming less dependent on local resources to sustain their businesses.

“The country should also incentivise diversification to renewable by promoting areas that current O&G players have transferable skills such as project management and offshore installation for wind energy.

“Both the federal and state governments should also reduce their dependence on fiscal revenues from O&G production, smoothing short-term price fluctuations by limiting yearly transfers from the O&G sector to the treasury.

Recommendations were also made to aggressively promote new mobility solutions, energy-efficiency standards, and electrical vehicles infrastructure and manufacturing, future-proofing Malaysia’s automobile industry beyond internal combustion engine technology as avenues for new business opportunities.

It said Malaysia should also further develop its solar photovoltaic capabilities by deepening domestic linkages and integrating with research and development and other component manufacturing.