Shell hopes to contribute to the national conversation about Malaysia’s energy transition

by S BIRRUNTHA / Pic by BLOOMBERG

SHELL Malaysia plans to increase investments into renewable energy (RE) in the future as more local oil and gas companies respond to climate change concerns.

Its chairman Ivan Tan said when it comes to discussing energy and climate change publicly, the temptation for a company like Shell is to play it safe and avoid the risk of backlash.

However, he said that doesn’t serve anyone’s interests and global energy companies like Shell have a responsibility to society to be engaged in the major issues at hand.

Tan noted Shell has eased into the RE space with its business model and the oil major has stakes in companies in the US and Singapore that do large-scale solar power generation.

“Shell Malaysia will continue to look into opportunities in RE, but it does not have a particular time frame yet,” he said during a press briefing after launching “The Tree, The Sky, The Sun: A Pathway Towards Malaysia’s Carbon-Neutral Future” book yesterday.

With the launch of the book, Tan said Shell Malaysia hopes to contribute to the national conversation about Malaysia’s energy transition and to the framing of the nation’s priorities in the run-up to the 2021 United Nations Climate Change Conference (COP-26) and beyond.

This was in line with the global ambition embodied in Shell’s Powering Progress strategy to become a net-zero emissions energy business by 2050.

“It is exciting to see Malaysia having open and more transparent discussions on the true scale of the climate challenge and the actions needed for achieving carbon-neutrality,” he said.

According to Tan, “The Tree, The Sky, The Sun” book tells the story of how Malaysia could reach for the sky — carbon-neutral by 2065 — with its unique advantages of trees and sun.

He said Shell’s story illustrates a technically possible yet challenging pathway for Malaysia to meet the goal of the Paris Agreement to keep the rise in global average temperature to well below 2°C above pre-industrial levels with a stretch goal of 1.5°C.

Tan said the pathway described in the book highlights five critical “increase levers” that are likely to have the greatest influence on moderating carbon emissions in Malaysia.

The levers include 1) the increase in forest acreage and density; 2) the introduction and gradual increase in the carbon price; 3) the emphasis on energy efficiency; 4) the greater push for electrification; and 5) a more widespread use of renewables, especially solar energy.

Shell’s aspirational pathway also found that the Malaysian energy system of 2065 will look significantly different from today.

“The economy-wide transformation required to achieve a carbon-neutral state will be underpinned by carbon pricing or the external cost of carbon which is phased in starting from 2026, coinciding with the start of the 13th Malaysia Plan (2026-2030).

“This drives reallocation of capital and resources toward low-carbon and energy-efficient choices,” he added.

Tan said renewable sources of energy will dominate a deeply electrified energy system by 2065 and stated that it will take robust policy frameworks and more open public engagement to create societal support for action, as well as enable the development of lower-carbon solutions and green technologies.

Tan said strong collaboration across government, business and society will be crucial to make progress at the pace required for Malaysia’s energy system to be carbon-neutral by 2065.

“Gains in energy efficiency led to a marginal increase in the country’s final energy demand despite healthy economic growth during this period.

“Any remaining emissions from the energy system are removed by nature or technology — reforestation of an additional 5.8% of Malaysia’s land mass can capture up to 29 million tonnes of CO2 per year, effectively bringing forward Malaysia’s carbon-neutral date by 15 years to 2065,” he noted.

Ultimately, Tan said the point at which Malaysia achieves carbon-neutrality depends on how aggressively these levers discussed are pursued in steering the economy towards a more sustainable post-pandemic recovery.

He added that other pathways are possible and depend on societal and policy preferences, but a major shift in how society produces and consumes energy is required to limit the rise in global temperatures and address the risks of climate change.