MINISTRY OF ECONOMY

National Energy
Transition Roadmap
Part 1: Flagship Catalyst Projects and Initiatives

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CO, CO,

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Energising the Nation,
Powering Our Future

Published by:

Ministry of Economy
Menara Prisma
No. 26, Persiaran Perdana, Precint 3
Federal Government Administrative Centre
62675 Putrajaya, Malaysia

603 8090 2090 | ukk@ekonomi.gov.my | ekonomi.gov.my

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of Economy, Malaysia.
Foreword
The Twelfth Malaysia Plan, 2021-2025 (Twelfth Plan)
outlines the nation's aspiration to achieve net-zero GHG
emissions as early as 2050, while the National Energy
Policy, 2022-2040 (DTN) lays the groundwork for
transforming the energy landscape. DTN strives for an
energy transition that is fair and inclusive for everyone.
Today, the global energy sector is undergoing a rapid transformation while addressing
energy trilemma of security, affordability, and sustainability. There is a growing
momentum both domestically and internationally to further decarbonise energy
systems towards net-zero GHG emissions.

In light of this, the government is developing the National Energy Transition Roadmap
(NETR) to accelerate Malaysia's energy transition. NETR is critical for Malaysia to navigate
the complexity of energy transition on a large scale, especially the shift from a traditional
fossil fuel-based economy to a high-value green economy.

This document outlines our approach to effectively manage the energy transition, which
requires a whole-of-nation approach involving the federal government, state
governments, industry and the general public, in partnership with the international
community.
 NETR has two parts. This document is the first part (Part 1) of NETR, which
outlines 10 flagship catalyst projects and initiatives based on six energy transition levers,
namely: energy efficiency (EE); renewable energy (RE); hydrogen; bioenergy; green
mobility; and carbon capture, utilisation and storage (CCUS).

Part 2 will focus on establishing the low-carbon pathway, national energy mix and
emissions reduction targets as well as the enablers needed for the energy transition. The
targets will reinforce Malaysia's commitment as a responsible stakeholder aiming to
achieve its net-zero greenhouse gas (GHG) emissions aspirations as early as 2050, despite
contributing 0.8% to global GHG emissions.

The Ministry has undertaken active consultation sessions to study and identify the best
practices and lessons learnt, as well as existing and planned projects undertaken by
policymakers, industry players, technology experts and businesses. Moving forward,
NETR will provide clarity and coherence in policy planning and implementation for the
energy sector to transition towards a low-carbon future.

Rafizi Ramli

Minister of Economy
July 2023
Table of
Content
Executive Summary 05

Introduction 06
• The Domestic Energy Landscape 07
• The Case for Change 09
• Malaysia's Policy Responses 12

National Energy Transition Roadmap 14

• Guiding Principles 16
• Review of Renewable Energy Policies 17
• Complementary Plans 18
• Flagship Catalyst Projects and Initiatives 18
• Energy Transition Financing Requirement 22

Conclusion 24
 Executive Summary
As a country committed to sustainable development,
Malaysia has embarked on a transformational journey
to reshape its energy landscape. Malaysia recognises
the
need for a bold and forward-thinking approach
in reducing its fossil-fuel reliance and investing in
alternative sources of energy that are clean, accessible,
affordable, sustainable and reliable.

As of 2020, four energy sources dominated the national

total primary energy supply (TPES) mix. Natural gas
constituted the largest portion of primary energy
supply at 42.4%, followed by crude oil and petroleum
products at 27.3% and coal at 26.4%. Renewables,
comprising mainly hydroelectric, solar and bioenergy,
constitute only 3.9%.

The government has recently announced its revised RE

capacity mix target, up from 40% in 2035 to 70% by
2050. Accordingly, RE capacity will be further scaled up
and the existing export ban on renewables has been lifted
to facilitate cross-border trade.

The government is also in the midst of developing

the Long-Term Low Emissions Development Strategy
(LT-LEDS) to outline its policies and actions for GHG
mitigation in key economic sectors, including energy.
This will further strengthen its commitment to cut
45% carbon intensity against GDP by 2030 compared
to the 2005 baseline.

The National Energy Transition Roadmap Part 1 has

identified 10 flagship catalyst projects and initiatives to
accelerate the pace of the energy transition. These
flagship projects are expected to generate an estimated
total investment of more than RM25 billion, 23,000 job
opportunities and a reduction in GHG emissions of
more than 10,000 Gg CO2 equivalent per year.

06 National Energy Transition Roadmap

Introduction
Malaysia has an equatorial climate, with
temperatures increasing in the range of
0.13-0.24°C per decade since the 1970s.
Rainfall distribution is influenced by the
topography and monsoon winds, and
annual rainfall averages between 2,000
and 4,000 mm. Malaysia has
consistently maintained more than 50%
of its landmass as forest following its
voluntary pledge at the Earth Summit in
1992.
Terrestrial biodiversity is concentrated
within these forests and the nation is
considered to be one of the world's
mega-diverse countries.
Malaysia is a small open economy with gross domestic product (GDP) and gross
national income (GNI) of RM1.79 trillion and RM1.73 trillion, respectively, in 2022. Its
population stood at 32.7 million people in 2022 and is expected to reach 40 million by
2050.
Meanwhile, the urbanisation rate was 75% in 2020, and is expected to reach 85% by
2040. Economic and population growth, as well as rapid urbanisation, will drive a rise
in energy demand, which is expected to increase by 2% annually until 2050.

The country transitioned from an agricultural and commodity-based economy towards

manufacturing and services in the 1980s. It has traditionally been a producer of finite
quantities of oil and gas, which contributed approximately 13% to GDP in 2021.
Indigenous gas resources have ensured secure energy supply at affordable prices.

As the nation evolves and lifestyles change, environmental sustainability has gained
more focus in business and policy decisions, and this has implications for people's
livelihoods. Rapid urbanisation and climate change require a timely adjustment of the
way we live, commute and interact with our surroundings, including the way in which
we consume and produce energy.
National Energy Transition Roadmap Part 1
The Domestic Energy Landscape
In 2018, the energy sector contributed approximately 28% of GDP and employed 25%
of the total workforce in Malaysia. In addition, it is a key source of national income, with
petroleum-related products contributing 31% of fiscal income, and energy exports
constituting 13% of total export value. The energy sector also benefits more than 10
million customers by providing daily access to an electricity supply and enabling
mobility through the reliable supply of transport fuels. Jobs and business
opportunities created in the energy sector, as well as economic multipliers in energy-
related supply
chains, also contribute significantly to Malaysians' quality of life and produce a positive
socioeconomic impact for the rakyat.

Fossil fuels continue to contribute the largest share of Malaysia's energy supply, and
have a significant influence in shaping the country's energy landscape. As of 2020, four
energy sources dominated the national TPES mix. Natural gas constituted the largest
portion of primary energy supply at 42.4% of TPES, followed by crude oil and
petroleum products at 27.3% and coal at 26.4%. Renewables, comprising hydropower,
solar and bioenergy, constituted just 3.9% of TPES.

Historically, the power sector in Malaysia has operated as a vertically integrated

monopoly system. Over time, it has undergone various stages of liberalisation. In
accordance with government policy, the power sector was privatised with the aim of
attracting investment as well as enhancing efficiency and productivity to ensure a
sufficient supply. Additionally, the government has encouraged the involvement of
independent power producers (IPPs) to improve the reliability of the electricity supply
and address the shortage of generation capacity to meet demand.

Natural gas plays an important role as a transitional fuel in energy transition. The
government has implemented third party access (TPA) in 2017 to provide healthy
competition among industry players including the independent power producers
(IPPs). This will facilitate the shift towards market-based pricing for power and non-
power sector, thus ensuring reliable gas supply at competitive prices.

Similarly, the government intends to reform the power sector further by establishing a
TPA framework to supply fuel sources, and access to the grid infrastructure and the retail
market. In addition, the government will embark on electricity tariff restructuring
initiative. These measures will ensure cost reflective prices, enable higher penetration of
renewable energy and enhance Malaysia's competitive advantage.

08 National Energy Transition Roadmap

Energy transition refers to the shift from an energy system
dominated by the use of fossil fuels with high carbon
emissions intensity towards a system based on clean and
renewable energy sources. The energy transition process is
unfolding at a swift pace due to rapid technological
developments and the increasing awareness of global
net-zero emissions targets.

The accelerated pace of the energy transition has

also presented Malaysia with the opportunity to Malaysia’s Regional Partnership to Acceler
restructure its economy and maximise the
potential for green growth. Investments In March 2023, Malaysia joined the Japan-led
supporting the energy transition create new
businesses and jobs, drive innovation and AZEC is a regional energy cooperation block t
enhance national competitiveness. The energy
transition has also fostered greater international
cooperation and strategic collaboration with
other countries.

Given the importance of the energy sector to

socioeconomic development, it is critical that
Malaysia's energy sector remains future-proof to
any domestic or global issues.

The government is mindful of challenges such

as growing energy demand, the increasing
subsidy burden and declining oil and gas
resources, as well as rising energy costs. In
addressing these
challenges, the government is developing the
National Energy Transition Roadmap (NETR)
to accelerate Malaysia's energy transition.

National Energy Transition Roadmap Part 1

 The Case for Change
Growth in the energy sector drives development in various adjacent
industries, creating spin-offs through employment, capital inflows and
investments, as well as supporting the energy service companies
ecosystem.

However, the energy sector has been the country's largest contributor of
greenhouse gas (GHG) emissions. A summary of Malaysia's GHG
inventory in 2019, based on the Fourth Edition of the Biennial Update
Report (BUR4) submitted to the United Nations Framework Convention
on Climate Change (UNFCCC), is as shown in Exhibit 1:

Exhibit f: Malaysia’s GHG Inventory in 20f9

Malaysia's GHG inventory, Mt CO2e (20f9) from BUR4
400
28
(8%) 10
Energy sector contributes to 78.5% of total emissions
(3%)
65 33
300 (21%) (8%)
194
(59%)

200

116
100 -215

0
Energy¹ (excluding
Transport
Transport) IPPU Waste Agriculture LULUCF Total

1 Refers to emissions from energy industries, manufacturing industries and construction, other sectors and non-specified energy emissions, and fugitive emissions fr

Source: Malaysia's Fourth Biennial Update Report submitted to the UNFCCC (2022)

In 2019, the energy sector emitted 259,326.11 Gg CO2 equivalent, or 78.5% of total
emissions. This was followed by industrial processes and product use (IPPU) at 10%,
waste at 9% and agriculture at 3%. The BUR4 report also listed climate mitigation
actions undertaken in the energy sector, such as the use of energy efficiency (EE)
measures,
energy-efficient vehicles, renewable energy (RE), biodiesel and natural gas instead of coal
for power generation.

10 National Energy Transition Roadmap Part

The energy sector has long driven Malaysia's development and
growth. Yet emissions have also increased in tandem with the
country's economic growth, necessitating an urgent need to
transition towards a low carbon economy. This will involve
meeting the country's climate commitment to cut 45% carbon
intensity against GDP by 2030 compared to the 2005 baseline.

On 29 March 2023, the United Nations General Assembly passed

a significant resolution requesting that the International Court of
Justice outline the legal responsibilities of states concerning
climate mitigation and adaptation. The current trajectory of
climate change poses a threat to the global economy, trade
and financial system, with potential losses amounting to nearly
10% of GDP by 2050. A critical factor when addressing climate
change is the energy sector, which, according to the International
Energy Agency (IEA), is responsible for 73.2% of GHG emissions
worldwide. To defend the 1.5°C frontier as outlined in the Paris
Agreement, IEA's Net Zero by 2050 pathway¹ suggests that 1 IEA, Net Zero by
2050: A Roadmap
the world economy should consume 7% less energy in 2050 for the Clobal
than at present. Energy Sector.

2 Carbon leakage is
In 2022, the European Union (EU) introduced the Carbon where a company
Border Adjustment Mechanism (CBAM), aimed at preventing moves production
from a country
carbon leakage² in the trade value chain. The current scope of with stringent
CBAM covers industries that are important to Malaysia, such as policies to one with
more
iron, steel, aluminium, fertiliser, electricity and hydrogen. It is lenient policies.
estimated that 57%³ of Malaysia's total exports will be affected
3 Bank Negara
by the implementation of CBAM. Further, the United States (US) Malaysia, Economic
introduced the Inflation Reduction Act (IRA) in 2022, which and Monetary
Review 2022.
prioritises the production of and demand for domestically
produced clean energy goods and services over foreign imports.

National Energy Transition Roadmap Part 1

The transition away from carbon-intensive systems is
challenging for many countries, including Malaysia. Coal is a
preferred source of energy due to its cost-effectiveness compared
to alternatives such as natural gas and renewables.
Additionally, 20% of
Malaysia's economy comprises hard-to-decarbonise 4 Bank Negara
industries such as iron and steel, which rely heavily on fossil Malaysia Annual
fuels4. Report 2022

The energy transition drives an increasing demand for

environmental, social and governance (ESG) compliance in
investment and business decisions. This has a direct effect on the
economy, including for small and medium enterprises (SMEs).
ESG necessitates a shift in organisations' capacity to measure
and report carbon emissions. This will be a critical factor in
ensuring continued access to financing and prosperity for SMEs.

Effective energy transition management requires a

whole-of-nation approach involving the federal government,
state governments, industry and the general public, as well as the
international community. This will ensure the coherence of policy
planning and implementation in balancing the energy trilemma
of security, affordability and environmental sustainability.

National Energy Transition Roadmap Part 1

Malaysia’s Policy Responses
Malaysia's five-year development plans cover socioeconomic policy planning that
sets out the country's direction and growth targets as well as the allocation ceiling for
development expenditure.

The Twelfth Malaysia Plan, 2021-2025 (Twelfth Plan) outlines the aspiration for the nation
to achieve net-zero GHG emissions as early as 2050. The plan emphasises Malaysia's
approach to effectively manage its energy transition. It recognises the complex and
interconnected nature of energy systems and acknowledges the need to balance the
energy trilemma. The approach not only ensures that energy policies and programmes
are environmentally responsible but also takes the socioeconomic implications into
consideration.

The National Energy Policy, 2022-2040 (DTN) lays the groundwork for a transformation
in the energy landscape. It defines the energy transition as a structural shift in energy
systems, characterised by a transition towards cleaner sources of energy, increased use of
RE, and a significant reduction in carbon emissions. The energy transition is expected to
occur at an accelerated pace, driven by rapid technological advances and robust climate
change policies.

The DTN's Low Carbon Nation Aspiration 2040 (LCNA 2040) seeks to transform the
primary energy supply, moving to cleaner, RE sources. LCNA 2040 emphasises low-
carbon policies, including:

• Restricting the development of new coal power plants while the renewables share is
being increased
• Driving energy efficiency practices
• Encouraging the adoption of electric vehicles (EVs)
• Increasing public transport's modal share
• Improving carbon footprint accounting and sustainability reporting

These progressive aspirations will ensure the energy sector is resilient to future
challenges and in a good position to seize the opportunities arising from the energy
transition. The DTN is supported by four strategic pillars, 12 strategies, 31 action plans
and five enablers, as shown in Exhibit 2.

12 National Energy Transition Roadmap

 Exhibit 2: The DTN Framework
Framework of National Energy Policy, 2022-2040 (DTN)

Vision
Energy sustainability towards achieving shared prosperity

3 Objectives Socialsecurity
Macroeconomic resilience and energy equitability and affordability
Environmental sustainability

A B C D
Stimulate Optimise
growth, market
energy opportunities
Enhanceandenergy-sector
cost advantage
contribution
for the economy
towards
Ensureand
energy
environmental
people
securitysustainability
towards fiscal sustainability
resources to stimulate sustainable economic growth
4 Strategic
thrusts

3 strategies 3 strategies 2 strategies 3 strategies

11 Strategies
1 cross-cutting strategy

12 action plans 8 action plans 4 action plans 4 action plans

31 Action
plans 3 cross-cutting action plans

Strengthen enablers for effective delivery

5 Enablers Financing & investment
Human capital & capabilities
Policy & Technology & infrastructure
Governance
regulation

Malaysia is an ardent proponent of an energy transition anchored on just, inclusive

and orderly principles. The government desires to develop a green economy that is fair
and inclusive for everyone, creating decent work opportunities for all.

Just Energy Transition (JET): What It Means and What Needs to Be Overcome

What it means: Just transition means greening the economy in a way that is as fair and inclusive as po

What needs to be overcome: Energy transition brings significant challenges and risks to the livelihood

National Energy Transition Roadmap Part 1

National Energy Transition
Roadmap (NETR)
The Ministry of Economy leads the development of the NETR with invaluable support
from the Steering Committee and the Technical Committee. These committees comprise
representatives from ministries, agencies and private sector (Exhibit 3) to help ensure a
collaborative and comprehensive approach to the development process. In addition, the
Project Team includes representatives from the Energy Commission (ST), Sustainable
Energy Development Authority (SEDA), Malaysian Green Technology and Climate Change
Corporation (MGTC), PETRONAS and Tenaga Nasional Berhad (TNB) to leverage the
diverse expertise in ensuring NETR's strategies and plans meet the needs of the wider
stakeholders.
Exhibit 3: The NETR Steering Committee and Technical Committee members

Ministry of Economy Ministry of Natural Resources, Environment

Ministry of Investment,
& Climate Trade Ministry
Changeand
(NRECC) of Transport
Industry (MITI) (MOT) Ministry of Finance (MOF)

Ministry of Plantation & CommoditiesMinistry of Agriculture & Food Security

Ministry of Local Government Development
Ministry of Domestic Trade and Cost of Living

Ministry of Science, Technology & Innovation

Ministry of Rural and Regional Development

Ministry of Foreign Affairs
UPEN Sabah UPEN Sarawak Energy Commission (ST)

Sustainable Energy Development Authority

Malaysian
Malaysia
Green(SEDA)
Technology and Climate Change Corporation (MGTC)
Bank Negara Malaysia (BNM) PETRONAS

14 National Energy Transition Roadmap

To ensure inclusive participation in the development of NETR, the Ministry of
Economy organised a workshop on 17 April 2023 as a platform for discussions and
information exchange between ministries, agencies, the private sector and industry
associations, including those from Sabah and Sarawak.

The ministry has also undertaken more than 40 engagements and consultations to
gather feedback and ensure the accuracy and validity of the NETR data and initiatives.
This
feedback has helped to shape the scoping of the roadmap and refine the NETR's
flagship catalyst projects and initiatives.

National Energy Transition Roadmap Part 1

The Project Team undertook a comprehensive scoping and stocktaking process of
macro and sectoral policies, including the Twelfth Malaysia Plan, the DTN, BUR4, the
National Energy Efficiency Action Plan (NEEAP), Malaysia Renewable Energy Roadmap
(MyRER), Malaysia Energy Transition Outlook (METO), National Low Carbon Cities
Masterplan,
Green Technology Master Plan Malaysia 2017-2030, Low Carbon Mobility Blueprint,
and GHG emissions reduction plans from the state governments and private sector.

The team also consults and collaborates with the Ministry of Finance (MOF), Bank
Negara Malaysia (BNM) and Securities Commission (SC) to explore suitable energy
transition financing.

The development of the NETR is divided into two parts (Exhibit 4). Part 1 outlines the 10
flagship catalyst projects and impact initiatives based on six energy transition levers,
namely: EE; RE; hydrogen; bioenergy; green mobility; and CCUS. The six levers are
further supported by five enablers: governance; policy and regulation; finance and
investment; human capital and capabilities; and technology and infrastructure.

Part 2 will focus on establishing the low-carbon pathway, energy mix and emissions
reduction targets needed for the energy sector. The NETR will further explore the
provision of technology transfer and green financing through bilateral and multilateral
cooperation. Targeted investments, people strategies and international cooperation
planning, as well as policy and regulatory frameworks, will be strengthened to develop
the infrastructure, technology and talent needed to scale up and sustain
decarbonisation efforts.
Exhibit 4: Parts f and 2 of the NETR
NETR Part f NETR Part 2
Identify flagship catalyst projects and initiatives Establish low-carbon pathway, energy mix and emission target reduction
for the energy sector
6 Energy Transition Levers 10 Flagship Catalyst Projects

Energy Efficiency Energy transition ambition and macro position

Efficient Switch
(EE)

Renewable Energy Zone

(RE Zone) Energy transition levers
Renewable
Energy (RE) Energy Storage

Energy Secure

Carbon EnergyRenewableHydrogenBioenergyGreenCapture,
Green Hydrogen EfficiencyEnergyMobilityUtilisation
Hydrogen (EE)(RE)and Storage
(CCUS)
Hydrogen for Power

Bioenergy
Biomass Demand Creation

Green Mobility Future Mobility

Future Fuel
Carbon Capture, Utilisation and
Storage (CCUS)
Cross-cutting Enablers
CCS for Industry
Financing & Human Capital & Policy & Technology &
Governance
Investments Capabilities Regulation Infrastructure

16 National Energy Transition Roadmap

Guiding Principles
There are four guiding principles behind the NETR (Exhibit 5). The first principle
highlights the importance of aligning the energy sector with the country's
aspirations and commitments to sustainable development.

The second principle emphasises that the energy transition must be just, inclusive
and cost-effective. It acknowledges the challenges that exist for low-income and
vulnerable populations. The NETR aims to ensure that the benefits and opportunities
from the
energy transition trickle down to every segment of society, leaving no one behind.

The third principle stresses the need for effective governance and a whole-of-nation
approach. Collaboration with state governments is crucial to create a vibrant energy
industry ecosystem that supports sustainability and facilitates the transition to a
low-carbon economy.

The fourth principle highlights the significance of creating high-value employment for
people and generating high-impact economic opportunities for SMEs.

Exhibit 5: The four guiding principles of NETR

Based on national
aspirations and Just, inclusive Effective governance High-impact job
commitments and cost- and whole-of-nation opportunities, SME
effective approach involvement in the
ecosystem

In terms of project evaluation, the NETR subscribes to the Climate Change and
Principle-Based Taxonomy defined by BNM. In addition, the proposals are
further assessed in accordance with the themes of the Twelfth Plan, namely:
resetting the economy; strengthening security, well-being and inclusivity; and
advancing
sustainability. Projects and initiatives are also evaluated based on their potentials to
reduce GHG emissions, provide economic opportunities, promote cost-effective
solutions and deliver benefits to the rakyat.

Based on the roadmap design, six energy transition levers have been identified
namely EE, RE, hydrogen, bioenergy, green mobility and CCUS (Exhibit 6).
National Energy Transition Roadmap Part 1
Exhibit 6: Energy transition levers

Energy transition levers Prioritisation criteria

Optimi

Energy Efficiency Emission reduction potential

Advancing green growth and enhancing sustainability to become a l
nation while addressing energy trilemma.

Renewable Energy Economic opportunities Propelling strategic and high impact indust
strengthen investments and create job opportunities.
Climate Change and Principle-based

Cost effectiveness
Hydrogen Upfront investments, especially in nascent technologies, will yield

Social inclusiveness
Strengthening the security, wellbeing and inclusivity through clean
Bioenergy
Shift to

Green Mobility

Carbon Capture,
Aba

Utilization and
Storage

Review of Renewable Energy Policies

In line with the development of the NETR, the Ministry of Economy has also
collaborated with NRECC to review and update existing policies on RE, leading to the
following decisions:
• Increase the target for installed RE capacity from 40% in 2035 to 70% by 2050.
The higher target is expected to generate new economic opportunities by
attracting multinational companies, especially RE 100 companies, to operate in
Malaysia
• Expand RE development based on the concept of a self-contained system to
encourage investment in the RE value chain and diversify RE programmes according
to the principle of “willing buyer, willing seller”
• Scale up the installation of solar systems in government buildings
• Allow cross-border RE trade through the establishment of an electricity exchange
system.

18 National Energy Transition Roadmap

The establishment of RE exchange system will position Malaysia as a regional hub
for RE while giving added impetus to, and building on, the ASEAN Power Grid (APG)
initiative. Malaysia is currently one of the key members participating in the Lao
PDR-Thailand-Malaysia-Singapore Power Integration Project (LTMS-PIP), the
pathfinder to advance cross-border power trade among ASEAN Member States, and
the APG initiative in the long-run.

The government is also cognisant of the need to bolster the national power grid to
accommodate higher RE uptake. This may come in the form of future-proofing
Malaysia Electricity Supply Industry (MESI) elements including introducing smart grid
features and enabling the grid for third party access.

Complementary Plans
Within the whole-of-nation approach, there has been a steady development of new
policies and strategies to complement NETR in strengthening Malaysia's low-carbon
transition. Among others, these include the Nationally Determined Contribution (NDC)
Roadmap and Long-Term Low Development Strategy (LT-LEDS) as well as Future
Proofing MESI from the NRECC, the Carbon Pricing Instrument developed by the
Ministry of Finance (MOF), the National ESG Industry Framework, the New Industrial
Master Plan (NIMP) and the Chemical Industry Roadmap (CIR) by the Ministry of
Investment, Trade and Industry (MITI), the Hydrogen Economy and Technology
Roadmap (HETR) by the
Ministry of Science, Technology and Innovation (MOSTI) and the National Biomass
Action Plan by the Ministry of Plantation and Commodities (KPK).

Natural gas will continue to play a pivotal role in Malaysia's energy landscape as the
nation moves towards a low carbon economy. To this end, the ministry is in the midst
of developing the Natural Gas Roadmap (NGR) to optimise the value of indigenous
natural gas resources, increase the domestic use natural gas use, enhance the security
of supply and access to cost-competitive natural gas, and position natural gas to
support Malaysia's energy transition.

Flagship Catalyst Projects and Initiatives

The Ministry of Economy has received an extensive list of proposals for energy
transition projects and initiatives from ministries and businesses. Based on the
evaluation process and guiding principles established by NETR, 10 flagship catalyst
projects and initiatives were identified. These flagship projects are expected to generate
an estimated total investment of more than RM25 billion, create 23,000 job opportunities
and reduce GHG emissions of more than 10,000 Gg CO2 equivalent per year.

National Energy Transition Roadmap Part 1

The implementation of the flagship projects and initiatives will be supported by the
expansion of the Malaysia Energy Literacy Program (MELP) under TNB to advocate and
foster the rakyat's understanding of energy issues, especially the energy transition and
the challenges of the energy trilemma. Other support measures will be identified in Part 2
of NETR.

The flagship catalyst projects and initiatives will have several modalities to demonstrate
the varying level of technology and solutions needed to address energy transition. As
such, each modality will be championed by different entities displaying their unique
approach in supporting Malaysia's energy transition advancement. The 10 flagship
catalyst projects and initiatives and their implementation modalities are outlined in
Exhibit 7:

Exhibit T: NETR f0 flagship catalyst projects and initiatives

and implementation modalities

Energy
Transition Flagship Modalities Champion
Levers

Energy Efficient Energy Efficiency and Conservation Act (EECA) NRECC

Efficiency Switch
The Energy Efficiency and Conservation Bill to regulate
energy-intensive users, buildings and products will
(EE) be tabled in Parliament in the fourth quarter of 2023.

Energy Audit For Rail Sector MOT

Railway operators to perform energy audit exercise
under the Energy Audit Conditional Grant (EACG 2.0)
aimed at establishing the current energy
consumption baseline, identifying potential energy
savings in their premises and lowering utility costs.

Renewable Renewable Integrated RE Zone Khazanah

Energy Energy Zone
A large-scale, integrated sustainable development Nasional Berhad
spanning the entire energy supply chain, from
(RE) (RE Zone) generation and energy storage to efficient demand
management and consumption, will be created. A
pilot RE Zone will be established encompassing an
industrial park, zero-carbon city, residential
development and data centre.

Solar Park TNB

Centralised large-scale solar (LSS) parks co-developed
by TNB, in partnership with SMEs, cooperatives, and
state economic development corporations. These
parks will consist of 100 MW deployment per site
across 5 sites in several states.

20 National Energy Transition Roadmap

Energy
Transition Flagship Modalities Champion
Levers

Renewable Renewable Hybrid Hydro-Floating Solar PV (HHFS) TNB

Energy Energy Zone
Development of 2500 MW HHFS potential at TNB
hydro dam reservoirs will increase RE generation close
(RE) (RE Zone) to
24-hour availability. The hydro plant acts as energy
storage by conserving the water in the reservoir during
peak hours and discharging it during non-peak, while
providing quick response to the duck curve. Reduce
investment by utilising existing hydro infrastructure as
compared to BESS + solar PV. Potential scaling up for
future green hydrogen feedstock in collaboration with
other hydrogen producers such as Gentari as the
green electron o aker.

Sime Darby
Residential Solar Property
The construction of 4.5 MW solar capacity across 450
homes in City of Elmina and Bandar Bukit Raja. Up to
10 kW solar capacity per house through rooftop
leasing with o ake within the township by high-
demand users from the commercial or industrial sector.

Energy NRECC
Energy Storage System (ESS) Energy
Storage Development of utility-scale ESS to enable Commission (ST)
higher penetration of variable RE in Malaysia.

Energy Sabah Energy Security Initiative Energy

Secure An integrated initiative is underway to secure the Commission of
long-term energy supply and support the Sabah (ECoS)
socioeconomic development of the state. This includes:
the development of large-scale solar (LSS) and small
hydropower plants; the formulation of policy and
regulatory framework on biowaste to ensure a
consistent supply of feedstock; and the feasibility of
geothermal for power generation.

Hydrogen
Green Sarawak Hydrogen Hub SEDC Energy
Implementation of three integrated projects to produce
Hydrogen green hydrogen will propel Sarawak as a regional
green hydrogen hub. These projects involve the
development of a green hydrogen production plant in
Kuching by 2025 for domestic use, and two plants in
Bintulu by 2027, mainly for export purposes. Sarawak
State
Government through SEDC Energy is collaborating
with strategic partners to develop the state into a green
hydrogen hub.

Hydrogen
for Power Co-Firing of Hydrogen and Ammonia TNB
Green hydrogen and ammonia co-firing in
collaboration with PETRONAS to decarbonise TNB
generation plants.

National Energy Transition Roadmap Part 1

 H,

22 National Energy Transition Roadmap

Energy
Transition Flagship Modalities Champion
Levers

Bioenergy Biomass Biomass Clustering NRECC

Development of potential biomass clusters with SEDA
Demand a centralised plant using aggregated feedstock
Creation from multiple neighbouring mills. Biomass
clustering is expected to improve economies of
scale as well as securing larger and more reliable
feedstock.

Biomass Co-firing Malakoff

Co-firing initiative at the existing 2100MW Tanjung Bin
Power Plant by burning biomass along with coal.
Biomass sources include Empty Fruit Bunch (EFB)
pellets, wood chips, wood pellets, bamboo pellets,
coconut husk and rice husk. A pilot phase of co-
firing will commence in 2024 with a view to scale up
to a minimum of 15% biomass co-firing capacity by
2027.

Green Future EV Charging Stations MITI

mobility Mobility
Installation of 10,000 EV charging stations by 2025
along highways and at selected commercial buildings
in collaboration with strategic partners, among others,
TNB, Plus Malaysia Berhad (PLUS), Permodalan
Nasional Berhad (PNB), Gentari and Sunway Group.

Mobile Hydrogen Refuelling Station MOSTI

Introduction of the first mobile hydrogen refuelling
station for transportation in Peninsular Malaysia, in
collaboration with NanoMalaysia Berhad, PETRONAS,
United Motor Works (UMW) and the MGTC.

Public Transport Electrification MOT

This project involves electrification of first and last mile Prasarana
public transport and upgrading infrastructure and
electrical lines at bus depots for charging, with
maintenance, repair and overhaul (MRO)
opportunities for local SMEs.

Solar Photovoltaic (PV) Installation for MOT

Rail Operations
The Rail Sector Energy Management and
Renewable Energy (EMRE) Action Plan entails the
installation of Solar Photovoltaic (PV) systems for
non-traction
electricity usage in rail operations such as stations
and depots.

Future Fuel Biofuels Hub PETRONAS

A bio-refinery will be developed in Pengerang, Johor, to
serve as a catalyst for creating hubs to produce a
range of bio-based products, including sustainable
aviation fuel (SAF), hydrotreated vegetable oil (HVO),
advanced sustainable fuel (ASF) and biochemicals.

National Energy Transition Roadmap Part 1

 Energy Transition Levers
Flagship Modalities Champion

CCUS CCS for Industry Regulatory Framework Ministry of Economy

Development of policy and regulatory framework to facilitate the implementation of CCU

Kasawari and Lang Lebah CCS PETRONAS

Implementation of carbon capture and storage (CCS)
catalyst projects for Kasawari and Lang Lebah high-CO2
CO, CO,

CO, gas fields, which are expected to be in operation by

CO, CO,

2026 and 2028 respectively. CCS technology will be used to capture CO2 from the gas production field and store it in the depleted fields

Energy Transition Financing Requirement

METO 2023 and WWF-BCG report Securing Our Future: Net Zero Pathways for Malaysia
indicated that the cumulative investment needed for Malaysia's energy transition to
achieve net-zero by 2050 ranges from RM435 billion to RM1.85 trillion (Exhibit 8).

Exhibit 8: Cumulative investments required for

Malaysia to achieve net-zero by 2050

Estimated cumulative investments until 1,850

2050 (RM Billion)

435

WWF-BCG NetMalaysia Energy Zero PathwaysTrasition (Net Zero 2050Outlook (1.5-S

Scenario)RE100 Scenario)

To achieve the target of 70% RE in installed capacity mix by 2050, approximately

RM637 billion is needed, which consists of investment in solar capacity as well as
transmission grid and distribution network reinforcement.

24 National Energy Transition Roadmap

The implementation of 10 flagship projects and initiatives under Part 1 of the NETR is
expected to generate investment of approximately more than RM25 billion
through a combination of private and public funding.

Meanwhile, Bursa Malaysia launched its voluntary carbon market, called the Bursa
Carbon Exchange (BCX), to enable voluntary purchases of carbon credits from
climate-friendly projects and solutions. The BCX Inaugural Auction took place on 16
March 2023 to facilitate price discovery.

Carbon trading in Malaysia is still at initial stage, where the Ministry of Finance in
collaboration with World Bank is currently conducting a feasibility study for carbon
pricing instrument (CPI). The study is focusing on the viability of Partnership for Market
Implementation (PMI) and PMI Readiness Support Plan (RSP) in Malaysia. The study is
expected to complete in 2025 to determine the carbon pricing instrument suitable for
implementation in Malaysia.

National Energy Transition Roadmap Part 1

 Conclusion
There is no one-size-fits-all model to meet growing global energy needs and reduce GHG
emissions. The NETR is critical if Malaysia is to navigate the complexity of energy
transition on a large scale, especially the shift from a traditional fossil fuel-based
economy to a high-value green economy. It will also reinforce the country's
commitment as a responsible stakeholder aiming to achieve its net-zero GHG
aspirations as early as 2050, despite contributing 0.8% to global GHG emissions.

Future energy pathways will be nationally determined and based on the country's unique
circumstances and priorities. Over the next two decades, Malaysia will focus on driving
clean energy through a whole-of-nation approach, improving energy efficiency, reducing
carbon and methane emissions, and accelerating innovation to commercialise
hydrogen technology. These actions will be accompanied by strategies to unlock
capital flows in support of the energy transition.

The NETR Part 1 projects and initiatives will set the agenda and signal to the market the
intended direction of the Malaysian government in exploring new energy sources,
developing future capabilities and shaping market demand in the green economy. This
further supports Malaysia's commitment to a Just Energy Transition that protects the
rakyat, creates opportunity and supports technological innovation through a
coordinated whole-of-nation approach.

Ministry of Economy
PUTRAJAYA

July 2023

24 National Energy Transition Roadmap Part 1

Ministry of Economy
Menara Prisma
No. 26, Persiaran Perdana, Precint 3
Federal Government Administrative Centre
62675 Putrajaya, Malaysia

www.ekonomi.gov.my