The

energy policy Energy policy is the manner in which a given entity (often governmental) has decided to address issues of energy development including energy conversion, distribution and use as well as reduction of greenhouse gas emissions in order to contri ...

Malaysia Malaysia ( ; ) is a country in Southeast Asia. The federation, federal constitutional monarchy consists of States and federal territories of Malaysia, thirteen states and three federal territories, separated by the South China Sea into two r ...

is determined by the

Malaysian Government The Government of Malaysia, officially the Federal Government of Malaysia ( ms, Kerajaan Persekutuan Malaysia), is based in the Federal Territory of Putrajaya with the exception of the legislative branch, which is located in Kuala Lumpur. Malay ...

, which address issues of energy production, distribution, and consumption. The Department of Electricity and Gas Supply acts as the regulator while other players in the energy sector include energy supply and service companies, research and development institutions and consumers. Government-linked companies

Petronas Petroliam Nasional Berhad (National Petroleum Limited), commonly known as Petronas, is a Malaysian oil and gas company. Established in 1974 and wholly owned by the Government of Malaysia, the corporation is vested with all oil and gas reso ...

and

Tenaga Nasional Berhad Tenaga Nasional Berhad (, abbreviated as TNB; TENAGA, ), also known as Tenaga Nasional or simply Tenaga, is the Malaysian multinational electricity company and is the only electric utility company in Peninsular Malaysia and also the largest p ...

are major players in Malaysia's energy sector. Governmental agencies that contribute to the policy are the Ministry of Energy, Green Technology and Water, Energy Commission (Suruhanjaya Tenaga), and the Malaysia Energy Centre (Pusat Tenaga Malaysia). Among the documents that the

policy Policy is a deliberate system of guidelines to guide decisions and achieve rational outcomes. A policy is a statement of intent and is implemented as a procedure or protocol. Policies are generally adopted by a governance body within an organ ...

is based on are the 1974 Petroleum Development Act, 1975 National Petroleum Policy, 1980 National Depletion Policy, 1990 Electricity Supply Act, 1993 Gas Supply Acts, 1994 Electricity Regulations, 1997 Gas Supply Regulation and the 2001 Energy Commission Act.

Policy overview

Energy policy is the responsibility of the Office of the

Prime Minister A prime minister, premier or chief of cabinet is the head of the cabinet and the leader of the ministers in the executive branch of government, often in a parliamentary or semi-presidential system. Under those systems, a prime minister is not ...

, specifically the Economic Planning Unit and the Implementation and Coordination Unit. The Ministry of Energy, Green Technology and Water has identified three principal energy objectives that would be instrumental in guiding the development of its energy sector.

Supply

To ensure the provision of adequate, secure and cost-effective energy supplies through developing indigenous

energy resource Energy development is the field of activities focused on obtaining sources of energy from natural resources. These activities include production of renewable, nuclear, and fossil fuel derived sources of energy, and for the recovery and reus ...

s both

non-renewable A non-renewable resource (also called a finite resource) is a natural resource that cannot be readily replaced by natural means at a pace quick enough to keep up with consumption. An example is carbon-based fossil fuels. The original organic mat ...

and renewable energy resources using the latest cost options and diversification of supply sources both from within and outside the country. In pursuit of the supply objective, policy initiatives, particularly with respect to

crude oil Petroleum, also known as crude oil, or simply oil, is a naturally occurring yellowish-black liquid mixture of mainly hydrocarbons, and is found in geological formations. The name ''petroleum'' covers both naturally occurring unprocessed crude ...

and natural gas, Malaysia have aimed at both extending the life of domestic non-renewable energy resources, as well as diversification away from oil dependence to include other forms of energy sources. Oil production peaked in 2016, with large and shallow oil fields having matured. Malaysia has cooperated with

OPEC The Organization of the Petroleum Exporting Countries (OPEC, ) is a cartel of countries. Founded on 14 September 1960 in Baghdad by the first five members (Iran, Iraq, Kuwait, Saudi Arabia, and Venezuela), it has, since 1965, been headquart ...

to reduce production in times of global slumps.

Utilisation

To promote the efficient utilisation of energy and discourage wasteful and non-productive patterns of energy consumption. The policy's approach to realise this objective is to rely heavily on the energy industry and consumers to exercise efficiency in energy production, transportation,

energy conversion Energy transformation, also known as energy conversion, is the process of changing energy from one form to another. In physics, energy is a quantity that provides the capacity to perform work or moving, (e.g. Lifting an object) or provides heat. ...

, utilisation and consumption through the implementation of awareness programs.

Demand side management Energy demand management, also known as demand-side management (DSM) or demand-side response (DSR), is the modification of consumer demand for energy through various methods such as financial incentives and behavioral change through education. Us ...

initiatives by the utilities, particularly through

tariff A tariff is a tax imposed by the government of a country or by a supranational union on imports or exports of goods. Besides being a source of revenue for the government, import duties can also be a form of regulation of foreign trade and poli ...

incentives, have had some impact on efficient utilisation and consumption. Government initiatives to encourage

cogeneration Cogeneration or combined heat and power (CHP) is the use of a heat engine or power station to generate electricity and useful heat at the same time. Cogeneration is a more efficient use of fuel or heat, because otherwise- wasted heat from elect ...

are also aimed at promoting an efficient method for generating heat energy and electricity from a single energy source.

Environmental

To minimise the negative impacts of

energy production Energy development is the field of activities focused on obtaining sources of energy from natural resources. These activities include production of renewable, nuclear, and fossil fuel derived sources of energy, and for the recovery and reuse ...

, transportation, conversion, utilisation and consumption on the

environment Environment most often refers to: __NOTOC__ * Natural environment, all living and non-living things occurring naturally * Biophysical environment, the physical and biological factors along with their chemical interactions that affect an organism or ...

. The environment objective has seen limited policy initiatives in the past. All major energy development projects are subjected to the mandatory

environmental impact assessment Environmental Impact assessment (EIA) is the assessment of the environmental consequences of a plan, policy, program, or actual projects prior to the decision to move forward with the proposed action. In this context, the term "environmental imp ...

requirement. Environmental consequences, such as

emissions Emission may refer to: Chemical products * Emission of air pollutants, notably: **Flue gas, gas exiting to the atmosphere via a flue ** Exhaust gas, flue gas generated by fuel combustion ** Emission of greenhouse gases, which absorb and emit rad ...

, discharges and

noise Noise is unwanted sound considered unpleasant, loud or disruptive to hearing. From a physics standpoint, there is no distinction between noise and desired sound, as both are vibrations through a medium, such as air or water. The difference arise ...

are subjected to the environmental quality standards like air quality and emission standards.

Renewable energy policy

Malaysia PVOUT Photovoltaic-power-potential-map GlobalSolarAtlas World-Bank-Esmap-Solargis

The Malaysian government is seeking to intensify the development of

renewable energy Renewable energy is energy that is collected from renewable resources that are naturally replenished on a human timescale. It includes sources such as sunlight, wind, the movement of water, and geothermal heat. Although most renewable energy ...

, particularly

biomass Biomass is plant-based material used as a fuel for heat or electricity production. It can be in the form of wood, wood residues, energy crops, agricultural residues, and waste from industry, farms, and households. Some people use the terms bi ...

, as the 'fifth fuel' resource under the country's Fuel Diversification Policy. The policy, which was set out in 2001, had a target of renewable energy providing 5% of electricity generation by 2005, equal to between 500 and 600

megawatt The watt (symbol: W) is the unit of Power (physics), power or radiant flux in the International System of Units, International System of Units (SI), equal to 1 joule per second or 1 kg⋅m2⋅s−3. It is used to quantification (science), ...

(MW) of installed capacity. The policy has been reinforced by fiscal

incentives In general, incentives are anything that persuade a person to alter their behaviour. It is emphasised that incentives matter by the basic law of economists and the laws of behaviour, which state that higher incentives amount to greater levels of ...

, such as investment tax allowances and the Small Renewable Energy Programme (SREP), which encourages the connection of small renewable power generation plants to the national grid.Business Monitor International (February 2008). "Malaysia Power Report Q2 2008", London,UK: Business Monitor International. In 2018, Malaysia set a 20% target of renewable energy in the country's

energy mix The energy mix is a group of different primary energy sources from which secondary energy for direct use - such as electricity - is produced. Energy mix refers to all direct uses of energy, such as transportation and housing, and should not be c ...

by 2025, an 18% increase from the 2% Malaysia had in 2018.Vakulchuk, R., Chan, H.Y., Kresnawan, M.R., Merdekawati, M., Overland, I., Sagbakken, H.F., Suryadi, B., Utama, N.A. and Yurnaidi, Z. 2020. Malaysia: how to scale up investment in renewable energy. ASEAN Centre for Energy (ACE) Policy Brief Series, No. 8. https://www.researchgate.net/publication/341793894 In order to reach the target, the country needs to attract a total of USD 8 billion of investment in renewable energy during this period; for attracting investment the government could improve its renewable energy governance and the investment climate for foreign investors. The Small Renewable Energy Program allows renewable projects with up to 10 MW of capacity to sell their electricity output to TNB, under 21-year licence agreements. Numerous applications for the program have been received, mainly involving biomass, and of these over half are for

palm oil Palm oil is an edible vegetable oil derived from the mesocarp (reddish pulp) of the fruit of the oil palms. The oil is used in food manufacturing, in beauty products, and as biofuel. Palm oil accounted for about 33% of global oils produced from ...

waste. In 2005 there were 28 approved biomass projects involving the installation of 194 MW of grid-connected capacity. There were also four approved

landfill gas Landfill gas is a mix of different gases created by the action of microorganisms within a landfill as they decompose organic waste, including for example, food waste and paper waste. Landfill gas is approximately forty to sixty percent methane, ...

-based projects, with 9 MW of capacity, and 18 mini hydro-electric projects offering 69.9 MW of total capacity. In 2013, the Malaysian government announced investment tax allowance of 100 percentage on qualifying capital expenditures. Though QCE calculation was said to be considered for a maximum period of five years. This measure was taken in order to encourage investment in renewable energy sector. In 2016, the Sustainable Energy Development Authority (SEDA) of Malaysia has conducted a comprehensive onshore wind mapping effort. SEDA Malaysia is a statutory body formed under the Sustainable Energy Development Authority Act of 2011. One of the key roles of the SEDA is to administer and manage the implementation of the Feed-in Tariff (FiT) mechanism, including a Renewable Energy fund mandated under the Renewable Energy Act of 2011. The Renewable Energy fund was created to support the FiT scheme. The current onshore wind mapping exercise will determine whether wind energy should be included in the FiT regime. As of 2021, Malaysia is one of the major producers of

solar panels A solar cell panel, solar electric panel, photo-voltaic (PV) module, PV panel or solar panel is an assembly of photovoltaic solar cells mounted in a (usually rectangular) frame, and a neatly organised collection of PV panels is called a phot ...

in the world, but paradoxically it has yet to fully capitalize on this for domestic electricity generation.

Production and consumption

Traditionally, energy production in Malaysia has been based around oil and natural gas. Malaysia currently has 13GW of electrical generation capacity. Power generation capacity connected to the Malaysian National Grid is 19,023 MW, with a maximum demand of 13,340 MW as of July 2007 according to Suruhanjaya Tenaga. Total electricity generation for 2007 is 108,539

GW·h A kilowatt-hour (unit symbol: kW⋅h or kW h; commonly written as kWh) is a unit of energy: one kilowatt of power for one hour. In terms of SI derived units with special names, it equals 3.6 megajoules (MJ). Kilowatt-hours are a common bil ...

with a total consumption of 97,113 GW·h or 3,570 kW·h per capita. The generation fuel mix is 62.6% gas, 20.9% coal, 9.5% hydro and 7% from other forms of fuel. In 2007, the country as a whole consumes 514 thousand barrels (23.6 million tonnes) of oil daily against a production of 755 thousand barrels (34.2 million tonnes) per day. Oil is generally transported via trucks rather than pipes. In the 21st century the government invested in oil refining, allowing drilled oil to be processed domestically. This has meant that most domestic demand is able to be met without imports. However, Malaysia only has 33 years of natural gas reserves, and 19 years of oil reserves, whilst the demand for energy is increasing. Due to this the Malaysian government is expanding into renewable energy sources. Currently 16% of Malaysian electricity generation is hydroelectric, the remaining 84% being thermal. The oil and gas industry in Malaysia is currently dominated by state owned

, and the energy sector as a whole is regulated by Suruhanjaya Tenaga, a statutory commission who governs the energy in the peninsula and Sabah, under the terms of the Electricity Commission Act of 2001. Petronas has exclusive ownership rights over oil and gas within Malaysia's territory, although it can license rights to other companies. Revenue from Petronas provides a significant proportion of national government revenue (35% in 2019), and the states of Sabah and Sarawak additionally levy a 5% tax on production within their territory. Sarawak established

Petroleum Sarawak Berhad Petroleum Sarawak Berhad (PETROS) is a state-owned oil and gas exploration firm established and owned by the State Government of Sarawak. Background Sarawak's and Sabah's oil and gas rights were lost to the Federal Government after the 13 May I ...

in March 2018, putting it on equal footing with Petronas within their state. Regulatory disputes between the two companies are ongoing. Disputes with

Brunei Brunei ( , ), formally Brunei Darussalam ( ms, Negara Brunei Darussalam, Jawi alphabet, Jawi: , ), is a country located on the north coast of the island of Borneo in Southeast Asia. Apart from its South China Sea coast, it is completely sur ...

exist over the management of oil and gas fields that cross the border.

Peninsular Malaysia historical electricity production and consumption data

All figures are in Megawatts Source: Suruhanjaya Tenaga (Energy Commission) Annual Report

Sabah historical electricity production and consumption data

All figures are in megawatts Source: Suruhanjaya Tenaga Annual Report

Energy efficiency

Energy use per person is relatively high in Malaysia compared to other upper-middle-income countries such as Brazil, Turkey or China. In 2015, the transport sector consumed 23,425 kilotonnes of oil equivalent (ktoe), meaning that it was responsible for 45.2% of total energy consumed in Malaysia. It was followed by the industrial sector, which consumed 13,989 ktoe (27.0% of total energy demand); the residential and commercial sectors at 7,559 ktoe (14.6% of total energy demand); non-energy uses such as the manufacture of chemicals at 5,928 ktoe (11.4%) and agriculture accounting for the rest. The Malaysian Energy Commission has set up various energy efficiency programs. Local governments are also showing leadership on energy efficiency policies: Putrajaya has the aspiration of becoming a "Green City" by 2025, while Iskandar Malaysia has developed a "Low-Carbon Society Blueprint". There are significant opportunities to improve energy efficiency in urban areas, where 73% of Malaysia's population live. and over 90% of Malaysia's economic activity is conducted. Johor Bahru, for example, could reduce its emissions by a quarter by 2025 through a range of cost-effective investments: switching from diesel to natural gas in the rubber and petrochemical industries, promoting hybrid cars, adopting more ambitious green building standards and introducing mandatory energy performance standards for appliances such as air conditioners. Suruhanjaya Tenaga (the Energy Commission) already have some of these measures in place. For example, the Electricity Regulation 1994 has introduced labelling systems and performance standards for air conditioners, refrigerators, domestic fans and televisions. There are also a range of government schemes for financing building energy retrofits, which have had various levels of effectiveness.

References

External links

Malaysia's Ministry of Energy, Green Technology and WaterMalaysia's Energy CommissionBioGen Portal of the Malaysia Energy CentreMalaysia Building Integrated Photovoltaic Technology Application Project1990 Electricity Supply Act 2001 Energy Commission Act
{{Malaysia topics Ministry of Energy, Technology, Science, Climate Change and Environment (Malaysia)

Public policy in Malaysia