AS renewable energy (RE) continues to its onward charge towards the country achieving net-zero, renewable energy certification (REC) may play an increasingly important role.
Using these certificates allow businesses – from large corporations to small and medium enterprises (SMEs) – to improve their net-zero standing, by supporting the use of RE through investment.
According to Saxon Renewable founder and managing director Reik Ong (pic), the company has seen an increase in the demand for RECs from corporations since 2022.
Ong was speaking on the topic of “The Strategic Role of Environmental Commodities (renewable energy certificates and carbon credits) in Corporate Sustainable Initiatives” at the Star ESG Summit on Nov 6, which was held at the Kuala Lumpur Convention Centre.
His session explored the strategic role of how instruments, like RECs, are utilised to offset carbon emissions, support environmental goals and enhance sustainability initiatives.
RECs are verifiable instruments certifying that electricity has been generated from renewable energy sources like solar, wind, hydro or geothermal power.
Ong said that corporations that approach him mostly face pressure.
“While things previously have been on a voluntary basis, and the status remains voluntary, in actual fact many have just started([turning to RE) due to pressure.”
He mentioned that there are a lot of pressures in the markets.
“First is regulatory pressure for example, companies in Malaysia are required to submit their sustainable reporting already, including other countries as well.
“Then slowly, all SMEs will also have to comply with this regulation as well.”
The current pricing mechanisms have recently been set since the governments have announced that Malaysia will start to impose carbon tax in 2026.
He shared that in Singapore, the carbon tax is already running and the tax is around one tonne, around S$80 per tonne, while in Europe, which uses the Emissions Trading System, the cost of the carbon is around €70 to €80 per tonne.
“If you don’t want to pay for all these taxes due to carbon emissions, then you should start to do something on that part.”
He said the second is social pressure, especially since many big brands face scrutiny if they are seen not to be doing enough on their sustainability.
However, he pointed out that the push companies face the most is from market pressure.
“The first form of this pressure is when the client demands. This is especially so for SMEs who buy RECs because they were told they will not be part of the supply chain if they do not comply.
“This could happen to larger companies as well, when they apply for tenders and are disqualified due to non-compliance.”
He added that while previously businesses would focus on raising their quality and productivity, those are not sufficient for today’s standards.
“There are also expectations from the supply chain, for example the banks that provide green financings will ask applicants to show their sustainability reports, upon which, they will get a better interest rate,” he added.
“There is a lot of pressure from shareholders, as well,
In a separate interview, Ong mentioned that Malaysia has the Green Energy Tariff from Tenaga Nasional Bhd
and the Corporate Green Power Programme, with 800 megawatt for the corporates to lock in a long-term RECs supply.
“And we have the Guidelines for Corporate Renewable Energy Supply Scheme as well.”
He said all these initiatives had helped corporations to achieve their carbon neutral targets.
“The REC is yet another device that companies can declare that they use renewable energies,” he said.
“RECS is based on supply and demand. In Malaysia now I think the supply is still running low, because we are getting more RE100 customers – corporations that have the highest stringent requirements on how they should buy RECs.
“We are getting more RE100 companies that are committed towards more renewable energy. There are also more SMEs or local companies that are pressured by these RE100 companies to achieve their targets.
“And also we are now inviting more data centres, which are also one of the biggest buyers of renewable energy or RECs.”
He said the government has provided these policies to assist companies in sourcing for renewable energies.
However he also said Malaysia can also refer to countries like Vietnam, which has more than ten times renewable energies landscape then Malaysia and who are achieving an oversupply of RECs that is cheap.
“That’s what we see in this region,” he added.
The ESG Summit is organised by Star Media Group, with Sime Darby Property Bhd as the Urban Biodiversity Partner. Saxon Renewables and Zurich Malaysia are silver sponsors.
