KUALA LUMPUR: Malaysia will require an estimated RM637bil in new investments until 2050 in its transition to renewable energy (RE), says Natural Resources, Environment and Climate Change Minister Nik Nazmi Nik Ahmad.
He said at the same time, the revision of the electricity tariff surcharge had resulted in a more climate-friendly consumption of energy by businesses, with more firms now transitioning to RE and becoming more energy-efficient.
"The government increased the surcharge for high and medium voltage for non-domestic consumers by almost 400%.
"Yes, there were a lot of complaints but a few months down the road, more companies have installed solar panels and are now taking energy efficiency measures simply because we have put the price of energy at almost the market price," he said at the Climate Finance Summit in Sasana Kijang here.
"It was the right first move. Only by going towards such targeted subsidies can we see more rational and climate-friendly consumption of energy in Malaysia," he added.
The government, said Nik Nazmi, was committed to transitioning to RE from coal-based energy sources.
He called on the financial sector to join hands in facilitating this effort.
“This transition definitely requires substantial financial resources – an estimated RM637bil in new investments for RE is required up until 2050,” he said.
This will include investments in RE generation sources, strengthening of grid infrastructure, energy storage system integration, and grid system network operation augmentation.
However, the exact total of new investment required to reach net-zero emissions for the country was still being determined through comprehensive studies, he added.
The transition, said Nik Nazmi, was crucial to further mitigate the effects of climate change that had been impacting most countries globally, with total adaptation costs expected to reach USD85bil (RM392bil) for Malaysia in the next 50 years.
"The cost of the energy transition – which is at the heart of successful climate action – is immense," he said, reiterating the government's commitment to accelerate the deployment of RE and increase its share as the source for Malaysia’s power generation to 70% by 2050.
Expressing optimism that the government could raise the required investments, Bursa Malaysia and WWF-Malaysia chairman Tan Sri Abdul Wahid Omar said it only made up 1% of Malaysia’s nominal GDP and would only require RM15bil to RM18bil to be raised a year.
"A large sum of the investments will be channelled towards efforts in decarbonising the energy sector, particularly stopping the production of new coal plants that cause high carbon emissions.
"It will also be channelled towards electric vehicles and green hydrogen, which will reduce carbon emissions in the transportation sector," he said during a panel discussion.
Abdul Wahid said 60% of the total estimated new energy investments would be commercially viable on their own without any government funding.
Bank Negara Malaysia Assistant Governor Frazrali Ismail said the central bank planned to help in this effort by encouraging the philosophy of "greening finance" and "financing green" in its practices.
He also stressed the need to help the banking industry handle the change towards a green economy by recognising the risks involved in the transition and adopting ways to tackle these risks themselves.
"To help banks be better equipped to transition towards a green economy, one of Bank Negara Malaysia's initiatives is to include climate considerations in our supervisory letters," he said.
The Climate Finance Summit, co-organised by the Perdana Fellow Alumni Association and Chevening, brings together businesses, regulators, financiers and the public to identify Malaysia's position in the global climate narrative.
