Summary of NETR 1696938078
Summary of NETR 1696938078
Summary of NETR 1696938078
Summary of the
National Energy
Transition Roadmap
Navigating the transient stage
Contents
Part 1:
3 Capitalising on high-value
green economy
Part 2:
10 Establishing low-carbon
pathway, energy mix and
emission target reduction
32 Your voice
What we are hearing
This summary document is mainly sourced from the National Energy Transition Roadmap (NETR)
supplemented by further research and analysis.
Part 1:
Capitalising on high-value
green economy
3
Forecasted energy flows in 2050 shows that dependency on
fossil fuels will reduce while renewable energy grows
PwC Strategy& illustration of energy source and target (2050) - Illustrative
By 2050,
low-carbon sources will
account for more than
90% of energy, and fossil
fuels will account for less
than 10%.
Renewable energy
sources will be the main
feedstock for the
economy, while fossil fuels
will be required for
hard-to-
decarbonise sectors.
2
26% 4% Renewables
28%
of national GDP Coal
are contributed
by the energy
sector
TPES is the sum
of production and
imports, minus
exports
02 Climate change poses a threat to the global economy, trade and financial
system, with potential losses amounting to 10% - 46% of GDP by 2050.
04 The US introduced the Inflation Reduction Act (IRA), which prioritises the
production and demand for domestically produced clean energy goods and
services over imported ones.
5 6
5 Green Hydrogen 6 Hydrogen for 7 Biomass Demand 8 Future Mobility
Bioenergy Sarawak Hydrogen
Power Creation EV charging stations
Hub by SEDC Energy Co-firing of hydrogen Biomass clustering by MITI
7
and ammonia by TNB by NRECC and SEDA
Mobile hydrogen
Green mobility Biomass co-firing refuelling station by
by Malakoff MOSTI
8 9
Public transport
9 Future Fuel 10 CCS for Industry electrification by MOT
Carbon capture,
and Prasarana
Abate
Source: NETR (2023) | Abbreviations: Ministry of Natural Resources, Energy and Climate Change (NRECC), Ministry of Investment, Trade and Industry (MITI), Ministry of Science and Technology (MOSTI) 7
NETR outlines the prioritisation criteria for energy
transition initiatives
Understanding the four prioritisation criteria will allow players to evaluate projects that are impactful
and aligned with national aspirations
Social inclusiveness
Cost Initiatives shall take into account job security, job
creation, wellbeing and its benefit to the communities
and future generations.
8
Energy transition initiatives are estimated to require up to
RM1.85tn in financing by 2050
Malaysia Energy Transition Outlook (METO) estimates US$415bn cumulative investments are required
for the 1.5 Celsius with 100% RE generation scenario
3% Key takeaways
11%
Establishing low-carbon
pathway, energy mix and
emission target reduction
10
NETR Part 2 focuses on the energy transition aspiration,
macro position, and the five cross-cutting enablers
Part 2
Supports Supports
EE RE HY BI GM CC
Part 1
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Targets
NETR introduces Responsible Transition (RT) targets in
2050 corresponding to each energy transition lever
Energy RT 2050 Energy RT 2050
Key driver Key driver
transition levers targets transition levers targets
EE Industry and commercial energy savings 23%1 GM Urban public transport modal share 60%
HY Green hydrogen production (MTPA1) Up to 2.5 Heavy transport fuel economy ~24%
Grey hydrogen feedstock phase off 100% Biofuel blending for heavy transport B30%
BI Biofuel capacity (billion litres) 3.5 Green fuel in marine transport 40%
Bioenergy power generation (GW) 1.4 SAF6 blending mandate by 2050 47%
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Targets
RT targets rely on energy produced from natural gas to provide
baseload demand, complemented by renewable energy
Total Primary Energy Supply (TPES) in Mtoe1 Responsible transition (RT) scenario estimates TPES to
increase to 102 Mtoe in 2050 from 96 Mtoe in 2023, a 2%
102 CAGR2.
96 Renewables
for hydrogen National Energy Policy 2040 scenario estimates TPES at
117 Mtoe, which is higher than RT 2050. Energy efficiency
Renewables2
initiatives play an important role in reducing national energy
Coal demand.
14
Sustainability
1
Herfindahl-Hirschman Index measures the market concentration. Lower number indicates higher diversity in power system mix
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Levers
Six energy transition levers:
16
Levers
Lever 1: Energy efficiency (EE)
Reducing energy consumption from the end uses via regulations, standards
and aggregator platform
1
Minimum Energy Performance Standards
Source: Malaysian Green Technology And Climate Change Corporation (2023), Green Practices Guideline for Manufacturing Sector
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Levers
Energy Service Company (ESCO) as a platform to
leverage on economies of scale
Measures that can
Proposed ESCO platform to interface with stakeholders benefit from this
Equity/Debt investments
Shared savings Bulk purchase
4
ESCO platform 7
2
EPC projects Returns/Repayments Encourage local
3 5 production
Startup equity, 3 Equity returns,
credit guarantee developmental impact
and policy support 6
6 Guarantee fund
Customers: Equity/Portfolio
public sector investors
Government Portfolio
7 investments
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Levers
Lever 2: Renewable energy (RE)
Solar as the dominant source of renewable energy through mass installation,
while considering the need for grid stability and energy storage solutions
RE3 Expand virtual aggregation model for rooftop solar 2 supportive framework to
● Intergovernmental
- Scale up corporate and industrial solar rooftop encourage adoption of RE
collaboration might allow
programme Malaysia to benefit from
other renewable sources
RE4 Develop plan for accelerated investments of
transmission and distribution
3 Grid limitations for RE
such as wind and hydro.
- Establish amount, timing and mode of funding for
grid infrastructure investment to reduce grid Lack of TPA regulatory
constraints while balancing energy trilemma 4 framework to address
mismatches in supply-demand
RE5 Develop Third-Party Administrator (TPA) framework
for sourcing of RE
Absence of RE exchange platform
RE6 Set up RE exchange hub to enable cross-border 5 inhibits the potential to capitalise on
RE trading export price premiums
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Levers
Lever 3: Hydrogen (HY)
Make hydrogen viable and competitive through policies and innovation while
securing long-term offtakes through bilateral agreements with importing countries
Code Initiatives
Limited supply of electrolysers ● Nascent technology requires
HY-1 Establish low-carbon hydrogen standards and 1 in the global market extensive feasibility study
regulations enabled by proven
HY-2 Develop domestic green electrolyser technologies, which may
manufacturing capabilities include partnering with
Lack of technical expertise to
2 produce green hydrogen
leading companies globally.
HY-3 Reduce Levelised Cost of Hydrogen (LCOH)
● Production of green hydrogen
for low-carbon hydrogen
is nearing commercial
- Establish hydrogen hubs to optimise
Low competitive advantage from feasibility, driven by scale
economics of low-carbon hydrogen
3 high capital expenditure and low (larger projects, more capital)
and lower renewable energy
HY-4 Stimulate demand for low-carbon hydrogen electrolyser efficiency
- Explore bilateral agreements with key costs due to bigger
importing countries to develop low-carbon availability on a global level.
hydrogen value chain, catalyse project Absence of policy support and ● The usage of hydrogen in
development and secure long-term green 4 defined standards transportation will contribute
hydrogen offtakes to the lowering of Scope 3
emissions.
Hydrogen hub
Multi-sector supply Define geographical scope
Showcasing the versatility of hydrogen Establish hydrogen ecosystems that
by catering to more than one end sector cover specific geographical areas,
or application in the transport, industry from local/regional activities to
and power sectors international outreach
Code Initiatives
Supply security of biomass and ● Bioenergy feasibility may be
BI-1 Explore alternative bioenergy feedstock 1 bioenergy feedstock impacted by inadequate
enforcement of our waste
BI-2 Enhance attractiveness of palm oil biomass management policy such as
Negative perception of palm oil separation at source.
BI-3 Address challenge of supply security 2 biomass globally Regulation is present but
- Scale-up UCO1 collection via awareness enforcement is key.
campaigns and UCO collection facilities
● Targeting the end-users of
High aggregation cost of bioenergy could be a lucrative
BI-4 Catalyse local demand for bioenergy 3 bio-based feedstock venture within different
sectors.
BI-5 Improve solid waste management policies
- Explore expansion of de-risking revenue ● Key points for execution:
sources and co-funding of waste-to-energy Limited domestic demand for Lock in pricing via long term
plants to ensure financial sustainability
4 bioenergy contracts to secure
availability of biomass and
bioenergy feedstock.
1
Used Cooking Oil
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Levers
Lever 5: Green mobility (GM)
Promote the transition to EV for light vehicles and to biodiesel for heavy vehicles
via infrastructure, incentives and blend mandates
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23
Levers
Lever 5: Green mobility (GM)
Promote the transition to EV for light vehicles and to biodiesel for heavy vehicles
via infrastructure, incentives and blend mandates
Code Initiatives
Lack of regulatory framework
● To be economically viable,
CC1 Develop CCUS-specific policies and 1 and governance to catalyse
CCUS must outweigh the
regulations CCUS development
expected environmental cost
CC2 Strengthen CCUS adoption through provision of releasing the CO2 into the
of incentives across all relevant sectors and High costs of CCUS technology atmosphere.
facilitate hub development 2 necessitate incentives and
● The costs of the capital and
competitive funding rates
energy intensive CCUS for
CC3 Facilitate CCUS Hub infrastructure
industrial plants burden the
development
Undeveloped transboundary entire supply chain.
CC4 Establish transboundary CO₂ agreement for 3 and domestic policy for
● As CCUS technology is
transportation and storage of CO₂ transportation and storage of CO₂
- Develop liability framework to protect relatively new in Malaysia, the
against environmental damage arising from regulatory environment and
Absence of viable utilisation commercial feasibility are key
CCS activities
4 opportunities such as urea factors that need to take
CC5 Promote local utilisation of CO₂ in industry production and precast concrete shape for CCUS to be
effective in net zero strategies.
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Enablers
Five cross-cutting enablers:
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Enablers
Enabler 1: Financing and investments
Achieve energy transition targets while looking at fiscal suitability through identifying
current financing gaps and recommending initiatives to increase capital investments
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Enablers
Enabler 2: Policy and regulations
Strengthening governance and regulatory frameworks to bolster continued
growth and innovation in the market
Code Initiatives
Economic distortions arising ● While designing policies that
EN4 Rationalise energy subsidies 1 from energy subsidies can hinder support green industries and
adoption of sustainable energy technological advancements,
policymakers should consider
EN5 Launch the Natural Gas Roadmap (NGR)
the opportunity costs,
- Enhance competitiveness of upstream oil
Balancing energy equity for consequential impact and
and gas to meet domestic demand and 2 low-income households equitability to the public.
energy transition needs for sustainability
and security ● The road to net zero requires
commitments and concerted
Addressing increasing demand effort by the public sector
3 for natural gas while striving for
● Three general models we
reduced reliance on fossil fuels
foresee being adopted by
Source: PwC (2021), Inventing Tomorrow’s Energy System governments around the world
● Policy driver
● Strategic infrastructure
investor
● Co-investor
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Enablers
Enabler 3: Human capital and just transition
Adopting green skills in the energy sector’s workforce, and the coordination from the
local government
Code Initiatives
Strategies required to transition
● Timeline for implementation of
EN6 Establish green skills taxonomy and ensure workers in GHG-intensive sectors
strategic workforce planning 1 to new employment
green education and training
programmes might be lengthy and
opportunities expensive, which might
EN7 Develop and roll out targeted green skilling
programmes discourage industries from making
the long term investment.
EN8 Develop and implement community support Targeted training and upskilling
initiatives required to incorporate ● Productive workforce trained in
programmes 2 green skills to the existing green skills will be essential to
EN9 Enhance energy literacy and energy efficiency workforce skill sets implement the NETR initiatives
awareness among students, SMEs and and flagship projects.
consumers
● The International Renewable
- Strengthen the MELP1 to catalyse a paradigm Addressing low energy literacy
Energy Agency (IRENA) predicts
shift in public perception and behaviour levels to ensure informed that jobs in the renewable energy
towards energy utilisation 3 decision-making and active field will increase significantly
- Implement energy literacy and awareness participation in sustainable from now until 2050. Solid
programmes at educational institutions energy transition workforce planning and strategy
are required to advance
1
Malaysia Energy Literacy Program employment in the decades
Source: IRENA (2022), Renewable Energy and Jobs
ahead.
PwC
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Enablers
Enabler 4: Technology and infrastructure
Supportive environment and financial investments to enhance the technological
landscape in the energy sector
Code Initiatives
Slow gradual uptake of ● Being an energy-intensive
EN10 Accelerate development of domestic industries country, industries need
for green manufacturing and adoption of green 1 sustainable practices within
enabling environments to
domestic industries
technologies operate in as they work
towards net zero
EN11 Develop a National Energy Knowledge Hub for commitments.
public access
- Establish a one-stop centre for energy Absence of a robust energy ● SMEs grapple with resource
transition data, information and programmes 2 knowledge platform tailored for limitations (e.g. funding, skills,
under the National Energy Council SMEs and businesses people), hindering their ability
to undertake sustainability
initiatives, notably in
transitioning to cleaner energy
sources.
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Enablers
Enabler 5: Governance and implementation
Promotes cross-sector collaboration in energy supply planning
Code Initiatives
Fragmented governance of ● The establishment of the
EN12 Establish National Committee on Energy National Energy Council
energy which leads o inefficient
Transition under the National Energy Council
- The National Energy Council will act to
1 energy planning and underscores the importance of
decision-making comprehensive planning to
monitor the progress of the NETR ensures continuity of energy
transition initiatives.
● Financing structures could
take the form of public-private
partnerships with further
assessment of risk sharing
required.
● There is a need for clear
legislation and governance
models with feedback loops to
support energy transition
efforts.
PwC
31
Your voice
32
Malaysian organisations are at early stages of energy transition journey.
Some are ahead than their peers, but still far from global standards
We begin the survey by categorising the players in the markets into three
Exhibit 1
Exhibit 1 categories with respect to their position on energy transition.
50% Preliminary
Have only heard about energy transition/net zero, with either no or
Intermediate very broad strategy and commitments
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Preliminary organisations often exhibit high inertia, showing resistance to
exploring further or being less susceptible to energy transition initiatives
unless required
Exhibit 2 Exhibit 3
69%
13%
Lack of capabilities/
knowledge
46%
15%
Lack of
Lack of
regulation/
awareness
enforcement
27%
Cost/Financial
support
Almost half of our clients’ inaction towards supporting energy transition can
of preliminary companies are not looking be attributed to lack of regulation and enforcement, while 27% are due to
further to understand their role in energy high cost or lack of financial support either by stakeholders or tax
transition authorities. So, how do we address these factors and support their journey
towards future sustainability?
PwC
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For the intermediate companies, several common attributes solidify their
position as first movers on transitioning to low-carbon operating model
Exhibit 4 External factors, such as government policies and investor demands are the main
forces pushing companies towards energy transition. Notably, peer pressure among
Why are intermediate companies companies in the same sector also encourages a shift towards more sustainable
operating practices.
where they are today?
80% Exhibit 5
The rest targets for a longer lead time, between 2030 and 2040
13%
7% Intermediate companies tend to have specific, measurable, actionable and relevant
timelines to achieve their net zero commitments. Goal-setting and high-level
Government Peer pressure Unsure roadmap are one of the key enablers to come up with a detailed step-by-step action
policies/ plan during the transition period.
Investors
requirement
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Implementing sustainability governance, reporting structure and allocating
adequate resources would allow intermediate companies to move towards
advanced stage
Exhibit 6 Exhibit 7
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Market players agree on common key challenges and external support
needed for the energy transition journey
Exhibit 8 Exhibit 9
Key challenges faced by companies in intermediate stage of Almost all companies demand support from
energy transition journey the government, in the form of...
48%
Knowledge and capability
1 Favourable tax incentives
30% for investment or capital
expenditure incurred for
Cost energy transition
PwC
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How we can help
PwC 38
Takeaways for businesses
1 Authenticity and the courage to be bold
Sustainability vision and goals need to be authentic and seamlessly integrated into an organisation’s business
strategy, practices and culture. Energy transition should form the core of any strategy with a view on long
term sustainability. Investments that move the needle are needed to create the momentum required.
40
Let’s have a chat
Supported by
Capital Projects & Infrastructure, Capital Projects & Infrastructure, Business Restructuring Services,
PwC Malaysia PwC Malaysia PwC Malaysia
41
www.pwc.com/my
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