Breaking down Malaysia’s climate commitments

Breaking down Malaysia’s climate commitments

Written by: Dhaartshini, Lim Kah Yau, Nat Zhai, Robin Goon 

Malaysia updated its Nationally Determined Contribution (NDC) in August, stating its intention to unconditionally reduce economy-wide carbon intensity (against gross domestic product [GDP]) of 45% by 2030 compared to 2005 levels. This is the first modification made to its NDCs, which were first submitted in 2015, and it represents a 10% increase in ambition.

In the previous version, Malaysia committed to reduce its greenhouse gas (GHG) emissions intensity of GDP by 35% unconditionally and a further 10% conditional upon receipt of climate finance, technology transfer and capacity building from developed countries, by 2030 compared to 2005 levels.

With this new NDC, it is worthwhile pondering if this increased ambition indicates that Malaysia has taken significant strides to mitigate GHG emissions in the past few years, and whether it has received sufficient assistance from developed countries. 

This article will aim to answer this question and also highlight where Malaysia could potentially do better to meet its climate commitments. 

For context, NDCs are submitted by countries who are parties to the Paris Agreement, reflecting the commitment by each country to reduce national emissions and adapt to impacts of climate change. Every five years, an updated NDC has to be sent to the United Nations Framework Convention on Climate Change (UNFCCC) secretariat, and each successive NDC must show progress from the previous version.

The achievement of NDCs are not legally binding. Signatories to the Paris Agreement are only legally obligated to submit an NDC. Additionally, developing countries do not have to adopt economy-wide absolute emission reduction targets as developed countries do. 

That is why some developing countries like Malaysia have opted to use reduction in emissions per unit of GDP as a target for its NDC. Emissions intensity refers to the GHG emissions per unit of economic activity, measured by the GDP levels. The downside of emissions intensity targets is that emissions can actually increase if the GDP increases. In contrast, an absolute GHG target results in an absolute reduction of GHG emissions. 

What is Malaysia doing to meet the NDCs?

Over the years, Malaysia has received financial or capacity building assistance from the Global Environment Facility, Germany, United Kingdom and other parties in various areas. The country has also introduced many policies to reduce GHG emissions. 

Malaysia’s NDC implementation time frame is from 2021 to 2030. Several important, new, national-level policies are also scheduled to be introduced in the near future. 

To understand what Malaysia has been doing to meet the NDCs so far, one can look at the country’s biennial update reports (BUR) to the UNFCCC, which is required of Paris Agreement signatories. 

In Malaysia’s third BUR submitted in 2020 (latest data from 2016), the emissions avoidance recorded comes from three main sectors: energy, waste and forestry. 

Chart 1: Summary of emissions avoidance achieved in 2016 

Mitigation actions in the forestry, energy and waste sectors contributed the most to reducing greenhouse gas emissions in Malaysia

Source: Malaysia third BUR

From this table, one can see that most emissions avoidance was achieved by the forestry sector (20,307.5 Gg CO2 eq), followed far behind by the energy sector (9266.3 Gg CO2 eq) and the waste sector (6315.6 Gg CO2 eq). CO2 eq (equivalent) is a measure used to compare emissions from different GHG based on their global warming potential. 

Evidently, Malaysia relied heavily on the forestry sector — reducing deforestation, sustainable management of permanent reserved forest, forest certification schemes and other actions — to reduce emissions. 

How is Malaysia doing now?

Malaysia became a net greenhouse gas (GHG) emitter from 2004 onwards. 

The majority of emissions come from the energy sector, followed by waste and industrial processes and product use (IPPU). The Land Use, Land-Use Change and Forestry (LULUCF) sector has been crucial to remove GHG emissions. However, it has not kept pace with the increase in emissions from other sectors, which explains why Malaysia became a net GHG emitter. 

Chart 2: The annual total GHG emissions from 1990-2016

Malaysia became a net greenhouse gas emitter from 2004 onwards

Source: Malaysia third BUR

As to where Malaysia stands currently with regards to its NDC target, the 12th Malaysia Plan indicates that Malaysia has achieved 29.4% reduction in GHG emissions intensity per unit of GDP by the end of 2016, compared to 2005 levels. 

Nevertheless, more actions that could contribute to the NDC target are coming up. A NDC Roadmap and National Adaptation Plan are expected to be introduced in these two years. Furthermore, the new Minister of Environment and Water has stated that a framework to improve and enforce climate change laws, a new carbon trading scheme and changes to the National Greenhouse Gases Inventory Centre are among the 10 key performance indicators for the ministry. 

A new renewable energy target of 31% and 40% by 2025 and 2035 in installed capacity was announced in July, the majority of which will be generated in the form of solar energy in Peninsular Malaysia at least until 2025. 

Meanwhile, the dominance of coal power plants in Peninsular Malaysia will be replaced by natural gas power plants from 2030 onwards, according to the Report on Peninsular Malaysia Generation Development Plan 2020. Utility-scale batteries will be installed from 2030 onwards to support renewable energy generation. 

Chart 3: Capacity Mix by Fuel (%) (2021-2039)

The dominance of coal as a fuel for electricity generation is expected to be replaced by natural gas in Peninsular Malaysia by 2030 

Source: Report on Peninsular Malaysia Generation Development Plan 2020

All these could be reasons why the government is confident that it can achieve the new NDC target, which it previously stated that it could only achieve with assistance from developed countries. 

How can Malaysia do better?

An argument for Malaysia to be more ambitious is that it could do much more to reduce emissions in the energy sector, particularly in terms of promoting renewable energy. 

This does not necessarily mean the country should increase its dependence on large-scale hydropower. 

The inclusion of hydropower in its energy supply was spurred by the Four-Fuel Diversification Policy in 1981 and the presence of large rivers with suitable elevation in nearly all Malaysian states. However, large-scale hydropower plants have resulted in the loss of land for many indigenous tribes in Malaysia, who have made their voices heard through protests. Environmental damage due to the submerging of huge tracts of land is also another contested topic. 

Instead, Malaysia could focus its efforts on increasing renewable energy generation from solar power and other sources, be it through expanded quotas for Feed-in Tariff (FiT), Net Energy Metering (NEM), Large Scale Solar (LSS) schemes; promotion of self-consumption schemes; or introduction of electricity market reforms that enable peer-to-peer trading, third party grid access and offsite RE generation.

Malaysia’s strategic location near the equator, coupled with its existing high energy reserve margins, substantiate its potential for more aggressive solar energy policies. In fact, some industry leaders have complained that current policies, such as the quota for RE in the electricity generation capacity mix, are limiting the adoption of renewable energy in the country. 

On the other hand, Malaysia’s reliance on LULUCF removals to meet its NDC target is a risk due to the continued encroachment of human activities into forest reserves, as seen with the Kuala Langat North Forest Reserve degazettement by the Selangor government recently. The degazettement was only revoked after much public protest.

Additionally, the ability of trees to rapidly absorb carbon weakens with the warming planet. This drop in carbon sink effectiveness due to climate variability has also been “projected with high confidence” in the recent Intergovernmental Panel on Climate Change (IPCC) report. A more worrisome consequence of unchecked climate change is that resulting occurrences such as forest fires may reverse the function of these sinks and instead, turn it into a carbon source.

What will it take?

While it is good to introduce comprehensive policies to tackle climate change, it is equally important to have consistent and good execution, as well as sufficient political will to enact lasting and impactful change. Malaysia has a mixed track record on this. 

The country’s actions towards a more sustainable economy started in the 1980s, with the government then adopting the Four-Fuel and Five-Fuel Diversification policies to wean Malaysia off petroleum dependence and diversify into natural gas, coal, hydropower and renewable energy. The plans were a success. By the end of 1995, Malaysia’s dependence on oil had reduced from almost 90% to less than 15%. 

Chart 4: Timeline of core national policies that drive the resource supply utilization in Malaysia

Malaysia began diversifying its energy source to include natural gas, hydropower and renewable energy in the 1980s

Source: The Oxford Institute for Energy Studies 

The Feed-in-Tariff (FiT), which pays renewable energy generators a premium rate over a period of time, was introduced in 2011. The quota for solar is no longer available, but FiT for biomass, biogas and small-hydro are still open. In 2016, the FiT was replaced by the NEM as the cost of solar panel installation became competitive.

However, the take-up rate for NEM quotas by 2018 was low because renewable energy generators had to sell electricity at a low displacement cost. This was corrected to a 1:1 offset basis in 2018. Subsequently, the quota taken up by commercial and industrial customers in nine months was three times more than what was achieved in the previous three years. 

These examples show that with sufficient political will, adjusting Malaysia’s energy portfolio is doable. However, ambiguities persist in some policy implementations. 

In the transportation sector, Kimura (2018) illustrated that the National Electric Mobility Blueprint  was intended to strengthen Malaysia’s electric mobility ecosystem and charging infrastructure. However, action on electric vehicle (EV) policies are minimal as of 2021. Instead, the National Automotive Policy (NAP) focused on the development of Energy Efficient Vehicles (EEVs). While this is laudable, it is not exactly expanding the implementation of electric mobility ecosystems. 

There is also the issue of policy inconsistency in Malaysia. In his unveiling of the National Forestry Policy in March, former prime minister Tan Sri Muhyiddin Yassin highlighted the need to be proactive in conservation. A month after that, he unveiled the National Mineral Industry Transformation Plan 2021-2030, which intends to open swathes of land for mineral resources exploration. This dichotomy within the government reflects a lack of political will and direction in meeting Malaysia’s NDC.

All in all, Malaysia has taken many steps to meet its NDC, but there is much that could be improved, especially in terms of promoting renewable energy generation, protecting forest reserves as a carbon sink and in ensuring proper implementation of policies and roadmaps. Malaysia can increase its NDC target, but this will have to be followed with strong commitment, political will and transparency from all stakeholders. 

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About Malaysian Youth Delegation

Established in 2015, Malaysian Youth Delegation (MYD) is a youth-led organization in Malaysia, which focuses on climate change policy and negotiations, providing a platform for curious and interested youths to explore the world of climate agreements. MYD strives to educate the public on climate change policy by organizing training sessions and public talks. MYD also regularly engages with the Government of Malaysia on climate change policies. 

For more information, visit https://mydclimate.org or email at focalpoint@mydclimate.org