1 More Day to COP21

Hello readers, believe or not COP21 will be happened in less than 24 hours ! Starting from tomorrow, more than 100 world leaders including Malaysia will negotiate on climate change’s issue. You can read our article on Road to COP21 Paris Background for more information on COP21. Wonder what Malaysia is doing to tackle climate change’s issue so far? Lets take a look Malaysia’s position on climate change.

 

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Malaysian Position on Climate Change

Climate scientists agree that climate change is occurring and greenhouse gases emitted by human activities are the main reasons. Negative impacts and threats to ecological system, human health, Earth’s physical and economic are likely to be real if there is no mitigating actions are taken. Hence, during COP15, Malaysia has agreed to cut 40% in emissions intensity by the year 2020 compared to the 2005 levels. Malaysia has set up many emission reduction initiatives to meet the goal. Among Malaysia initiative is on renewable energy (RE).

Renewable energy is an energy obtained from natural resource such as biomass, hydro, wind, solar and geothermal that can be replenished. Renewable energy can be used as a replacement of fossil fuel in energy generation and using renewable energy instead of fossil fuel can reduce greenhouse gas emission.

Thus, Malaysia has launched the National Renewable Energy Policy 2010 to improve renewable energy’s development in Malaysia. The aim of National RE Policy 2010 is to enhance the utilization of indigenous renewable energy resources to contribute towards national electricity supply security and sustainable socio-economic development. This policy consists of five objectives that are:-

  • (1) To increase RE contribution in the national power generation mix.
  • (2) To facilitate the growth of the RE industry.
  • (3) To ensure reasonable RE generation costs.
  • (4) To conserve the environment for future generation.
  • (5) To enhance awareness on the role and importance of RE.

In order to ensure the objectives of National RE Policy 2010 is achieved, five strategic thrusts have been identified as per below:-

  • (1) Thrust 1: Introduce appropriate regulatory framework.
  • (2) Thrust 2: Provide conducive-environments for RE businesses.
  • (3) Thrust 3: Intensify human capital development.
  • (4) Thrust 4: Enhance RE research and development.
  • (5) Thrust 5: Design and implement an RE advocacy program.

Thrust 1 : Introduce appropriate regulatory framework

Renewable Energy Act has been launched on 2011 to support Thrust 1. The Act is to provide establishment and implementation of a special tariff system (Feed in tariff system) to catalyze the generation of renewable energy and to provide for related matters. The act consists of a feed in tariff system, connection, purchase and distribution of renewable energy, feed in tariff, renewable energy fund, information gathering powers, enforcement, general, savings and transitional.

In the same year, SEDA Act 2011 also launched. The act is aimed to provide for the establishment of the Sustainable Energy Development Authority Malaysia (SEDA Malaysia) and to provide for its functions and powers and for related matters.

Thrust 2 : Provide conducive-environment for RE businesses

The conducive environment would include the provision of :-

  1. Creation of an evaluation process for lending to RE power producers.

The standard evaluation process will be set up by trained renewable energy financing team. Mandating the evaluation process can be undertaken by Bank Negara Malaysia. The evaluation is to provide added security to the financial institutions in lending to renewable energy power generation projects. As a stand-by provision, the government offer financial assistance, estimated RM500 million to renewable energy power generation firms that are unable to secure any funding.

  1. Continuation of existing fiscal incentives

Existing fiscal incentives will be continued until 2019. Meanwhile, an evaluation of the incentives’s relevance and usefulness to firms will be undertaken over 4 years from renewable energy law enforcement. The evaluation is to determine if any revisions on the fiscal incentives are required or not.

  1. Special fiscal reliefs to use locally created/developed R&D

Special fiscal reliefs will be given to firms that adopt and use locally created or developed R&D for renewable energy. The special fiscal reliefs are:

  • (a) Group tax relief – so losses in one subsidiary can be used to offset the profits in another; and
  • (b) Double deduction of the costs of the local innovation or R&D in RE technology used

4. Local content incentives

Incentives will be given to renewable energy manufacturer that use local material in their finished products and component. The incentives would be double deduction on local material for domestic manufacturer and for foreign manufacturer that use more than 50% local content, the incentive would be 2 years tax holiday extended or the grant of 2 years tax holiday.

  1. Create an RE Centre for SMEs

The RE Centre focus on providing information about renewable energy project to SMEs and assisting SMEs to participate in incentive programs.

  1. Involve GLCs and specifying their RE contribution by using their existing renewable energy resource for renewable energy power generation or demonstrating their renewable energy projects and technologies.
  1. Involve existing MNCs like IKEA, Western Digital, INTEL and others to engage in renewable energy activities and to influence local suppliers to do likewise.

Thrust 3 : Intensify human capital development

There are three actions under Thrust 3 which are:-

1)         Collaboration amongst ministries to design certifying renewable energy technology courses at a local institute of higher learning and also training centers.

2)         Increase the development of training institutes that meet international renewable energy training standard and also development of centers of excellence (CoE) at universities.

3)         Provide technical training subsidy and fiscal relief for higher education. The subsidy and fiscal relief valid for renewable energy course only.

Thrust 4 : Enhance RE research and development

The focus of renewable energy research and development is on innovation as innovation enhances the diffusion of renewable energy technology by making the technology cheaper and easier to use. Several research that have been done are wind mapping, geothermal study and mini hydro map.

Thrust 5 : Design and implement an RE advocacy program

The advocacy programs under Thrust 5 are an awareness program and the commissioning of independent evaluations published locally or engaging third party public sector bodies to organize workshops, discussion forums, seminars or case studies or even public hearings, briefings or consultations. The programs consist of two phases. Phase one is to provide information and phase two is to encourage participation from the target audience. Each phase is tailored to specific target audience with specific messages. Target audience is divided into eight categories that are public, schools, banks, GLCs/MNCs/Public listed companies and large enterprises, SMEs, regulatory bodies, the third sectors and government agencies.

Overall, Malaysia is already aware on climate change issue and hence, Malaysia has implemented a variety of programs to cut down emission as in the renewable energy sector. Other than emission reduction in the renewable energy sector, Malaysia also focuses on sustainable waste management, eco-tourism, eco-city, energy efficiency and others. However, Malaysia still need a support in technology and financial to further improve on climate change related issues.

 

Reference : Malaysia National Renewable Energy Policy

Author : Fatiha Zainal , June 2015

 

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