National Energy Policy, 2022-2040

2. Electricity excluded as electricity consumption of all demand sector is covered under power sector

3. Residential and Commercial

4. Use of products resulting from the transformation process for non-energy purpose (i.e., bitumen, lubricants and polymer) and as industry feedstocks *The data are rounded up to nearest decimal point. Source: Suruhanjaya Tenaga 17 CHAPTER 1: INTRODUCTION On the supply-side, four energy sources dominate of hydroelectric, solar and bioenergy constitute the national total primary energy supply (TPES) seven per cent of TPES. Coal has experienced the mix. Natural gas constitutes the largest portion highest rate of growth at 11 per cent per annum, of primary energy supply at 41 per cent of TPES, driven primarily by demand from the power sector followed by crude oil and petroleum products in Peninsular Malaysia. The increase in coal as a and coal which constitute 29 per cent and 22 per portion of the primary energy mix is mainly driven by cent respectively. Renewables, comprising mainly energy security and affordability objectives. TPES by energy source Mtoe* 120 +3% 98 100 100 97 92 92 5 7 7 91 4 4 3 86 80 77 79 15 15 17 19 CAGR1 21 22 16 (2010-2018) 15 15  +8% 60 2   +11% 40 40 42 41 39 41 41   +2% 40 35 36    +2%    20 25 27 30 32 33 29 31 29 29 6 7 7 0 2010 2011 2012 2013 2014 2015 2016 2017 2018

1. Compound Annual Growth Rate

2. Others refer to non-crude energy forms which consist of imported light diesel, slop reprocess, crude residuum and residue used as refinery intake *The data are rounded up to nearest decimal point. Source: Suruhanjaya Tenaga Based on forward-looking plans, the primary substituted with indigenous sources of RE in the energy supply is expected to evolve to enable primary energy mix. Trends in fuel switching, such enhanced environmental sustainability. Measures as the transition from internal combustion engine to promote and increase the share of RE in line (ICE) vehicles to electric vehicles (EVs)3 which will with the Five-Fuel Diversification Policy have been result in decreased demand for petroleum products developed in 2000. These measures will collectively and increased demand for electricity, are also reduce overall energy sector emissions intensity expected to influence the primary energy mix and and enhance domestic energy self-sufficiency as contribute to enhanced environmental sustainability imported non-renewable sources of energy are of the energy sector. 3 Electric vehicles refer to Battery Electric Vehicle (BEV) including cars, motorcycles and buses. Plug-in Hybrid Electric Vehicle (PHEV) refers to cars only. 18 CHAPTER 1: INTRODUCTION 1.5 Existing Energy-Related Acts and Policies A range of existing energy-related acts and The acts, supported by a series of policies provide policies set the direction and guiding principles specific stakeholders within the energy landscape for the energy sector in Malaysia. These acts and with relevant authority to carry out responsibilities policies have enabled the country to make balanced in alignment with energy-related Acts and Policies. progress along all aspects of the energy trilemma. Energy-related Acts Petroleum Development Act Electricity Supply Act (1990) Energy Renewable Energy Act (2011) (1974) • To provide for the regulation of Commission Act • To provide for the establishment • To vest the entire ownership in the electricity supply industry. (2001) and implementation of a feed-in and the exclusive rights for the • Supply of electricity at • Establishment tariff (FiT) system to increase exploration and exploitation reasonable prices and licensing of the Energy electricity generation from of petroleum resource in of electrical installation and Commission. renewable sources. PETRONAS. to promote safe and efficient • Authorise • PETRONAS shall be subject to systems for electricity-related the Energy the control and direction of the operations. Commission to Prime Minister. regulate energy Sustainable Energy Development • The National Petroleum Gas Supply Act (1993) supply activities Authority Act (2011) Advisory Council is set up including the • To provide for the licensing of • To provide for the establishment to advise the Prime Minister enforcement of natural gas supply to consumers of the Sustainable Energy on national policy, interests energy supply at reasonable prices, with Development Authority (SEDA). and matters pertaining laws. continuous supply and good to petroleum, petroleum • SEDA is responsible for quality. industries, energy resources sustainable energy laws and to • Ensure the safe and efficient promote the use of sustainable and their utilisation. operation of natural gas pipelines, energy. installations and appliances. 19 CHAPTER 1: INTRODUCTION Energy-related policies National Petroleum National Depletion Five Fuel National Biofuel National Policy on National Energy Policy 1975 Policy 1980 Diversification Policy 2006 Climate Change Efficiency Action Policy 2000 2009 Plan 2015 • Efficient utilisation of • Prolong life span • Reduce petroleum resources of national oil and • RE as the 5th fuel in dependency on • Development • 8% reduction in gas reserves energy supply mix depleting fossil fuels on sustainable energy demand • PETRONAS exclusive with biofuels path, conserve vs. baseline with rights to explore, • Encourage efficient environment and energy efficiency develop and produce energy utilisation natural resources initiatives Malaysia's petroleum resources Four Fuel • Institutional Diversification framework, Policy 1981 capacity National Renewable • Reliability and National Green development for Policy & Action Plan security of Tech Policy 2009 energy efficiency 2010 supply through (EE) fuel source • Energy • 20% RE in power National Energy National independence diversification capacity mix by Policy 1979 Policy on the and efficient National (oil, gas, coal and 2025 Environment utilisation Automotive Policy • Supply - adequate, hydropower) 2002 • RE industry growth, 2020 secure, cost effective • Enhance reasonable RE energy supply • Stewardship of economic • Sustainable costs, enhance environment, development with RE awareness, development • Utilisation - promote continuous Green Technology and conserve of automotive efficient utilisation of improvement industry energy • Conserve, minimise environment of environment quality environment • Environment - impact and improve Nationally minimise negative • Sustainable quality of life Determined environmental use of natural impact Contribution 2021 resources • Decrease in GHG intensity of GDP by 45% Legend: Energy security Energy affordability Environmental sustainability (unconditional) by 2030 as Source: Government websites and publications compared to 2005 In addition to the core energy-related policies economic sectors and energy-related industries listed above, various other related policies such as to address challenges as well as reap benefits housing, transport and industrial policies also have from the global energy transition mega trend; significant implications on the energy sector. • provide latest and visionary direction for the Hence, there is a need for a new energy policy to: energy sector in order to facilitate investors’ and industries’ long-term investment decisions, thus • strengthen and harmonise existing energy- spurring GDP growth and job opportunities; related policies for clarity of future direction and targets for the energy sector; • strengthen energy sector enablers and governance to drive planning, development • ensure coordinated energy sector response in and implementation of comprehensive and line with national aspirations and agenda, that integrated energy policy; and are future-proof ready and consistent with the developments in global energy transition trend; • refine aggregate impacts from various policies and development plans in other economic • establish coordinated long-term vision and sectors such as from public transportation plan, action plans across various stakeholders, fuel economy and next-generation vehicle under the transport sector. 20 CHAPTER 1: INTRODUCTION 1.6 Energy Sector Governance Energy sector governance and planning represent a planning, consisting of multiple energy sources complex and multi-faceted undertaking due to the such as oil, natural gas, coal and RE, requires wide scope and cross-sectoral nature of energy- extensive cross-sector collaboration with relevant related decision making. Energy demand planning stakeholders. The energy sector is governed by intersects across key sectors of the economy ministries, agencies and regulators based on and involves transport, industrial, residential and responsibilities defined in key legislative acts. commercial sector stakeholders. For energy supply 21 CHAPTER 1: INTRODUCTION Key Energy-Related Ministries Ministries with direct energy-related responsibilities Economic Ministry Ministry of Ministry of Planning of Energy Plantation Domestic Trade Unit, Prime and Natural Industry and and Consumer Minister's Resources Commodities Affairs Department (KeTSA) (MPIC) (KPDNHEP) (EPU) Ministries related to key final energy demand sectors Cross-cutting influence State-specific entities Ministry of Ministry of State Economic Ministry of Transport Housing and Local Planning Unit Finance (MOF) (MOT) Government (KPKT) (UPEN) Sabah Ministry of Ministry of Rural Ministry of State Economic International Development Environment and Planning Unit Trade and (KPLB) Water (KASA) (UPEN) Sarawak Industry (MITI) Ministry Ministry of Ministry of of Federal Agriculture and Ministry of Science, Utility and Territories Food Industry Technology, and Telecommunication (KWP) (MAFI) Innovaton (MOSTI) (Sarawak) Key Energy-Related Organisations Key Energy-Regulators Power-related Oil and gas-related Cross-cutting influence Electricity and piped gas Malaysian Green Single Buyer Malaysia Technology and (SB) Petroleum Resources Climate Change Corporation (MPRC) Corporation (MGTC) Energy Commission (ST) Malaysian Grid System Investment Operator (GSO) Development Renewable Energy related Authority (MIDA) Upstream Oil and Gas Sustainable Malaysia Petroliam Energy Automotive, Nasional Berhad Development Robotics and IoT (PETRONAS) MyPower Authority (SEDA) Institute (MARii) The energy sector governance will be further • enhancing regulatory coverage, clarity of enhanced to increase efficiency and drive oversight and capability building to keep pace greater holistic planning to meet challenges and with technological developments across various opportunities of various domestic and global sectors; and developments. These include: • streamlining and creating clarity among multiple • strengthening collaboration and cooperation stakeholders in key energy-related topics for between ministries and agencies to enhance enhanced accountability and implementation energy sector governance; effectiveness. 22 CHAPTER 2: NATIONAL ENERGY POLICY, 2022-2040 CHAPTER 2: NATIONAL ENERGY POLICY, 2022-2040 The DTN crystallises Malaysia’s forward-looking will need to pursue the Low Carbon Nation Aspiration aspirations, vision, objectives, strategic thrusts, 2040 to realise strong economic benefits from and enablers to support WKB 2030 and 2030 energy transition in line with DTN objectives. This Agenda. The policy encompasses a time horizon is also aligned to the target of Long-Term Low of between 2022 and 2040, with periodic reviews Emission Development Strategy (LT-LEDS) to achieve every three years. This is to ensure Malaysia keeps net-zero GHG emissions in 2050. A DTN Action Plan pace with global megatrends and capture economic has been developed to support the implementation opportunities from the energy transition. Malaysia of key initiatives outlined in the DTN. 2.1 National Energy Policy Vision and Objectives Energy as a catalyst for socioeconomic sustainability to achieve shared prosperity DTN sets the vision of energy sustainability towards vision, progress needs to be made in three DTN achieving shared prosperity, reflecting the role of objectives - enhancing macroeconomic resilience energy as a significant contributor which enables and energy security, achieving social equitability other key sectors of the economy to thrive on the and affordability, as well as ensuring environmental country's economic development. To realise this sustainability. 24 CHAPTER 2: NATIONAL ENERGY POLICY, 2022-2040 National Energy Policy vision and objectives Energy Sustainability Towards Achieving Shared Prosperity Objective Macroeconomic resilience Social equitability and Environmental and energy security affordability sustainability Catalyse strong economic growth Ensure energy affordability, fair Drive environmental and fiscal health anchored on and equitable distribution sustainability to future-proof continued energy security and of costs as well as benefits national economy and to improve sources of sustainable competitive from energy transition. living standards for all. advantage. The vision and objectives of the DTN are equipped with a view on the end-state vision to guide and drive the energy sector’s direction. National Energy Policy End-state Vision • New areas of economic growth and employment related to energy, built on long- term competitive advantage. • Equitable and fair distribution of benefits and costs from energy transition. DTN strategic • Captures economic benefit and remains globally competitive by keeping pace thrusts and with energy transition trends. enablers are • Affordable and reliable access to energy. anchored on the end-state vision for • A leader in environmental sustainability and green economy in ASEAN. the energy sector • Continuous efficient utilisation of energy and indigenous energy resources. • Contribute to fiscal and trade balance health. 25 CHAPTER 2: NATIONAL ENERGY POLICY, 2022-2040 2.2 Low Carbon Nation Aspiration 2040 The Low Carbon Nation Aspiration 2040 is developed based on the existing plans in the energy sector. The Government will undertake a more proactive role by identifying and developing selective leadership in the areas of low carbon economy, which will be aligned with the areas where the country has high potential and competitive advantage. Appropriate Government incentives will be provided residential and commercial. It targets a higher level to attract investments in catalysing the development of urban public transport modal share, electric of low carbon technologies. This will allow the vehicle (EV) penetration, share of alternative lower country to become a leader in high potential growth carbon fuels in heavy vehicles and marine transport areas such as RE, energy storage, low carbon and enhanced energy efficiency in industrial and mobility, hydrogen economy and others. commercial as well as residential sectors. In addition, the Aspiration entails a higher level of RE penetration The Aspiration aims to achieve various targets in the in the installed capacity and total primary energy energy-related sectors covering both electrical and supply (TPES), with no new coal power plant. The non-electrical components in transport, industrial, DTN aims to achieve nine selected targets as follows: 26 CHAPTER 2: NATIONAL ENERGY POLICY, 2022-2040 Selected targets on Low Carbon Nation Aspiration 2040 compared to 2018 Low Carbon Nation Selected Targets 2018 Aspiration 2040

1. Percentage of urban public transport modal share 20% 50%

2. Percentage of electric vehicle (EV) share <1% 38%

3. Alternative fuel standard for heavy transport B5 B30

4. Percentage of Liquefied Natural Gas (LNG) as 0% 25% alternative fuel for marine transport

5. Percentage of industrial and commercial energy <1% 11% efficiency savings

6. Percentage of residential energy efficiency <1% 10% savings

7. Total installed capacity of RE 7,597 MW 18,431 MW

8. Percentage of coal in installed capacity 31.4% 18.6%

9. Percentage of RE in TPES 7.2% 17% Legend: Energy security Energy affordability Environmental sustainability The Aspiration is expected to create significant facilitate the transition. The Government also has a positive economic development impact with higher key role to play in establishing catalytic incentives GDP and job creation. It will also spur the next wave and supportive regulatory frameworks to spur of green growth FDI into the country. In addition, investments and transition in low carbon economy improvements are expected along each dimension growth ecosystems for the country. In addition, of the energy trilemma, including reduction in evolving policy and technological trends should emissions intensity. continue to be monitored and aimed at reviewing the targets in the future. In supporting the Aspiration, private and public investments should be made in a timely manner to 27 CHAPTER 2: NATIONAL ENERGY POLICY, 2022-2040 Impact of Low Carbon Nation Aspiration 2040 Low Carbon Nation Aspiration 2040 Impact of implementation Emphasis on low carbon policies and Contribution to GDP (RM/year) 13 billion investments to increase adoption and pursue selective leadership in low carbon sectors, such as: Total job creation 207,000 • Endeavour to no new coal power plant CO2 emissions reduction will be aligned with amid increasing renewables share LT-LEDS targets* • Provide financing and incentives to drive energy efficiency practices to Energy self-sufficiency 48% to 72% meet the targets • Incentivise adoption of EVs, increasing Fiscal outlay 4.3 bilion public transport modal share, and fuel (RM/year) economy standards Total Investments 9.2 billion (RM/year) * To be finalised by the Ministry of Environment and Water by end-2022 Source: DTN Project Team Analysis The implementation of this Aspiration is supported Key actions and targets for the DTN were set based by various actions, which will be executed within on short-term (2021-2025), medium-term (2026- the timeframe of the DTN to achieve the selected 2030), and long-term (2031-2040) horizons to ensure targets. This Aspiration will also contribute to the effective implementation. These include enhancing reduction of CO2 emission in the energy sector in the energy sector governance and implementing line with LT-LEDS target to achieve net-zero GHG other initiatives identified in the DTN. emissions by 2050. 28 CHAPTER 2: NATIONAL ENERGY POLICY, 2022-2040 Implementation of LCNA 2040 Twelfth Plan (2021-2025) Thirteenth Plan (2026 – 2030) Improve rural electricity Fourteenth & Fifteenth Plans supply to achieve 99% (2031 – 2040) coverage Grow gas-based petrochemical hubs Thrive domestic EV Implement step change in ecosystem, with at scale EV industry energy efficiency Thrive Third-Party penetration (EE) through enforcement Access (TPA) gas market, of Energy Efficiency and investments in regasification Adopt large scale energy Conservation Act (EECA), terminal (RGT) for energy storage for RE energy audits and Minimum security Energy Performance Implement pilot and market Standards (MEPS) Increase upstream entry programmes of investments to develop hydrogen as well as next Increase usage of smart deepwater, marginal and generation bioenergy meter and smart grid as well sour gas fields1 as upgrade grid Establish globally Enhance OGSE players competitive hydrogen Improve Sabah power supply capacity through export hub in Sarawak reliability consolidation and international participation Enhance energy efficiency Improve fuel economy with digital technology standard for vehicle Phase down broad-based adoption energy subsidies, move to market-based pricing Capture growth

1. Fields with high carbon dioxide (CO2) opportunities of biofuels in and hydrogen sulphide (H2S) contents Capture growth with LNG marine and aviation sectors uptake in marine bunkering In alignment with energy transition, the DTN mix through increased penetration of clean and will enhance the environmental sustainability renewable sources of energy and decreased by reducing the overall energy intensity, while penetration of coal and petroleum products in the improving the intensity of the primary energy primary energy mix. Primary energy mix target of LCNA 2040 Current Position1 Low Carbon Nation Aspiration 20402 99.9 Mtoe 117.1Mtoe 0% 1% 4% 6% 4% 9% Bioenergy 30% 27% Solar Hydropower Oil/Petroleum Products 41% 39% Natural Gas 22% Coal 17% 2018 2040 Source: 1. Suruhanjaya Tenaga

2. DTN Project Team Analysis 29 CHAPTER 2: NATIONAL ENERGY POLICY, 2022-2040 National Energy Policy Strategic Thrusts, Strategies 2.3 and Enablers In achieving the DTN vision, four strategic thrusts position, its socioeconomic aspirations and global and five enablers have been identified to ensure energy transition megatrends. These strategic an effective implementation of the DTN. These thrusts are supported by 12 strategies and 31 strategic thrusts and enablers are designed from action plans. the situational analysis of Malaysia’s current National Energy Policy Vision, Objectives and Strategic Thrusts Vision Energy Sustainability Towards Achieving Shared Prosperity Macroeconomic resilience Social equitability Environmental 3 Objectives and energy security and affordability sustainability A B C D Optimise energy Stimulate growth, Enhance energy Ensure energy resources market opportunities sector contribution security Strategic to stimulate and cost advantage towards towards fiscal 4 sustainable for the economy and environmental sustainability Thrusts economic growth people sustainability 3 Strategies 3 Strategies 2 Strategies 3 Strategies 12 Strategies 1 Cross-cutting Strategy 12 Action Plans 8 Action Plans 4 Action Plans 4 Action Plans 31 Action Plans 31 Cross-cutting Cross-cutting Strategy Action Plans Strengthen energy sector enablers for effective delivery 5 Enablers Policy & Financing & Human Capital & Technology & Governance Regulation Investment Capabilities Infrastructure Strategies and action plans are designed to provide impact on the Government's financial position is balanced benefits to achieve the main objectives of managed and rationalised accordingly, ministries the DTN in accordance with the financial capability and agencies shall periodically review and refine of the Government. In order to ensure that the the measures to be taken. 30 CHAPTER 2: NATIONAL ENERGY POLICY, 2022-2040 Strategic Thrust 1: Optimise energy resources to stimulate sustainable socioeconomic growth Objective: Leverage and optimise the use of energy resources to support economic development and equitable distribution of benefits to the rakyat. Strategies: 1) Optimise position of petrochemicals. 2) Optimise country value-add in energy sector. 3) Enhance demand-side management. Overview of the Action Plans: This strategic thrust will be driven through the following initiatives: • Expanding energy access to drive towards nationwide rural electrification aspirations and unlocking natural gas access for industry clusters built on sustainable competitive advantage to enhance equitable development across all regions; • Enhancing demand-side management and energy efficiency across all sectors and usage of energy types, such as expanding from electricity-focused energy efficiency to also include energy efficiency from thermal energy sources and in the transport sector; • Increasing the value-add of indigenous energy resources through optimised use such as in high-value industries and downstream petrochemical clusters; and • Enhancing supply-side measures such as driving private investments, competitiveness and industry development of high potential indigenous energy sources including oil and gas, and RE such as hydroelectric, solar, bioenergy and other emerging alternative energy sources. 31 CHAPTER 2: NATIONAL ENERGY POLICY, 2022-2040 A. Optimise energy resources to stimulate sustainable socioeconomic growth Strategy Action Plan Strategy 1 A1 Continue progress towards nationwide rural energy access Utilise the location of A2 Optimise value-add of indigenous oil and gas resources petrochemical hubs and gas infrastructure. Optimise strategic positioning of petrochemical hubs across the A3 country Strategy 2 Optimising value-add from oil Optimise plans and execute gas infrastructure build-out for A4 and gas, bio-based energy, industry cluster development solar, hydroelectric and new A5 Optimise indigenous oil and gas production clean energy sources. Enhance and unlock potentials of indigenous bio-based energy A6 Strategy 3 resources Improving energy demand A7 Enhance and unlock potentials of indigenous solar resources management with enablers in the industrial, residential and Enhance and unlock potentials of indigenous hydroelectric A8 commercial sectors. resources A9 Explore high potential nascent new energy sources A10 Enhance demand-side management in the industrial sector Enhance demand-side management in the residential and A11 commercial sector Support scale-up of demand-side management initiatives with A12 strengthened enablers 32 CHAPTER 2: NATIONAL ENERGY POLICY, 2022-2040 Strategic Thrust 2: Capture growth, market opportunities and cost advantage for the economy and people Objective: Create benefits for both the economy and the people by capturing the benefits of rapidly evolving technology and global policy megatrends driven by energy transition and nurturing energy-related innovation to unlock new value pools and growth opportunities. Strategies: 1) Capture domestic market opportunities. 2) Comply with and capture market opportunities from international regulations. 3) Optimise power generation mix. Overview of the Action Plans: This strategic thrust will be driven through the following initiatives: • Transforming and spurring high potential new growth sectors related to energy transition and other megatrends including low carbon mobility, power generation, energy storage and new energy such as hydrogen. It is also expected to enhance the export competitive advantage of the automotive industry with the development of manufacturing capabilities and automotive supply chain to support EV manufacturing; • Ensuring readiness for the country to comply with international regulations on emissions in the marine and aviation sectors in a phased and effective manner. This will support the aspiration of the national aviation industry to become an air cargo hub in the Asia Pacific region; and • Leveraging on cost advantages by keeping pace with energy transition developments such as the rapidly falling costs of renewable power generation, energy storage and low carbon mobility, whilst balancing across various energy trilemma dimensions. 33 CHAPTER 2: NATIONAL ENERGY POLICY, 2022-2040 B. Capture growth, market opportunities and cost advantage for the economy and people Strategy Action Plan Strategy 1 Unlock opportunities from mobility trends in the light vehicles B1 Seize opportunities in the segment environmentally friendly light Unlock opportunities from mobility trends in the heavy vehicles and heavy vehicle market. B2 segment Strategy 2 Comply and capture value pools in line with international marine Seize market opportunities B3 bunkering fuel regulations from the implementation of international regulations such Comply and capture value pools from international aviation fuel B4 as clean fuel for ships and regulations aircrafts. Optimise power generation mix based on the energy trilemma, B5 factoring in rapid technology progress Strategy 3 Optimising the mix of energy Implement physical and regulatory enablers to accommodate B6 generation sources. power system advancement Enhance and optimise regional and international grid system B7 interconnectivity Unlock opportunities and long-term competitive advantage in the B8 emerging hydrogen economy 34 CHAPTER 2: NATIONAL ENERGY POLICY, 2022-2040 Strategic Thrust 3: Enhance energy sector contribution towards environmental sustainability Objective: Improve energy sector contribution to environmental sustainability to support the country in meeting international climate change obligations and ambitions, as well as to ensure the Malaysian economy remains attractive for international investments and is competitively positioned, given global ESG investing trends. Strategies: 1) Implement strategic enablers. 2) Enhance carbon footprint tracking. Overview of the Action Plans: This strategic thrust will be driven through the following initiatives: • Enhancing environmental sustainability by implementing bold solutions to drive carbon emission reduction across the energy sector; • Enabling businesses to enhance reporting and increase transparency on carbon footprint by incorporating ESG trends to drive environmental sustainability in order to be future- proofed; and • Creating clarity on overall energy sector GHG emission reduction targets in alignment to the goals set at national and international levels. C. Enhance energy sector contribution towards environmental sustainability Strategy Action Plan Strategy 1 Enhance environmental sustainability by focusing on high GHG Promote the use of clean fuels C1 emission areas in industries and determine GHG emissions reduction Enhance carbon footprint accounting, reporting and certification in target in energy sector. C2 businesses Strategy 2 Encourage businesses to Determine and enforce energy sector GHG emission reduction C3 implement carbon footprint targets accounting, reporting and certification as well as access Enhance platform for businesses to access RE in line with ESG to RE. C4 trends 35 CHAPTER 2: NATIONAL ENERGY POLICY, 2022-2040 Strategic Thrust 4: Ensure energy security towards fiscal sustainability Objective: Contribute to fiscal stability by optimising fiscal inflows and outflows in the energy sector, whilst ensuring continued security of energy supply. Strategies: 1) Conduct rationalisation of energy subsidies. 2) Ensure smart and timely investments. 3) Establish energy supply boundary conditions. Overview of the Action Plans: This strategic thrust will be driven through the following initiatives: • Rationalising energy subsidies and moving towards market-based pricing with the right timing and to ensure energy affordability for low income households; • Driving smart public and private investments for large energy infrastructure development, including investments needed to facilitate energy transition and to meet growing energy demand of the country; and • Enhancing energy security by creating clarity on boundary conditions and safeguards as well as effective advanced planning for energy infrastructure build-out. D. Ensure energy security towards fiscal sustainability Strategy Action Plan Strategy 1 Rationalise energy subsidies. D1 Rationalise energy subsidies towards market-based pricing Strategy 2 Ensure smart investments Ensure effective, targeted and cost effective investments in energy in energy infrastructure D2 infrastructure development. Strategy 3 Establish energy supply boundary conditions by giving priorities to D3 Establish boundary conditions national energy security and implement safeguards to enhance national energy Timely build-out of new energy import infrastructure to safeguard security. D4 security of supply 36 CHAPTER 2: NATIONAL ENERGY POLICY, 2022-2040 Cross-cutting Strategy with three Action Plans Objective: Enhance governance and increase energy sector competitive advantage and value-add, whilst ensuring a fair energy transition. Enablers: 1) Governance. 2) Policy and Regulation. 3) Financing and Investment. 4) Human Capital and Capabilities. 5) Technology and Infrastructure. Overview of the Action Plans: This strategic thrust will be driven through the following initiatives: • Improving energy sector governance for improved planning, policy development and regulation for public sector efficiency and effectiveness including DTN monitoring and implementation coordination; • Increasing competitive advantage and value-add of energy players with improved localised technological ability to seize opportunities from energy transition and domestic energy resources; and • Ensuring a fair energy transition for the workforce in affected sectors through effective and holistic workforce demand-supply planning. Cross-cutting strategy Enablers Action Plan Governance Establish a National Energy Council for holistic planning, policy E1 development and implementation coordination Policy and Regulation Financing and Investment Determine national level energy technology priorities and ensure E2 stakeholders deliver the priorities Human Capital and Capabilities Conduct strategic workforce planning and enhance future-proof Technology and Infrastructure E3 skills across energy sector workforce 37 CHAPTER 2: NATIONAL ENERGY POLICY, 2022-2040 Enabler : Strengthen energy sector for effective delivery The strategic thrusts are supported by five enablers, namely: • Governance: Strengthen governance structure for holistic energy sector planning, policy development and implementation orchestration through the establishment of a National Energy Council chaired by the Prime Minister. In addition, close collaboration between public and private sectors will be enhanced to enable conducive market environment and sustainable investment; • Human Capital and Capabilities: Implement long-term strategic workforce transition planning to facilitate equitable transitions in skills and jobs as new sectors grow and existing sectors change and transform in line with energy transition. In addition, enhance skills of the energy sector workforce for digital, analytics, automation, and advanced technologies, and encourage competency and capability building to drive research, development, commercialisation and innovation (R&D&C&I) in the energy sector; • Policy and Regulations: Develop action plans to shape energy markets in driving efficiency gains, exploring new business models as well as streamlining regulations and standards. This is crucial to facilitate growth and development of new trends in emerging energy-related aspects. Strengthening the governance and regulatory framework for increased transparency will also be important to ensure continued energy sector growth and enhanced innovation alongside evolving competition and market dynamics; • Technology and Infrastructure: Facilitate conditions to foster innovation and new technology applications to create technological advantages across the energy sector. In addition, the scaling up of major energy infrastructure investments will be considered to safeguard energy security, improve energy access and enhance environmental sustainability. Support will also be needed to encourage innovation especially for technologies at early stages of the maturity curve, but with high potential benefits and scalability; and • Financing and Investment: Promote timely capital and investment required to support implementation of initiatives, including optimising public and private funding to meet investment requirements in energy transition. These include promoting green financing and sustainable investing in line with increasingly important ESG standards and criteria required by investors. 38 CHAPTER 2: NATIONAL ENERGY POLICY, 2022-2040 2.4 Capitalising Emerging Technologies Technology plays a critical success factor in National energy sector technology priorities should exploring opportunities and new value pools be identified to set direction for stakeholders. in energy transition in a wide range of areas These will ensure an integrated and coordinated including RE, low carbon mobility and nascent effort towards energy transition. The technology new energy such as hydrogen. Technology will focus areas, among others, should be oriented to enable countries to capture first-mover advantage where Malaysia has opportunities for long-term in energy transition and increase speed of value competitive advantage and value creation for the realisation domestically from energy transition and country. technology-driven exports. Oil and Gas The oil and gas sector continues to face unique challenges, which requires technology analytics, development, adoption and commercialisation to optimise the lifespan of indigenous oil and gas resources. These include technologies for deepwater and ultra-deepwater fields, technologies to ensure economical and environmentally sustainable production in sour gas fields as well as enhanced oil recovery technology for mature fields. In addition, efforts to develop advanced technology and enhance technology adoption in growing demand areas such as sustainable exploration and production will be key, which can be leveraged to build regional leadership in the sector. Technologies to drive efficiency in operations will be enhanced such as the digitalisation adoption across the oil and gas value chain. These include the use of data analytics; artificial intelligence (AI) and machine learning (ML); integrated carbon capture, utilisation and storage (CCUS) facilities; as well as harnessing the potential of internet of things (IoT) to enhance value creation and cost-competitiveness of domestic oil and gas production. 39 CHAPTER 2: NATIONAL ENERGY POLICY, 2022-2040 Hydroelectric Hydroelectric will be a key technology focus area, driven not only by its potential as an electricity generation source but also as a key enabler towards increasing green hydrogen competitiveness. This includes continuous technology development to improve the operational efficiency of power generation from hydroelectric such as technologies to improve electro-mechanical component efficiency, enhance generator design, adopt digital technologies and enhance flow stability. In addition, technologies to enhance hydro resources as a source of energy storage will be explored, which includes increasing the flexibility of hydraulic turbines and enhancing variable speed hydroelectric generation in areas such as pumped hydro. Meanwhile, technologies to improve the efficiency and uptime of mini-hydro resources will be critical to enhance cost-competitiveness and economic feasibility of the project. Technology developments on potential breakthrough including Restoration Hydro Turbine (RHT) will also be explored for its cost-competitiveness and applicability. Apart from utilising efficiency-driven hydro technologies and optimising energy generation, focus will also be given on minimising socioeconomic and environmental impacts of hydroelectric project throughout the lifecycle of a plant. This includes continuous measures in protecting local communities, wildlife species and heritage sites. Solar Ecosystem Solar energy has high potential to increase its share in the installed capacity of RE in line with rapidly decreasing levelised cost of energy (LCOE). One key focus area of technology is to further increase environmental sustainability and reduce the environmental impact of large-scale solar farms. In addition, suitable crops and other methods will be identified to enhance dual-use of land on solar farms, based on the local characteristics. This will enable further increase in competitiveness with alternate revenue streams, while improving the utilisation and quality of land throughout the lifespan of solar electricity generation. Efforts to ensure continued preservation of biodiversity will also be promoted to further complement the environmental sustainability through contribution of solar resources. Investments to develop and adopt technologies in areas such as floating solar will be further explored given the large complementary synergies between solar and hydroelectric resources. Technology development and adoption to harness potentials of rooftop solar and other solar-related technologies should also be focused on, in accordance with local characteristics. 40 CHAPTER 2: NATIONAL ENERGY POLICY, 2022-2040 Bio-Based Energy Malaysia is the second-largest palm oil producer globally and has large potential to harness bioenergy from agricultural products for circular economy benefits as well as improve environmental sustainability and domestic energy security. The need to develop technologies suited to domestic bio-based resources will be critical for future competitive advantage. For first and second generation bioenergy technologies, efforts will be given towards the objective of driving cost-effectiveness of energy generation on the supply-side, as the country has large feedstock advantages, especially from the palm oil industry. These efforts include technology development and adoption to reduce feedstock aggregation and transportation costs as well as enhance pre-treatment technologies to increase the range of viable feedstock inputs. Research, technology development and adoption will be conducted on the demand-side to enhance technical and commercial viability in emerging end-use sectors such as the utilisation of hydrotreated vegetable oil (HVO) for aviation and marine to enable higher blends of biofuels in transport and industrial use. Other end-use applications that should be focused on for technology development and adoption are the use of biogas in Bio- Compressed Natural Gas (BioCNG) as well as potential use of bio-based solid fuels to substitute fossil fuels in power generation and as feedstock for industry. Strategic development of third and fourth generation bioenergy will be considered with a focus on areas that have potential to create technological advantage compared to global peers. This includes localisation and customisation of technologies that are developed globally, such as optimising the utilisation of algae-based technology in the production of biofuel. 41 CHAPTER 2: NATIONAL ENERGY POLICY, 2022-2040 Energy Efficiency Smart Devices Energy efficiency technologies have been gaining significant traction with the use of digital and smart devices related to the Fourth Industrial Revolution (4IR) in residential and commercial appliances, driven by energy transition and the push for increased environmental sustainability. Malaysia has an enduring legacy in the electrical and electronics (E&E) industry, thus presenting itself huge opportunities in producing more value-added energy efficient products. Given the rapid technological advancement globally, focus will be given to technology scanning, customisation and localisation as well as adoption of energy efficiency technologies that are in line with 4IR and MyDigital policies. Support for local players such as energy service company (ESCO) will be provided to keep pace with global trends on energy-efficient smart devices, creating awareness of the highest potential technologies and developing these technologies to ensure relevance in local context. In terms of technology R&D, a strategic and specific approach is the way forward in deciding the focus areas where there is a potential to establish global leadership and where Malaysia is best poised to leverage and adapt as a strategy. Deliberate decision-making is important to avoid low returns on investments in developing technologies where other countries have had a significant head start. Low Carbon Mobility Energy transition trends have accelerated low carbon mobility which offers large and growing value pool opportunities. Malaysia has several key foundational advantages that should be harnessed in technological development for low carbon mobility. The country has a legacy of automotive manufacturing capabilities, including partnerships with global automotive manufacturers who have vast experience in EV manufacturing. In addition, advantages can be harnessed from a strong E&E industry with adjacencies in components and supply chain required to manufacture EV parts. In order to build technology advantage, effective technology adaptation and adoption supported by technology transfer from established automotive players globally will be critical to driving cost-competitive EV production for domestic markets and capturing international market demand. Attractive incentives should be provided to encourage foreign participation and technology transfer for local companies to increase national competitiveness. Focus areas for supply chain development should also be defined. Other efforts in low carbon mobility such as the promotion of Next-Generation Vehicles (NxGV) and Energy Efficient Vehicles (EEVs) beyond EVs should be continued but reviewed using a portfolio perspective to ensure efforts are not diluted and are focused in order to increase the chances of success. 42 CHAPTER 2: NATIONAL ENERGY POLICY, 2022-2040 Hydrogen Hydrogen has a large opportunity for the country based on its domestic use and export potential. Malaysia’s indigenous resources in natural gas and renewables such as hydroelectric, solar and bioenergy, positions the country effectively for the competitive production of blue and green hydrogen. A key technology focus area for Malaysia would be technology scanning, development and adoption of green hydrogen production and transportation technologies. This is aligned to the national long-term potential to be an export hub for green hydrogen due to competitive advantages, especially for local hydroelectric. Technology partnerships and technology transfer from international players will be critical on a range of topics including electrolyser technologies, export terminal technologies, and hydrogen transport technologies between production sites and export terminals. Sub-focus areas will also be identified in hydrogen technologies such as reducing electrolyser capital costs, increasing electrolyser conversion efficiency and utilisation potential. In determining the optimal conversion for long-range transport, options using carriers such as ammonia, liquid hydrogen, liquid organic hydrogen, or metal hydride will be considered for export. Technologies to enhance safety and reduce operational costs such as terminal handling costs will also be important to enhance end-to-end hydrogen value chain competitiveness. 43 CHAPTER 2: NATIONAL ENERGY POLICY, 2022-2040 2.5 Benefits of the National Energy Policy The timely and effective implementation of the DTN In addition to economic development, benefits initiatives will realise large benefits for the country. are expected along all dimensions of the energy This includes economic development benefits such trilemma over time. In terms of energy security, as increased GDP, job creation and FDI inflows. The greater domestic energy self-sufficiency and benefits of economic development are expected to fuel diversification will support a more resilient accrue to a wide range of stakeholders including energy sector and enable enhanced control businesses in the energy sector and supply over energy as a key strategic resource for the chains, in energy-intensive industries and broader country. Benefits from energy affordability include economic impact through induced multiplier enhanced energy reliability and access. Significant effects. The economic development impact will improvements are expected in terms of energy also be sustainable over time, beyond the period of sector environmental sustainability, which aligns DTN, given the focus on new future-proof growth to global megatrends of enhanced ESG focus and sectors. supports enhanced quality of life with lower in- country emissions. National Energy Policy Benefits Across Economic Development and Energy Trilemma Economic Development Increase contribution to GDP Job creation New FDIs 1.0% – 1.5% added to GDP 207,000 added jobs, Prospects and growth totaling ~RM260b majority in green economy sector opportunities sectors related to low carbon economy Energy Security Energy Affordability Environment Sustainability Lesser reliance on energy Wider energy access Less CO2 emissions import Continuity of rural CO2 emissions reduction, Increased penetration of electrification programme based on NDC and LT-LEDS, indigenous energy sources in support of climate change commitment Fuel diversification Greater RE penetration Enhanced energy source 17.0% of renewable diversification and lower penetration in primary Herfindahl-Hirschman energy mix from 7.2% in Index (HHI) of primary 2018 energy mix (HHI of 0.5 in 2020 and HHI of 0.3 in 2040) 44 CHAPTER 2: NATIONAL ENERGY POLICY, 2022-2040 Economic opportunities from DTN will also enhance The combination of these benefits is expected to social outcomes for Malaysians, such as providing strongly position the energy sector as a catalyst secure future-proof jobs and promoting balanced for socioeconomic sustainability to achieve regional development. Focus will be given towards shared prosperity, in line with long-term national safeguarding the energy affordability of low-income aspirations. These benefits will be jointly shared households and enhancing rural electrification. across various stakeholders including the rakyat, businesses and the government. National Energy Policy Benefits to Stakeholders Rakyat Business Government • Additional 207,000 new jobs, • Enhanced energy access for • Integrated, holistic and better majority in green economy high potential industry. coordination of energy sector. sectors. • Lower carbon footprint with • 1.0% – 1.5% GDP uplift, with • Increase in quality of life cleaner energy mix and energy spurring of new growth areas. outcome with lower carbon efficiency for future trade and emissions. investment. • Enhanced energy security and energy self-sufficiency. • Socioeconomic empowerment • Support capture of new value of rural communities with pools with catalytic incentives • Enhanced diversification of electrification. and infrastructure. fiscal income with new growth opportunities. • Energy cost competitiveness • Building long term capacity of by keeping pace with cost- local companies that are active • Lower CO2 emission, guided by reducing technology trends. in energy sector. NDC and LT-LEDS, supporting climate change commitments. • Enhanced human capital with upskilling of the workforce. 45 CHAPTER 3: GOVERNANCE STRUCTURE CHAPTER 3: CHAPTER 3: GOVERNANCE GOVERNANCE STRUCTURE STRUCTURE 3 Governance Structure Effective and timely implementation of A National Energy Council will be established to initiatives are critical in order to realise the steer and guide energy sector strategic decisions. objectives of the DTN. Given the high degree It is important in ensuring strong accountability of of interconnectedness of the energy sector relevant ministries and agencies in implementing with other sectors, and multiple energy-related DTN initiatives. The Council will be chaired by stakeholders, implementation of the DTN will need the Prime Minister, to be represented by all to be effectively coordinated to ensure optimised ministries and agencies related to energy sector impacts. with Economic Planning Unit, Prime Minister’s Department (EPU) being the Secretariat. Strengthening the energy sector governance structure is needed to ensure effective EPU will coordinate the review of the DTN every implementation of the DTN. The energy governance three years taking into account the latest internal structure needs a clear line of authority. The and external developments. Views of energy- enhanced energy governance structure is expected related stakeholders from public and private to strengthen monitoring and overall energy sector sectors including civil society organisations will be growth. accommodated to further enhance and refine DTN initiatives. 47 CONCLUSION CONCLUSION Conclusion The DTN sets the overarching strategic The DTN will position the energy sector as a policy direction for Malaysia’s energy sector key catalyst for socioeconomic sustainability to encompassing a time horizon of between 2022 achieve shared prosperity. Large economic benefits and 2040. Successful implementation of the DTN will be unlocked with the development of new will ensure a future-proof energy sector which is growth areas which will uplift GDP contribution, aligned with the long-term national aspirations create jobs, attract FDI, and strengthen economic of WKB 2030 and the 2030 Agenda. The DTN will and fiscal sustainability of the country. The also enable the country to effectively navigate energy sector will also progress across the energy challenges and capture large opportunities trilemma dimensions as well as ESG elements, associated with energy transition and other global while reaping socioeconomic benefits in line with megatrends, towards achieving Low Carbon Nation the spirit of Keluarga Malaysia. Aspiration 2040. 49 APPENDIX - ACTION PLAN APPENDIX - ACTION PLAN A1 Continue progress towards nationwide rural energy access KEY OBJECTIVES Stakeholders • Improve access for rural communities as a foundation for socioeconomic development in line with Sustainable Development Goal 7 of the 2030 Lead Entity: Agenda. KPLB • Enhance energy equity of providing rural electricity access by exploring Core Stakeholders: innovative solutions such as micro grid. MPIC, SEDA, UPEN (Sabah), UPEN (Sarawak), Ministry of • Unlock socioeconomic benefits and create source of income from renewable Utility and Telecommunication energy (RE) sources (for instance, biogas and biomass). (Sarawak), SEB, SESB, TNB DESCRIPTION OF INITIATIVES Supporting Stakeholders: EPU, KeTSA, KPKT • Expand rural electrification access in line with targets, optimising main grid connectivity or alternative micro grid. • Continuous optimisation of cost effectiveness in providing rural energy Implementation Initiative Type Timeline access, including strategically weighing across various rural energy access provision options such as electricity grid access expansion and use of 2022-2030 Continuous micro grid. A2 Optimise value-add of indigenous oil and gas resources KEY OBJECTIVES Stakeholders • Strengthen economic contribution and value-add of indigenous oil and gas resources to national economy through Gross Domestic Product (GDP) Lead Entity: contribution, job creation and fiscal contribution. EPU • Leverage natural gas resources to spur high value downstream industries Core Stakeholders: and industry clusters with sustainable competitive advantage to enhance MITI, UPEN (Sabah), UPEN regional socioeconomic development. (Sarawak), Ministry of International Trade, Industry DESCRIPTION OF INITIATIVES and Investment (Sarawak), and representatives in JCC (Sarawak) • Optimise value creation to the country from indigenous oil and gas and JCC (Sabah), PETRONAS resources through exports and domestic uses including industry, petrochemicals and power generation based on long-term business case, Supporting Stakeholders: sustainable input pricing, as well as GDP and jobs contribution impact. MIDA, PETROS, SEC • Mandate a joint working group to focus on current natural gas allocations Implementation Initiative Type and domestic natural gas demand aspirations of Sabah and Sarawak. Timeline 2022-2040 New 51 APPENDIX - ACTION PLAN A3 Optimise strategic positioning of petrochemical hubs across the country KEY OBJECTIVES Stakeholders • Strengthen long-term competitive advantage and value-add of petrochemical hubs to enhance GDP contribution, job creation and export Lead Entity: income. MITI • Capture spillover effects of petrochemical hubs to local supply chains and Core Stakeholders: communities to enhance socioeconomic development. EPU, UPEN (Sabah), UPEN (Sarawak), UPEN (Terengganu), • Ensure continued feedstock security of supply for petrochemical hubs UPEN (Johor), Ministry of based on outlook of indigenous oil and gas resources for energy security. International Trade, Industry and Investment (Sarawak), DESCRIPTION OF INITIATIVES PETRONAS, SEDC, PETROS, SOGDC, and representatives in • Build Sabah and Sarawak petrochemical hubs to optimise natural gas JCC (Sarawak) and JCC (Sabah) advantage, such as the Bintulu Petrochemical Hub and Sipitang O&G Industrial Park (SOGIP), factoring in the demand-supply outlook for gas Supporting Stakeholders: feedstock. MIDA, MATRADE • Optimise position of Peninsular petrochemical hubs, such as the strategic positioning of Kerteh Integrated Petrochemical Complex (KIPC), Pengerang Implementation Initiative Type Timeline Integrated Petroleum Complex (PIPC), Gebeng Integrated Petrochemical Complex (GIPC), factoring in the demand-supply outlook for gas and naptha 2022-2030 Continuous feedstock. A4 Optimise plans and execute gas infrastructure build out for industry cluster development KEY OBJECTIVES Stakeholders • Leverage gas access to enhance economic competitiveness of industrial clusters built on sources of long term sustainable competitive advantage. Lead Entity: EPU • Strategic, timely, and cost-effective build out of gas infrastructure based on firm and sustainable demand requirements, optimising across range of Core Stakeholders: options including physical and virtual pipelines to provide reliable gas supply MITI, ST, UPEN (Sabah), UPEN for end users. (Sarawak), Ministry of Utility and Telecommunication (Sarawak), • Enhance environmental sustainability with petroleum product to gas SEC, PETRONAS, GMD and gas switching. infrastructure owners DESCRIPTION OF INITIATIVES Supporting Stakeholders: PETROS • Ensure natural gas infrastructure build out is supported by industry demand built on sustainable, long-term competitive advantage to support natural gas input market pricing. Implementation Initiative Type Timeline • Timely build out of natural gas infrastructure, including physical or Virtual Pipeline Systems (VPS). 2022-2040 New 52 APPENDIX - ACTION PLAN A5 Optimise indigenous oil and gas production KEY OBJECTIVES Stakeholders • Enhance upstream investment attractiveness for continued development of upstream oil and gas sector for GDP, job and fiscal income contribution. Lead Entity: EPU, PETRONAS • Enhance competitiveness of upstream oil and gas sector for competitive breakeven production costs, meeting challenges of increasingly challenging Core Stakeholders: domestic fields. MOF, MPRC, PETROS • Contribute to energy security through indigenous resource production to Supporting Stakeholders: reduce energy imports. MOSTI, MOGSC DESCRIPTION OF INITIATIVES • Optimise fiscal regime and government take on a periodic basis factoring in evolving basin characteristics, to ensure competitiveness in attracting upstream investments. • Enhance Oil & Gas, Services and Equipment (OGSE) sector competitiveness to reduce breakeven costs and to improve resilience and regional competitiveness. • Define national oil and gas technology priorities based on specific challenges of Malaysia basins including high CO2 and high H2S fields, marginal, maturing and deepwater fields and coordinate across stakeholders to invest, develop, adopt and commercialise these priority technologies. • Enhance operational efficiency to lower breakeven costs including driving Implementation Initiative Type greater standardisation and modularisation, unlocking cross-operator Timeline operational synergies and establish strategic supplier relationships in the oil and gas sector. 2022-2040 Continuous 53 APPENDIX - ACTION PLAN A6 Enhance and unlock potential of indigenous bio-based energy resources KEY OBJECTIVES Stakeholders • Enhance RE penetration to increase fuel source diversification, enhance domestic energy self-sufficiency and environmental sustainability. Lead Entity: MPIC • Enhance long-term cost competitiveness of energy production from bio-based resources. Core Stakeholders: EPU, MOT, MAFI, MPOB, SEDA • Promote circular economy and strengthen revenue streams for the agriculture sector by unlocking advantages of abundant bio-based feedstock resources. Supporting Stakeholders: MITI, KeTSA, KPLB, MIDA, ST, DESCRIPTION OF INITIATIVES SEC, SESB, SEB, Ministry of Utility and Telecommunication • Define strategy of bio-based resources use across energy (including solid, (Sarawak), industry players liquid, gas fuels) and non-energy uses (including bio-chemicals, bio-fertiliser, from agri-commodity, bio-products, others.) to optimise value-add of bio-based resources. automotive, marine and aviation sectors • Optimise the role of bioenergy for power generation including exploring opportunities where bioenergy (such as through biomass or biogas plants) can support cost-effective rural electrification through micro grid. • Optimise the role of biofuels penetration in existing transport and industry uses, factoring in impact of Palm Oil Gas Oil (POGO) on fiscal costs of enhancing biodiesel blending. • Invest to build local capabilities and technology advantage to unlock high potential emerging areas of biofuel use such as in marine bunkering and aviation, biogas and biomethane (such as, BioCNG) in industry, supported by early-stage funding and grants to encourage early-mover adoption. • Explore and implement measures to structurally drive down costs of bioenergy production, such as reducing cost of upstream feedstock, enhancing scale and supply security of feedstock, efficiency of energy conversion and identifying Implementation focus areas to localise capabilities or equipment production. Initiative Type Timeline • Research and evaluate feasibility and economic implications of co-firing generation plants which leverage solid biomass pellets. 2022-2040 New 54 APPENDIX - ACTION PLAN A7 Enhance and unlock potential of indigenous solar resources KEY OBJECTIVES Stakeholders • Enhance RE penetration to increase fuel source diversification, enhance domestic energy self-sufficiency and environmental sustainability. Lead Entity: KeTSA • Enhance cost-competitiveness of energy production from solar resources to improve energy affordability, reduce environmental impacts of solar land use. Core Stakeholders: ST, SEDA, Ministry of Utility and • Unlock synergies with solar PV manufacturing industry and new solar-related Telecommunication (Sarawak), value pools and business models such as solar leasing, peer-to-peer (P2P) TNB, SB, GSO, SEC, SESB, SEB trading and others. Supporting Stakeholders: DESCRIPTION OF INITIATIVES MITI, MOSTI, KASA, KPKT, TNB, state governments, solar • Long-term pipeline of Large Scale Solar (LSS) projects to spur industry industry players and financial capability building, with indicative total package and lot sizes, optimised institutions between large solar parks and smaller scale packages. • Incentivise dual-use agri-voltaic solar farms to increase land productivity and environmental sustainability. • Further explore high potential floating solar, including synergies between hydro and solar resources. • Increase availability and competitiveness of private capital for solar investments, with optimisation of equity holding rules and by strengthening due diligence during bid evaluation process. • Extend Net Energy Metering (NEM) to continue encouraging industry development, before transitioning to other forms of compensation such as compensation on displaced cost rates as industry gains maturity. • Increase capital access for distributed solar with rooftop solar aggregation and unlock attractiveness of distributed solar with P2P and virtual Power Implementation Purchase Agreements (PPAs). Initiative Type Timeline • Identify ecosystem opportunities to unlock synergies across the solar value chain, between upstream manufacturing and downstream development. 2022-2025 New 55 APPENDIX - ACTION PLAN A8 Enhance and unlock potential of indigenous hydroelectric resources KEY OBJECTIVES Stakeholders • Enhance RE penetration to increase fuel source diversification, enhance domestic energy self-sufficiency and environmental sustainability. Lead Entity: EPU, KeTSA, UPEN (Sarawak) • Enhance cost-competitiveness of energy production from hydro resources to improve energy affordability and reduce environmental impact of hydro plants Core Stakeholders: development. KASA, ST, SEDA, UPEN (Sabah), Ministry of Utility and • Position hydro resources to support power system needs of the future with the Telecommunication (Sarawak), balance between power generation and energy storage contribution. SB, GSO, SEB DESCRIPTION OF INITIATIVES Supporting Stakeholders: MOSTI, TNB, SESB, SEC • Optimise utilisation of hydro resources in the country factoring in the environmental impact perspective and the overarching requirement of state governments with regards to water and land use. Implementation • Enhance efficiency of small-scale hydro resources, through technology and Timeline Initiative Type sharing of best practices to optimise plant performance and efficiency, as well as access to attractive financing. 2022-2040 New A9 Explore high potential nascent new energy sources KEY OBJECTIVES Stakeholders • Enhance renewable energy penetration to increase fuel source diversification, enhance domestic energy self-sufficiency and environmental sustainability. Lead Entity: EPU • Enhance commercial viability and competitiveness of alternative energy sources to achieve technical and commercial viability, as foundation for scale- Core Stakeholders: up. MOSTI, KeTSA, MPIC, MAFI, KPKT, ST, SEDA, SB, Ministry of • Build competitive position and unlock value pools with early-mover technology Utility and Telecommunication advantage in high potential nascent alternative energy sources. (Sarawak), UTM-OTEC DESCRIPTION OF INITIATIVES Supporting Stakeholders: MOHE, MGTC, research and • Conduct targeted feasibility studies to identify the potential of alternative academic institutions, SEC, energy supply sources in Malaysia, focusing on high potential energy sources SESB, SEB such as waste-to-energy, third-generation bioenergy, solar thermal, and ocean thermal energy conversion (OTEC). • Support private sector investments with matching government grants particularly in early proof-of-concepts as well as deployment and scale-up phase for high potential alternative energy supply sources. Implementation Initiative Type Timeline • Conduct highly selective study of geothermal and wind energy potential in specific high potential targeted regions. 2022-2040 New 56 APPENDIX - ACTION PLAN A10 Enhance demand-side management in the industry sector KEY OBJECTIVES Stakeholders • Reduce energy intensity to realise benefits of environmental sustainability, enhanced resource conservation, and domestic energy self-sufficiency. Lead Entity: ST, Ministry of Utility and • Contribute to industry competitive advantage by lowering costs of energy Telecommunication (Sarawak) inputs, with NPV positive measures. Core Stakeholders: • Support growth and development of local energy efficiency industry for GDP EPU, KeTSA, MITI, MOSTI contribution and job creation, and unlock synergies with 4IR efforts. Supporting Stakeholders: DESCRIPTION OF INITIATIVES MIGHT, MIDA, industry associations • Establish and enforce a long-term roadmap for mandatory Minimum Efficiency Performance Standards (MEPS) for a range of electrical and thermal energy- intensive industrial equipment. • Enforce mandatory energy audits for large and medium industry players above selected energy consumption threshold. • Encourage and incentivise cost-benefit analysis to be carried out for large industrial facilities on co-generation as well as combined heat and power (CHP) adoption for industry new builds or major refurbishment, with adoption of measures based on results of cost-benefit analysis. • Establish supporting regulatory framework for thermal energy use (i.e., heat and steam), as a pre-requisite to the implementation of regulations targeted at energy efficiency from CHP. Implementation Initiative Type • Incentivise, increase awareness and promote adoption of 4IR digital Timeline technologies to drive energy efficiency across industry players and energy service companies (ESCO). 2022-2040 Continuous 57 APPENDIX - ACTION PLAN A11 Enhance demand-side management in the residential and commercial sector KEY OBJECTIVES Stakeholders • Reduce energy intensity to realise benefits of environmental sustainability, enhanced resource conservation and domestic energy self-sufficiency. Lead Entity: ST, Ministry of Utility and • Contribute to household and commercial energy affordability by lowering Telecommunication (Sarawak) costs of energy inputs, with Net Present Value (NPV) positive measures. Core Stakeholders: • Support growth and development of local energy efficiency industry to improve EPU, KeTSA, KPKT, JKR, MGTC, GDP contribution and job creation and unlock synergies with smart city SEDA efforts. Supporting Stakeholders: DESCRIPTION OF INITIATIVES REHDA, malaysiaGBC, CIDB, state governments • Expand coverage and establish a long-term roadmap for mandatory MEPS for a range of energy-intensive household appliances and commercial equipment. • Expand equipment coverage of energy efficiency labelling, review five-star rating scale for products that have already reached the five-star mark and enhance information provided on energy efficiency label. • Enforce mandatory energy audits for large and medium commercial players with sizable energy consumption. • Modify or allow exceptions in public procurement process to facilitate Energy Implementation Initiative Type Timeline Performance Contract (EPC) adoption in public sector buildings, to enable the scale-up of energy efficiency in the public sector. 2022-2040 Continuous • Harmonise various Green Building Indices on energy efficiency. 58 APPENDIX - ACTION PLAN A12 Support scale-up of demand-side management initiatives with strengthened enablers KEY OBJECTIVES Stakeholders • Increase awareness and support effective realisation of demand-side management initiatives in industry, residential and commercial sectors. Lead Entity: ST, Ministry of Utility and • Promote healthy energy efficiency ecosystem, unlocking synergies between Telecommunication Sarawak manufacturing, service providers, financial institutions and others to enhance value-add, GDP contribution and job creation. Core Stakeholders: EPU, KeTSA, MITI, JKR, MGTC, DESCRIPTION OF INITIATIVES SEDA • Pass Energy Efficiency and Conservation (EEC) Bill to accord regulatory Supporting Stakeholders: oversight of Energy Commission (ST) over electrical and thermal energy MIDA, MIGHT, REHDA, MGBC, efficiency. CIDB, BNM, state governments, financial institutions, industry • Support increased adoption of EPC by developing national standard EPC associations, academic templates and measurement and verification (M&V) guidelines to increase institutions confidence and reduce transaction costs between client and ESCO. • Establish knowledge sharing platform for industry and commercial players and ESCO to share information about energy efficiency measures and returns, to increase confidence for energy efficiency. • Enhance capabilities and capacity of ESCO players on the technical side by creating awareness of latest energy efficiency technologies and on the financial side by consolidation and improving creditworthiness. • Optimise Energy Audit Conditional Grant (EACG) funding target recipients as energy audits are made mandatory for energy-intensive industries. • Continue Green Technology Financing Scheme (GTFS), enhance awareness and ability of banks to evaluate energy efficiency projects to unlock private Implementation financing. Push towards sustainable private sector led financing for energy Timeline Initiative Type efficiency investments, by building strong banking sector support for ESCO EPC. 2022-2040 Continuous 59 APPENDIX - ACTION PLAN B1 Unlock opportunities from mobility trends in the light vehicle segment KEY OBJECTIVES Stakeholders • Unlock consumer benefits and value pools for domestic auto industry by keeping pace with rapid technology trends in electrification of light vehicles. Lead Entity: MITI • Position auto industry for export competitive advantage with build-up of auto manufacturing capabilities and supply chain to support electric vehicle (EVs) Core Stakeholders: manufacturing. EPU, MOT, KASA, KeTSA, MOSTI, MPIC, ST, MGTC, MARii • Enhance energy conservation and environmental sustainability with public transport, fuel economy and electrification of light vehicle. Supporting Stakeholders: NanoMalaysia, MIMOS, MAA, DESCRIPTION OF INITIATIVES TNB, PETRONAS, SEB, SESB • Establish clear responsibility and governance for the coordinated delivery of fuel economy and fuel of the future initiatives across stakeholders. • Implement minimum fuel economy standard requirements on automotive OEMs and enforce vehicle fuel economy labelling to achieve ASEAN fuel economy target. • Continuously promote energy efficiency by enhancing public transport modal shares, shared mobility, alternative carbon free mobility and facilitating the entry of digitally enabled carpooling. • Recognise EVs as the focus of the future in light vehicles to achieve required level of scale in infrastructure and auto-manufacturing. Support with investments, financing and capability building to enhance local EV manufacturing and supply chain ecosystem. • Conduct strategic planning and support with early stage public-private funding to support charging infrastructure build out and other relevant physical Implementation Initiative Type enablers to accommodate EV penetration. Timeline • Establish regulations to support EV adoption such as regulation on vehicle, 2022-2040 New battery and infrastructure attributes. 60 APPENDIX - ACTION PLAN B2 Unlock opportunities from mobility trends in the heavy vehicles segment KEY OBJECTIVES Stakeholders • Enhance energy conservation, reduce congestion and enhance environmental sustainability with more efficient demand-side management, enhanced fuel Lead Entity: economy and switching towards cleaner fuels in heavy transport. MITI • Enhance synergies between the domestic agricommodity industry and the Core Stakeholders: transport sector with biofuels penetration, and capture new value pools EPU, MOT, KASA, MPIC, MGTC, from other emerging high potential fuels of the future in the heavy transport MARii, MOSTI, UPEN (Sabah), segment. UPEN (Sarawak), SEB, SEC, PETRONAS DESCRIPTION OF INITIATIVES Supporting Stakeholders: • Implement minimum fuel economy standard requirements on automotive NanoMalaysia, MIMOS, auto- OEMs and enforce vehicle fuel economy labelling to complement other industry players demand-side management programmes such as green freight and eco-driving programme. • Support timely execution and shifts to alternative modes of transport for freight. Implementation • Keep pace with developments in fuel of the future including hydrogen, Initiative Type Timeline Liquefied Natural Gas (LNG), biodiesel and heavy EVs with deliberate decision made to prioritise fuel of the future before at-scale build out of infrastructure 2022-2040 New enablers. B3 Comply and capture value pools in line with international marine bunkering fuel regulations KEY OBJECTIVES Stakeholders • Ensure optimised national response to International Maritime Organization (IMO) sulphur cap standards compliance in the near term and decarbonisation Lead Entity: compliance in the longer term. MOT • Capture new value pools related to marine fuels of the future such as low Core Stakeholders: sulphur fuel oil, LNG and biofuels leveraging fuel of the future advantages to EPU, MPIC, KASA, PETRONAS, increase ports competitiveness. port authorities DESCRIPTION OF INITIATIVES Supporting Stakeholders: UPEN (Sabah), UPEN • Position Malaysia as a regional LNG bunkering hub for long-term advantage, (Sarawak), MGTC, MITI, MOSTI, with supporting port incentives and policies. NanoMalaysia, MIMA, maritime players, domestic refineries • Optimise fuel mix and encourage investments in refineries for residue desulphurisation and low-sulphur crude topping units to enhance domestic supply of Low Sulphur Fuel Oil (LSFO) to meet IMO requirements and encourage take-up of LSFO in domestic ports. Implementation Initiative Type • Invest and build technology advantage in biofuels used in marine bunkering as Timeline a high potential fuel of the future and explore adoption of biofuels for onboard energy use and for diesel-powered vessels. 2022-2040 New 61 APPENDIX - ACTION PLAN B4 Comply and capture value pools from international aviation fuel regulations KEY OBJECTIVES Stakeholders • Ensure optimised national response to Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA) emission standards compliance, Lead Entity: supporting country aviation industry aspirations. MOT • Capture new value pools through early mover advantage in fuels of the future, Core Stakeholders: such as leveraging advantages of domestic bio-based feedstock for biofuels. EPU, MPIC, KASA, CAAM, MAHB DESCRIPTION OF INITIATIVES Supporting Stakeholders: MOSTI, MGTC, NanoMalaysia, • Track developments in international CORSIA regulations, invest and build domestic airlines, aviation fuel technology advantage in biofuel use for aviation industry as well as demand- suppliers side management measures. • Invest and encourage pilot projects to build technology advantage in the use of Implementation indigenous bioenergy sources to produce biofuels for use in aviation industry. Initiative Type Timeline • Track developments and factor in energy-related impact of new air-based mobility technology. 2022-2040 New B5 Optimise power generation mix based on the energy trilemma, factoring in rapid technology progress KEY OBJECTIVES Stakeholders • Enhance power system energy security, affordability and environmental sustainability by optimisation of power capacity development plans. Lead Entity: KeTSA - Enhance energy security by improving fuel source diversification, domestic energy self-sufficiency and energy storage for system stability. Core Stakeholders: ST, SB, TNB, GSO, SEDA, - Enhance energy affordability by keeping pace with tech trends influencing SESB, Ministry of Utility and relative competitiveness of various power generation sources. Telecommunication (Sarawak) - Enhance environmental sustainability by moving to cleaner energy sources. Supporting Stakeholders: EPU, KASA, MITI, SEB, SEC, DESCRIPTION OF INITIATIVES MGTC, UPEN (Sabah), UPEN • Optimisation of power capacity mix across coal, natural gas, and renewables (Sarawak) to achieve energy trilemma objectives, factoring in rapidly evolving global policy and technology trends. Implementation Initiative Type Timeline • Enhance conversion efficiency to improve fuel input to electricity generated. 2022-2040 Continuous 62 APPENDIX - ACTION PLAN B6 Implement physical and regulatory enablers to accommodate power system advancement KEY OBJECTIVES Stakeholders • Enable benefits of energy security, affordability and environmental sustainability to be realised from power system of the future, such as Lead Entity: accommodating increase in EVs and variable RE generation. KeTSA, Ministry of Utility and Telecommunication (Sarawak) • Unlock competition, new business models, innovation in the power sector and to enhance international competitiveness in attracting investors. Core Stakeholders: ST, SB, TNB, GSO, SEDA • Cost effective implementation of enablers with support of private investments. Supporting Stakeholders: DESCRIPTION OF INITIATIVES MITI, MGTC, MARii, MOT, MyPower, SEB, SESB, SEC, • Invest in grid infrastructure upgrades and energy storage in a timely manner UPEN (Sabah), UPEN (Sarawak) to support future mix with greater variable RE penetration, supported by strong regulatory frameworks. • Invest in digitalisation and modernisation of the power system including roll- out of smart grid infrastructure. • Enhance country value capture by developing local capabilities and industries across the RE value chain and in enablers such as smart grid, smart energy management systems and other innovations associated with the modernisation of the electricity sector. • Study and implement measures to accommodate greater penetration of variable renewable energy (VRE) and EVs by enhancing grid infrastructure and installing energy storage facilities. • Facilitate entry of green virtual PPAs, to increase electricity offtake choice required to attract environmental, social and governance (ESG) investments. Implementation • Study potential to enhance electricity sector with market reforms such as Initiative Type Timeline considering electricity market liberalisation and transparent, equitable and well-designed grid Third-Party Access (TPA) schemes. 2022-2040 Continuous 63 APPENDIX - ACTION PLAN B7 Enhance and optimise regional and international grid system interconnectivity KEY OBJECTIVES Stakeholders • Leverage Sabah-Sarawak interconnectivity to benefit Sabah with enhanced energy security from wider network access, improved fuel diversification, Lead Entity: sharing of reserve margins and energy affordability by leveraging Sarawak KeTSA, Ministry of Utility and hydropower. Telecommunication Sarawak • Leverage ASEAN interconnectivity to benefit country with enhanced energy Core Stakeholders: security from the integrated network systems and sharing of indigenous ST, SB, TNB, GSO, SESB, SEB, reserve margins as well as enable regional power trading. UPEN (Sabah), UPEN (Sarawak) DESCRIPTION OF INITIATIVES • Establish regional grid connectivity between Sabah and Sarawak to enhance power system stability, enable sharing of backup capacity and to unlock the benefits of hydropower in Sarawak. Implementation • Leverage ASEAN power grid interconnectivity to enhance power system Initiative Type Timeline stability, to optimise reserve margins and explore potential electricity sales to neighbouring countries. 2022-2040 Continuous B8 Unlock opportunities and long-term competitive advantage in the emerging hydrogen economy KEY OBJECTIVES Stakeholders • Unlock new value pools, GDP contribution and job creation from hydrogen economy, keeping pace with technology development in various end uses. Lead Entity: MOSTI, UPEN (Sarawak), • Enhance export income, which contributes to socioeconomic development UPEN (Sabah) from hydrogen production for exports. Core Stakeholders: • Support carbon emission reduction efforts with hydrogen, in line with EPU, MITI, PETRONAS, SEB, increasing commercial viability of hydrogen relative to substitutes. MGTC, SEDC Energy, SB, NanoMalaysia, Department of DESCRIPTION OF INITIATIVES Standards • Nominate a lead government entity to spearhead and oversee the end-to-end development of hydrogen economy roadmap for Malaysia. • Develop long-term hydrogen roadmap which optimises hydrogen production pathways across green, blue and grey hydrogen. • Determine national strategy to optimise hydrogen production locations for optimised competitive advantage, such as positioning Sarawak as a green hydrogen production hub targeted for export markets. • Build up a domestic hydrogen ecosystem supported by research and development (R&D), technology deployment and commercialisation Implementation Initiative Type capabilities across targeted areas along the hydrogen value chain of Timeline production, distribution and end-use application. 2022-2040 New • Develop regulation to ensure safe, secure and equitable roll-out of hydrogen production, transport and end-use applications. 64 APPENDIX - ACTION PLAN C1 Enhance environmental sustainability by focusing on high GHG emission areas KEY OBJECTIVES Stakeholders • Enhance environmental sustainability to improve standard of living and reduce national greenhouse gas (GHG) emissions. Lead Entity: EPU • Focus efforts on highest return areas where significant emission reductions can be obtained and where cost of emission reduction is viable. Core Stakeholders: MITI, KASA, ST, PETRONAS DESCRIPTION OF INITIATIVES Supporting Stakeholders: • Set national limits and commit to zero continuous flaring and venting Sector stakeholders (e.g., emissions to reduce upstream GHG emissions. industry associations, oil and gas operators, etc.) • Identify commercially viable solutions to reduce coal use in the cement sector, such as fuel switching to biomass and waste-to-energy, optimising clinker-to- cement ratios, and enhancing plant capacity for energy efficiency. Implementation • Identify viable opportunities to drive diesel to natural gas or biogas switching Initiative Type Timeline in industry use, including considering VPS solutions to enable natural gas access to facilitate switch. 2022-2040 Continuous C2 Enhance carbon footprint accounting, reporting and certification in businesses KEY OBJECTIVES Stakeholders • Enable businesses to increase competitiveness in export markets where ESG and production carbon footprint are increasingly important factors in decision- Lead Entity: making. KASA • Encourage consumers to factor in ESG considerations into purchasing Core Stakeholders: decisions with ESG transparency that enables market activation for business MITI, MOT, KeTSA, Bursa shifts. Malaysia, Companies Commission (SSM), Securities • Create transparency to inform strategic measures to reduce carbon footprint, Commission (SC), BNM to meet national commitments. DESCRIPTION OF INITIATIVES • Enhance accuracy and comprehensiveness of nationwide GHG accounting standards, such as establishing country-specific emission factors. • Adopt internationally recognised standards, encourage, and gradually mandate private sector carbon footprint accounting and reporting. Implementation Initiative Type Timeline • Enable mechanisms which allow for local firms to voluntarily certify carbon footprint position through endorsed certification entities. 2022-2030 New 65 APPENDIX - ACTION PLAN C3 Determine and enforce energy sector GHG emission reduction targets KEY OBJECTIVES Stakeholders • Align energy sector targets on GHG emissions to national commitments, to ensure accountability in achievement of targets. Lead Entity: KASA • Unlock positive spillover benefits of environmental sustainability on health and quality of living. Core Stakeholders: EPU, KeTSA, MOT, MITI, ST, SB, • Leverage strong position on environmental sustainability as a form of PETRONAS competitive advantage to attract investors and to benefit from multilateral development support. DESCRIPTION OF INITIATIVES Implementation Initiative Type Timeline • Determine the targets for key energy subsectors including transport, power and industry in line with the country's GHG emissions commitments. 2022-2025 New C4 Enhance platform for businesses to access RE in line with ESG trends KEY OBJECTIVES Stakeholders • Attract foreign investments and retain current domestic investments by catering to specific ESG requirements of global investors, such as the RE100. Lead Entity: KeTSA • Keep pace with changing and increasingly stringent ESG and RE requirements of investors to achieve competitive advantage. Core Stakeholders: EPU, MITI, MIDA, UPEN (Sabah), • Benefit from spillover effects such as GDP contribution and job creation from UPEN (Sarawak) entry of foreign investments. Supporting Stakeholders: DESCRIPTION OF INITIATIVES KASA, SEDA, Ministry of International Trade, Industry • Enhance mechanisms for industries to offtake electricity from renewable and Investment (Sarawak) energy sources, including additionality requirements by selected RE100. • Enable offtake of renewable energy and selection of energy source based on various ESG factors through virtual Power Purchase Agreement (PPA) enabled by structural reform and supported by a comprehensive technical, commercial and regulatory framework. Implementation Initiative Type • Market ability for companies to offtake RE in order to attract FDI and Timeline corporations to Malaysia. 2022-2025 Continuous 66 APPENDIX - ACTION PLAN D1 Rationalise energy subsidies towards market-based pricing KEY OBJECTIVES Stakeholders • Enhance fiscal sustainability and reduce economic distortions with move towards economics-driven market-based pricing. Lead Entity: MOF, EPU • Ensure safeguard of energy equity for low-income households with targeted support. Core Stakeholders: KPDNHEP, MPIC, KeTSA, MITI, • Ensure smooth transition and advanced notice for subsidy rationalisation, ST, UPEN (Sabah), UPEN through clear communications, with timeline and adjustment period credibility (Sarawak) as well as timely execution of actions. DESCRIPTION OF INITIATIVES • Rationalise transport fuel subsidies, with only targeted exception-based for low-income households. • Rationalise LPG subsidy leakages and move towards market prices in line with post COVID-19 fiscal rationalisation, with only targeted exception-based for low-income households. • Establish supporting enablers such as developing a strong database of vulnerable groups which ensures data consistency across ministries and is Implementation consistently updated, to enhance targeted support for low-income households. Initiative Type Timeline • Time energy subsidy rationalisation with overall fiscal consolidation plans of 2022-2025 Continuous government following the COVID-19 recovery. D2 Ensure effective, targeted and cost effective investments in energy infrastructure KEY OBJECTIVES Stakeholders • Achieve timely build out of energy infrastructure to facilitate energy transition and safeguard energy security, whilst ensuring fiscal sustainability. Lead Entity: EPU, MOF • Manage large energy sector-related direct or contingent liabilities to ensure continued fiscal sustainability. Core Stakeholders: KeTSA, MOT, KASA, SB, GSO, • Unlock full potential and avoid "crowding out" of private investments, such as MGTC, ST, UPEN (Sabah), UPEN through well-designed public-private partnership models. (Sarawak), PETRONAS, GMD DESCRIPTION OF INITIATIVES • Ascertain continuous and consistent forward planning and accountability to ensure demand-led and cost-efficient large energy investments, such as power plants, grid and natural gas infrastructures, which will lead to impactful private sector investment and public-private partnership options. Implementation Initiative Type • Mitigate large future energy-sector liabilities such as oil and gas Timeline decommissioning costs, through early planning and proactive actions. 2022-2040 Continuous 67 APPENDIX - ACTION PLAN D3 Establish energy supply boundary conditions by giving priorities to national energy security KEY OBJECTIVES Stakeholders • Ensure continued energy security with safeguards on energy security of supply and compliance to various energy security metrics such as domestic self- Lead Entity: reliance, fuel source and energy import source diversification. EPU • Ensure cost effective safeguards, such as exploring innovative public-private Core Stakeholders: partnerships to enable enhanced security of supply. KeTSA, ST, PETRONAS, TNB DESCRIPTION OF INITIATIVES Supporting Stakeholders: MITI, MOT, KPKT, KPDNHEP • Establish and enforce boundary conditions on key energy security metrics, such as fuel source diversification, domestic energy self-reliance and energy import source diversification. Implementation Initiative Type • Enhance energy stockpiles for energy security and identify paths to enable Timeline cost-effective stockpiles and energy security. 2022-2025 New D4 Timely build-out of new energy import infrastructure to safeguard security of supply KEY OBJECTIVES Stakeholders • Ensure continued energy security with the timely build-out of relevant energy import infrastructure to improve security of supply. Lead Entity: EPU, ST • Ensure cost-effective build out of import infrastructure leveraging private investments enabled by TPA and timing build-out in line with accurate demand Core Stakeholders: requirements to prevent underutilisation of infrastructure. PETRONAS, UPEN (Sabah), UPEN (Sarawak), licensed energy infrastructure players DESCRIPTION OF INITIATIVES Supporting Stakeholders: MITI, KeTSA, GMD • Invest into timely expansion of energy import infrastructure based on outlook of energy demand-supply balances. Implementation Initiative Type Timeline 2022-2040 New 68 APPENDIX - ACTION PLAN E1 Establish a National Energy Council for holistic planning, policy development and implementation coordination KEY OBJECTIVES Stakeholders • Strengthened energy sector governance for holistic planning, policy development and energy policy implementation coordination. Lead Entity: EPU • Enhance public sector efficiency and effectiveness in planning and implementation of energy related policies and key projects. Core Stakeholders: MOF, PMD, KeTSA, KASA, • Ensure effective oversight and orchestration for implementation of the DTN. KPDNHEP DESCRIPTION OF INITIATIVES Supporting Stakeholders: ST, PETRONAS • Establish a National Energy Council as a forum chaired by the Prime Minister for executive decisions related to energy policy, given the cross-cutting impact of energy policy decisions on the overall economy. Implementation Initiative Type Timeline 2022-2023 New E2 Determine national level energy technology priorities and ensure stakeholders deliver the priorities KEY OBJECTIVES Stakeholders • Effectively develop, commercialise and scale energy technologies required to capture opportunities from energy transition and indigenous energy resources. Lead Entity: EPU, MOSTI • Enhance competitive advantage and increase value-add of energy sector players with enhanced localisation of technology capabilities, contribution to Core Stakeholders: GDP, job creation, and technology export income. KeTSA, MPIC, ST, MGTC, MARii, PETRONAS • Improve effectiveness of technology development efforts by unlocking synergies and creating ecosystem focus, promote higher return on technology Supporting Stakeholders: funding. MOHE, MITI, MIDA, MPRC, SEB, research and academic DESCRIPTION OF INITIATIVES institutions • Prioritise and define national-level energy technology focus areas and sub- areas, aligned to where country has potential to create sustained technology competitive advantage. • Prioritise areas of energy-sector technology funding and financing by adopting strategic portfolio view to public sector technology investments. • Orchestrate stakeholders to push technology priorities in a structured manner and unlocking synergies through ecosystem-wide collaboration. Implementation Initiative Type Timeline • Ensure alignment of academic and research institutions towards technology priorities. 2022-2025 New 69 APPENDIX - ACTION PLAN E3 Conduct strategic workforce planning and enhance future-proof skills across energy sector workforce KEY OBJECTIVES Stakeholders • Ensure equitable energy transition for the labour force and protect workers impacted by the energy transition. Lead Entity: EPU, MOHR • Effective and holistic workforce demand-supply planning, which meets future energy sector needs and increases employability and value-add of workforce. Core Stakeholders: MOHE, MOE, MQA, DSD, • Create people and capability competitive advantage for the energy sector, academic institutions unlocking productivity benefits, value-add and export income potential. and TVET entities, state governments DESCRIPTION OF INITIATIVES Supporting Stakeholders: • Engage key academic and Technical and Vocational Education and Training MOF (TVET) institutions to update and future-proof academic syllabi and training courses in line with future skills identified in the strategic workforce planning Implementation exercise. Initiative Type Timeline • Develop sub-sector specific packages to support the equitable and smooth transition of workforce in line with the energy transition. 2022-2040 New 70 GLOSSARY GLOSSARY GLOSSARY 2030 Agenda 2030 Agenda for Sustainable HVO Hydrotreated vegetable oil Development ICE Internal Combustion Engine 4IR Fourth Industrial Revolution IMO International Maritime Organization AI Artificial Intelligence IoT Internet of Things ASEAN Association of Southeast Asian Nations JCC Joint Coordination Committee BioCNG Bio-Compressed Natural Gas JKR Public Works Department BNM Bank Negara Malaysia KASA Ministry of Environment and Water CAAM Civil Aviation Authority of Malaysia KEGA Key Economic Growth Activities CAGR Compound Annual Growth Rate KeTSA Ministry of Energy and Natural CCUS Carbon capture, utilisation and storage Resources CHP Combined heat and power KPDNHEP Ministry of Domestic Trade and Consumer Affairs CIDB Construction Industry Development Board KPKT Ministry of Housing and Local Government CO2 Carbon dioxide KPLB Ministry of Rural Development CORSIA Carbon Offsetting and Reduction Scheme for International Aviation KWP Ministry of Federal Territories DDI Direct Domestic Investment LCOE Levelised cost of electricity DTN National Energy Policy, 2022-2040 LNG Liquefied Natural Gas E&E Electrical and electronics LT-LEDS Long-Term Low Emission Development Strategies EACG Energy Audit Conditional Grant LTSM Logistics, transportation and EE Energy efficiency sustainable mobility EECA Energy Efficiency and Conservation Act LSFO Low Sulphur Fuel Oil EEV Energy-efficient vehicle LSS Large Scale Solar EPC Energy Performance Contract M&V Measurement and Verification EPU Economic Planning Unit, Prime MAA Malaysia Automotive Association Minister's Department MAFI Ministry of Agriculture and Food ESCO Energy service company Industries ESG Environmental, Social and Governance MAHB Malaysia Airports Holdings Berhad EV Electric vehicle malaysiaGBC Malaysia Green Building Council FDI Foreign Direct Investment MARii Malaysia Automotive Robotics and IoT GDP Gross Domestic Product Institute GHG Greenhouse Gas MATRADE Malaysia External Trade Development Corporation GMD Gas Malaysia Distribution Sdn Bhd MEPS Minimum Energy Performance GSO Grid System Operator Standards GTFS Green Technology Financing Scheme MGTC Malaysian Green Technology and H 2S Hydrogen sulphide Climate Change Corporation HHI Herfindahl-Hirschman Index MIDA Malaysian Investment Development Authority 72 GLOSSARY MIGHT Malaysian Industry-Government Group RE Renewable energy for High Technology REHDA Real Estate and Housing Developers' MIMA Maritime Institute of Malaysia Association Malaysia MITI Ministry of International Trade and RGT Regasification terminal Industry RHT Restoration Hydro Turbine ML Machine learning SB Single Buyer MOF Ministry of Finance SEB Sarawak Energy Berhad MOGSC The Malaysian Oil, Gas & Energy SEC Sabah Energy Corporation Sdn Bhd Services Council SEDA Sustainable Energy Development MOSTI Ministry of Science, Technology, and Authority Innovation SEDC Sarawak Economic Development MOHE Ministry of Higher Education Corporation MOHR Ministry of Human Resource SESB Sabah Electricity Sdn Bhd MOT Ministry of Transport SOGDC Sabah Oil & Gas Development MPIC Ministry of Plantation Industries and Corporation Sdn Bhd Commodities ST Energy Commission MPOB Malaysian Palm Oil Board TNB Tenaga Nasional Berhad MPRC Malaysia Petroleum Resources TPA Third-Party Access Corporation TPES Total primary energy supply Mtoe Mega Tonnes of Oil Equivalent TVET Technical and Vocational Education MW Megawatt and Training NDC Nationally Determined Contribution Twelfth Plan Twelfth Malaysia Plan, 2021-2025 NEEAP National Energy Efficiency Action Plan UPEN State Economic Planning Unit NEM Net Energy Metering UTM-OTEC Universiti Teknologi Malaysia - Ocean NPV Net Present Value Thermal Energy Centre NxGV Next-generation vehicles VPS Virtual Pipeline System OEM Original equipment manufacturer VRE Variable renewable energy OGSE Oil & Gas, Services and Equipment WKB 2030 Wawasan Kemakmuran Bersama 2030 P2P Peer-to-Peer PETRONAS Petroliam Nasional Berhad PETROS Petroleum Sarawak Berhad POGO Palm Oil Gas Oil PPA Power Purchase Agreement R&C Residential and Commercial R&D Research and Development R&D&C&I Research, development, commercialisation and innovation 73 CONCLUSION 76