National Energy Transition Roadmap (NETR)
The Government recently launched Part 1 of the National Energy Transition Roadmap (NETR Part 1) with the aim of effectively overseeing the progression towards sustainable energy practices. The concept of energy transition involves shifting away from an energy system predominantly reliant on fossil fuels towards a more environmentally friendly structure centered on clean and renewable energy resources. Further, NETR also aims at transforming the economy and creating potential business opportunities in the energy sector.
Generally, there are 2 parts to the NETR. NETR Part 1 identifies 10 flagship catalyst projects and 6 energy transition levers. Meanwhile, NETR Part 2 (targeted to be published later in the year) will address the low-carbon pathway, energy mix and emission target reduction for the energy sector as well as the enablers needed for the energy transition.
The 12th Malaysia Plan 2021-2025 (12th Plan) sets out the nation’s target to achieve net-zero Greenhouse Gas (GHG) emissions as early as 2050, while the National Energy Policy 2022-2040 (DTN) outlines the groundwork for transforming the energy landscape. As such, the NETR was launched by the Ministry of Economy with the purpose of fundamentally transforming how our economy works by combining our existing strengths and taking advantage of global megatrends.
In 2018, the energy sector contributed approximately 28% of the gross domestic product (GDP) and 25% of the total employment of workforce in Malaysia. Petroleum-related products contributed approximately 31% of the national fiscal income and energy exports constituted 13% of total export value. However, as of 2020, out of the 4 energy sources which dominated the national total primary energy supply (TPES) mix, renewables (such as hydropower, solar and bioenergy) only constituted 3.9% of TPES. The other energy sources are natural gas (42.4% of TPES), crude oil and petroleum products (27.3% TPES) and coal (26.4% of TPES).
Further, the fast pace of the energy transition in shifting the energy system from being dominated by the use of fossil fuels with high carbon emissions towards an energy system that predominantly uses clean and renewable energy sources. Energy transition brings new job opportunities, increases national competitiveness and promote better international relationship with other countries.
However, with the potential challenges such as increasing energy demand, subsidy burden and energy costs as well as decreasing oil and gas resources, the NETR was launched to accelerate the energy transition in Malaysia. The energy transition also enhances the need for environmental, social and governance (ESG) compliance in an organisational decision.
General Overview Of NETR
Source: Page 15 of the National Energy Transition Roadmap issued by Ministry of Economy
NETR Part 1 sets out 10 flagship catalyst projects, namely:
(ii) Renewable Energy Zone (RE Zone)
(vi)Hydrogen for Power
(vii)Biomass Demand Creation
(x)CCS for Industry
The 10 flagship catalyst projects are based on 6 energy transition levers, namely:
(i)Energy Efficiency (EE)
(ii)Renewable Energy (RE)
(vi)Carbon Capture, Utilisation and Storage (CCUS)
The 6 energy transition levers are further supported by 5 enablers, namely:
(i)Financing & Investments
(ii)Human Capital & Capabilities
(iii)Policy & Regulation
(iv)Technology & Infrastructure
The 10 flagship catalyst projects are anticipated to bring an estimated investment of more than RM 25 billion and create 23,000 job opportunities. Additionally, the 10 flagship catalyst projects are expected to reduce GHG emissions of more than 10,000 Gg CO2 equivalent per year. This is important because the energy sector has been the largest contributor to GHG emissions in Malaysia.
To ensure a smooth implementation, the flagship projects will be supported by the Malaysia Energy Literacy Program (MELP) under Tenaga Nasional Berhad (TNB) to educate the public about the energy transition and its challenges. Further, the Ministry of Economy also sets out the detailed modalities for each of the flagship catalyst projects and the respective champions. The modalities are the various pragmatic solutions in need for the energy transition. The modalities for each flagship project are:
Further, the Ministry of Economy has also collaborated with the NRECC to review the existing policies on RE and certain decisions have been made. Firstly, increasing the target for installed RE capacity from 40% in 2035 to 70% by 2050. This is to create more new economic opportunities by attracting multinational companies, particularly RE 100 companies, to invest in Malaysia. Secondly, expanding RE development to promote investment in the RE value chain and to diversify the RE programs. Thirdly, scaling up the installation of solar systems in government buildings. Also, allowing cross-border RE trade through an electricity exchange system.
According to the World Economic Forum’s Energy Transition Index (ETI) 2023, Malaysia is ranked as the best country in Southeast Asia and 35th globally in terms of transition readiness to RE. NETR Part 1 is a welcome approach in which the Ministry of Economy sets out a clear future plan with regard to the energy sector and Malaysia’s green economy. As such, this increases the confidence level among the potential foreign investors as well as the potential local investors, eventually contributing to the growth of Malaysia’s economy as NETR is expected to open up investment opportunities between RM 435 billion and RM 1.85 trillion by 2050.
Adopting the NETR or similar sustainability initiatives within a company may involve legal considerations, especially if the transition requires compliance with new regulations, contracts or environmental standards. As such, it is essential to engage legal professionals to ensure a company's successful adoption of the sustainability initiative as it can help mitigate risks, ensure compliance and provide guidance on how to navigate the complex legal landscape associated with sustainability and energy transition.
 Ministry of Natural Resources, Environment and Climate Change, “Malaysia Fourth Biennal Update Report under the United Nations Framework Convention on Climate Change” (https://unfccc.int/sites/default/files/resource/MY%20BUR4_2022.pdf)  Muqsit Ashraf and Roberto Bocca, “Fostering Effective Energy Transition 2023 Edition” (https://www3.weforum.org/docs/WEF_Fostering_Effective_Energy_Transition_2023.pdf)  The Sun, “NETR could spark up to RM 1.85 tril investment opportunities by 2050” (https://www.thesundaily.my/business/netr-could-spark-up-to-rm185-tril-investment-opportunities-by-2050-HL11292775)
3 October 2023