IF THERE IS a lesson to be learned from Covid-19, it is this: local governments must make mainstream, through local development plans, consciousness about renewable energy (RE) and energy efficiency (EE). Currently, global carbon dioxide emissions from the energy sector alone is responsible for almost two-thirds of greenhouse gas (GHG) emissions.
The acceptance of RE and EE is able to reduce this by 70% by 2050.1
The manufacturing and services sectors are the backbone of Penang’s economy, accounting for 90% of the state’s economy.2 Penang recorded RM8.85bil in manufacturing investment in Malaysia for the first quarter of 2020, the highest in the country.3 But the twin events of Covid-19 and the MCO unexpectedly collapsed its supply chains, leaving a supply shock stock up.
The present fragile state of the global supply chain is prompting governments to focus inward and to strengthen the local economy and market and create more job opportunities. One thing is clear, however. Clean energy and environment-focused sectors have fared better than their resource-driven counterparts. The Department of Energy reported that energy efficient jobs already totalled 2.18 million in 2016, almost twice the total of fossil fuel jobs.4
Penang is encouraged to follow a strategy similar to that taken by South Korea, the UK and China. These countries have generated jobs and incomes through boosting RE and EE investment. Establishing a locally empowered RE and EE sector, and recruiting Malaysians into the workforce will help to rebuild both employment and economic security. This proposed solution will not only address the challenges of our current situation, but also solve the uncertainties of the climate crisis.
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The MCO is a clarion call to say that digital technology is the future. The flip side of this is that with millions working from home and relying heavily on electronic gadgets for day-to-day functions, the demand for energy has spiked greatly.
But here also lies the opportunity for governments to promote EE products and RE projects at the community level. Introducing small-scale incentives for RE projects is sure to provoke interest. It is a win-win situation – residents are able to generate their own energy supply and profitable income, while the government harnesses clean energy and creates a market demand for RE and EE.
... Malaysia is committed to cutting down on GHG emissions by 45% by 2030. Contradictorily, we are still relying heavily on coal and natural gas because their pricing is significantly lower than RE.
Under the Paris Agreement, Malaysia is committed to cutting down on GHG emissions by 45% by 2030. Contradictorily, we are still relying heavily on coal and natural gas because their pricing is significantly lower than RE. For RE to penetrate the market at a relatively reduced cost, investment in research and development is imperative. But this too is an expensive endeavour for companies to undertake single-handedly. What is proposed instead is for the Penang State Government to establish a centralised R&D hub, with the technologies needed for product testing, to explore new frontiers and for collaborations between key players.
An alliance can be created with the State Government sharing technologies and funds, while academic institutions share their expert knowledge. It is probable that this initiative can attract more innovators and RE and EE investors. At the ground level, capacity building is an obvious necessity. Skill development agencies can prepare modules and provide skills development, training and apprenticeship programmes to employees.
Financing RE and EE Projects
RE has become a preferred choice for investors. The World Bank and International Monetary Fund are in discussions to introduce new economic stimuli reaching as high as 10% of the global economy, and which are large enough to ensure the transition to a low-carbon economy. Incentives that are easily accessible, e.g. microfinancing, grants, concessional loans, tax benefits and technology rebates should be developed as possibilities to support an entrepreneur’s entry into the RE market.
Malaysia’s Sustainable Energy Development Authority (SEDA) is working to normalise the use of RE through the Small Renewable Energy Programme, the Malaysia Building Integrated Photovoltaic Project, and the Feed-in-Tariff (FiT) programmes. But dismally, RE has barely reached 2% in the country, with most of this is from solar Photovoltaic.
A variety of financial support has also been rolled out; the FiT and Net Energy Metering approved by SEDA come with a financial package to assist individuals and SMEs with installation and maintenance. The Malaysia Debt Ventures’ EE projects for SMEs include the retrofitting of building systems such as chillers, lighting and air-conditioning, as well as passive building features. Savings that EE projects generate are used to cover the entire investment cost, including the necessary returns and financing costs.
To ensure continuous support for RE and EE technology projects, the Ministry of Finance has greenlighted the Green Technology Financing Scheme 2.0. CIMB recently partnered with SEDA to launch RE financing for SMEs, making it the first programme to push SMEs to apply and benefit from RE loans. The financial markets are increasingly recognising sustainable investment as the new horizon for vast opportunities for transformation; it is imperative for local governments to promote these schemes. Businesses and investors can also boost clean investment through investing in these clean energy markets.
Accelerating the economy and addressing climate change by pushing for clean energy transitions call for a grand coalition of stakeholders. Therein lies the path towards a sustainable and resilient Penang.
2Penang Economic & Development Report PEDR 2017-2018