Second, Malaysia should pursue the huge potential for green investment in electric vehicles (EVs), including motorcycles, and in hydrogen-based industries. Malaysia could set up to be an innovation leader, for example, in the use of battery-swapping technology in EVs to cut recharge times and improve battery life. The incentives for EV adoption, such as the road tax exemption and personal tax exemption relating to EV expenses, are justified. An EV revolution would be key to Kuala Lumpur’s 2030 goal of reducing carbon intensity to 45 per cent of the 2005 level.
A breakthrough in hydrogen presents the biggest hope in renewable technology. Green hydrogen is a clean energy alternative that can generate immense heat while producing water as a byproduct. However, its commercialisation faces tough challenges, especially due to the high cost of producing hydrogen. The possibilities are already growing, with hydrogen being increasingly used in chemicals, textile fibre manufacturing, glass, electronics, and metallurgy.
Malaysia has great potential in this area as positive experiences emerge, for example in Sarawak, where projects such as H2ornbill and H2biscus, in collaboration with Japanese and South Korean partners respectively, have made strides in hydrogen-based, export-oriented industries.
Third, Malaysia needs to shore up institutional and financial support. Some key areas include education programmes and funding to equip the workforce for a low-carbon economy, and financing models, incentives and grants for green technology adoption and green technology R&D.
The country needs clearer standards and regulations in renewable markets, and more stringent monitoring of green investments, to enhance transparency and accountability. The government could also address the formulation of a green taxonomy, which local banks have indicated would be valuable in establishing criteria for approving green loans. Finally, enhancing the accessibility and quality of data will be crucial for policy analysis, monitoring, evaluation, and future reforms.
With its heavy reliance on fossil fuels, Malaysia faces a tough but essential road to decarbonisation. Nonetheless, the country is well-positioned to tap into emerging technological opportunities for low-carbon growth in industry and transport. Moving forward, Malaysia must boldly and swiftly spur green investments and pursue its carbon reduction goals.
Vinod Thomas is a Visiting Senior Fellow at the ISEAS – Yusof Ishak Institute. This commentary first appeared on the Institute’s blog, Fulcrum.