Modelling Malaysia’s energy transition pathways: the role of renewable energy policy measures

Coal’s rising prominence in the power industry has raised concerns about future CO2 emissions and energy reliability. As of 2017, it is estimated that Malaysia’s existing natural gas production can only be maintained for another 40 years. Consequently, the carbon intensity of electricity production has increased due to the increasing share of coal-fired plants and electricity infrastructure inefficiencies. To sum it up, energy industries were the highest emitters of CO2 emissions, with a 54 percent share. In response to these challenges, the government implemented series of Renewable Energy (RE) policy measures. Whether these policies are sufficient in driving Malaysian energy decarbonization is yet to be answered. In the study, we simulate different scenarios from 2015 to 2050 with an agent-based model to explore the roles of renewable energy policies toward emission reduction in the energy sector. The simulation results reveal that when all renewables initiatives were implemented, the share of RE increased to 16 percent, and emissions intensity fell by 26 percent relative to its level in 2005, albeit with increasing absolute carbon emissions. This milestone is still far below the government’s 45 percent reduction target. The simulation results demonstrated that renewable energy policies alone are less effective in driving Malaysian electricity toward desired low-carbon pathways. Furthermore, it is evidenced that no single policy can achieve the emission reduction target. Therefore, a combination of energy efficiency and renewable energy policy measures is unavoidable to decarbonize the electricity sector in Malaysia.