Climate and Environmental Governance: What Malaysia Can Learn From Asia’s Energy Transition

This article first appeared in Forum, The Edge Malaysia Weekly on August 18, 2025 - August 24, 2025

Malaysia’s energy transition is at a critical juncture. The energy sector accounts for nearly 80% of national greenhouse gas emissions, placing it at the heart of the country’s decarbonisation efforts. Yet the transition must also ensure energy security and continued economic development. In addition, Malaysia faces unique challenges: federal-state governance complexities; subsidy dependency; and an industrial-heavy economy. Addressing the energy trilemma: security of supply; affordability; and sustainability demands a whole-of-nation approach, underpinned by clear policies, targeted investment, innovation and inclusive partnerships.

To accelerate progress, Malaysia must engage more deliberately with lessons emerging from across Asia. Over the past years, ERM (Environmental Resources Management) has been actively supporting governments, investors and companies across Asia to examine the region and navigate the complexities of energy transition. This article draws on those experiences to highlight what Malaysia can adopt, adapt and act on now.

A region in flux

Asia’s energy demand has grown by more than 80% since 2000 and is projected to triple by 2050. Yet the region remains heavily reliant on fossil fuels, with coal still playing a dominant role. Many countries, including Malaysia, have yet to reach peak emissions.

Despite these challenges, momentum is building. Over three-quarters of Asia’s emissions are now covered by net zero targets under long-term strategies submitted through the Paris Agreement. Countries such as Japan, Indonesia and Vietnam have committed to meaningful 2030 emissions reductions. Based on the National Energy Transition Roadmap (NETR), Malaysia has also set an interim target of 45% carbon emission intensity reduction against gross domestic product (GDP) by 2030. However, in many developing economies, decarbonisation must take place alongside broader goals, such as energy access, affordability and industrial competitiveness.

Promote energy efficiency and demand side management (DSM)

Promoting energy efficiency (EE) must be prioritised first. Mandating energy efficiency measures such as mandatory minimum energy performance standards (MEPS) for appliances and equipment, enforcing advanced building energy codes for new construction and incentives for industrial retrofits can reduce peak loads and lower the need for costly generation expansion. Japan’s Top Runner Programme, South Korea’s rigorous MEPS programme and Singapore Green Mark Scheme are some good examples to consider. Empower the energy utilities — Tenaga Nasional Bhd (KL:TENAGA), Sabah Electricity Sdn Bhd and Sarawak Energy Bhd — to develop robust, cost-effective DSM portfolios through load management, rebates and audits. Accelerate national smart meter rollout to enable time-of-use tariffs. The electricity tariff rationalisation strategy and expansion of the Energy Efficiency and Conservation Act (EECA) are steps in the right direction. The government is encouraged to stay the course on planned rationalisation of fuel and electricity subsidies in a phased, transparent manner; earmark a portion of the subsidy savings for EE rebate programmes and public transport upgrades; and support low-income households to adopt efficient appliances.

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