My Say: Viewing the 12th Malaysia Plan through the lens of decarbonisation

This article first appeared in Forum, The Edge Malaysia Weekly, on November 29, 2021 - December 05, 2021.
My Say: Viewing the 12th Malaysia Plan through the lens of decarbonisation
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On Sept 27, 2021, at the unveiling of the 12th Malaysia Plan (12MP), Prime Minister Datuk Seri Ismail Sabri Yaakob announced that Malaysia aims to become carbon neutral as early as 2050. The announcement was a pleasant surprise because this preferred deadline is nowhere to be found in the published 12MP. It reveals an impressive understanding by Ismail Sabri about the existential threat from climate change, and that climate actions can create vibrant ecosystems.

Climate change is often framed as a problem, but it is an opportunity to reframe our relationship with Nature to ensure both the survival and continued progress of mankind. Decarbonisation is not an end, but a starting point to discover how to improve productivity in a sustainable way. Drawing upon research conducted for the Asean Green Future project by the Jeffrey Sachs Center on Sustainable Development at Sunway University, we will expand on three topics discussed in the 12MP: green energy, green ports and sustainable agriculture.

Green energy

The 12MP targets renewable energy to account for 31% of Malaysia’s total generating capacity by 2025. Renewable energy installed capacity in Malaysia, including large hydropower, is currently at 23% (nearly 8GW) of the national installed capacity. The 12MP does not discuss whether Malaysia can get all the needed energy from renewable sources within the country or that some proportion would be sourced outside the country.

No country can develop their way out of the climate crisis alone. For instance, an energy system with widely dispersed and variable sources of energy dependent on the variability of the weather requires a highly integrated, sophisticated and responsive system to link them all together in order to ensure a smooth energy supply. Deep collaboration is needed among many agencies in many different countries to do it.

Japan is now establishing a long-term source of sustainable energy from abroad. Japan is investing in wind or solar installations, or both, in Australia to power electrolysis to produce green hydrogen. The liquid hydrogen will be shipped to Japan to transform the production of chemicals and steel there.

It is therefore farsighted of the 12MP to include hydrogen in the government’s strategic thinking about renewable energy. The 12MP is also right to encourage private sector investment in developing hydrogen-powered vehicles besides energy-efficient vehicles and electric vehicles.

Green hydrogen can enable deep decarbonisation of transportation, industry and power. The cost of green hydrogen is set to decline rapidly. The Indian conglomerate Reliance Industries has just signed a deal with wind power pioneer Stiesdal to mass produce an ultra-low-cost electrolyser that would allow Reliance to offer hydrogen energy under US$1/kg within a decade.

Green ports

Ports are mentioned in the 12MP in the context of improving accessibility and capacity. What the 12MP could have highlighted are the development opportunities associated with reducing emissions from port users and port operators. For example, ports have hundreds of diesel-powered machines such as quay cranes and prime movers for moving containers, and a supplier like Terberg can either convert the energy source of existing engines from diesel to hydrogen or deliver a new hydrogen-powered fleet.

Malaysia should consider strategic planning that integrates the fuel needs of the ports with the fuel needs of all the lorries that travel to and from the port, and the companies that trade through the port. For example, the Malaysian strategic roadmap would link with Australia for the wind- and solar-powered production of liquid hydrogen, ship it to Malaysia and store it at the port, for both the port’s use and regional distribution. The outcome is a crucial long-term infrastructure contribution to both the port and the Asean region. Such strategy development is sustainability leadership at the regional level.

Petronas rolled out its hydrogen business in November 2020 by partnering with Sarawak Energy to explore the production of green hydrogen using hydropower. In September 2021, Petronas announced a collaboration with Tokyo-based Eneos to study low-carbon production of hydrogen and conversion of gaseous hydrogen into liquid methylcyclohexane to enable large volume deliveries.

It takes a long time to build facilities, thus the port authorities in Malaysia need to start planning early for green ports. The Port of Rotterdam Authority is introducing a large-scale hydrogen network across the port complex to establish Rotterdam as an international hub for hydrogen production, import, application and transport, thus maintaining Rotterdam’s position as an important energy port in the future.

In South Korea, the Ministry of Oceans and Fisheries is reviewing the creation of a hydrogen energy ecosystem in the major ports of Busan, Incheon and Ulsan to supply more than 60% of the country’s total hydrogen consumption by 2040.

When Malaysia builds its hydrogen backbone, its major ports — particularly Port Klang, Port Tanjung Pelepas, and Johor Port — must coordinate their operations to integrate their hydrogen ecosystems and minimise infrastructure duplication. An integrated hydrogen network will enable Malaysia’s ports to step up their leadership in international supply chains for hydrogen.

Soil fertility

The 12MP identifies soil fertility as one of the ecosystem health indicators to be closely monitored and recommends more collaboration with universities on soil testing. The 12MP should have also pinpointed soil fertility as a lever for agriculture productivity and decarbonisation.

Malaysia manufactures and uses chemical fertiliser at 10 times the rate of application of many neighbouring Asean countries but achieves a lower agricultural yield than them. The very poor fertility of Malaysia’s soil is the reason. The excessive use of fertiliser has seriously damaged the microbiological ecosystem that maintains the soil’s fertility. What is needed is a biological solution, based on a thorough understanding of the underlying microbiological ecosystem, and working to regenerate it.

The carbon footprint of agriculture will be smaller when Malaysia reduces the application of chemical fertiliser significantly. Subsidising the use of science-based composting and other soil fertility-enriching practices will improve carbon sequestration, agricultural productivity, food security and national health.

Fertiliser production

Most of the nitrogen-based fertilisers (urea is the most widely used) are derived from ammonia produced through the energy-intensive Haber-Bosch process. The carbon footprint of ammonia synthesis is accentuated by the use of natural gas to generate the hydrogen needed for making ammonia. Grey hydrogen production generates 1.8% of global CO2 emissions. Some 80% or more of the ammonia produced is used for fertiliser production.

The emergence of green hydrogen for producing green ammonia will transform the nitrogen fertiliser industry within a decade. In October 2021, Fertiglobe, the world’s largest export-focused nitrogen fertiliser platform, joined forces with Norwegian renewable energy producer Scatec and the Sovereign Fund of Egypt to develop a 90,000MT/annum green ammonia project in Egypt.

Closer to home, Posco, Lotte Chemical, Sarawak Economic Development Corporation, and Samsung Engineering had also set out in October 2021 to develop a green hydrogen and ammonia project in Bintulu. The project is expected to produce 7,000MT/annum of green hydrogen, 600,000MT/annum of blue ammonia, 630,000MT/annum of green ammonia, and 460,000MT/annum of green methanol.

The Malaysian government should lower the cost of capital to accelerate cost reduction in green ammonia production and re-orientate the operating conditions and regulatory frameworks for the fertiliser ecosystem to decarbonise faster. Successes on these two fronts will assure the future competitiveness of the Malaysian fertiliser industry and quicken regional decarbonisation because Malaysia exports urea to Australia and Southeast Asia.

Mindset

Ismail Sabri’s preferred deadline (2050) for carbon neutrality represents a new strategic mindset in response to the emerging global realpolitik of climate change, which began to shift in 2019 when the European Union (EU) adopted the European Green Deal to achieve carbon neutrality by 2050. In 2026, the EU will implement a Carbon Border Adjustment Mechanism (involving tariffs) on imported iron and steel, cement, fertiliser, aluminium and electricity.

The EU has started a “race to zero”. In 2020, Japan and Korea also committed to become carbon neutral by 2050, and China agreed to do so by 2060. In January 2021, the US rejoined the Paris Agreement and committed itself to achieving net zero emissions (NZE) in 2050. In early April 2021, China and the US met in Shanghai and pledged to fight climate change together.

The important implication for Malaysia is that if some developing economies are still carbon emitters in 2060, then the US, China, EU, Japan and South Korea will have to become carbon negative for the world to be carbon neutral. This outcome will not occur because these large and powerful countries will forestall it with escalating punitive economic and political actions against developing economies not on pathways to NZE as 2060 draws closer.

For Malaysia to minimise the adjustment cost to the coming disruptions of global production systems, it must start planning early. Besides stopping new investments in coal power plants, Malaysia can get on the front foot and shape forward-thinking on big returns on investment opportunities, and create technology roadmaps towards sustainable energy and agriculture. This will accelerate Malaysia’s transition to knowledge-led growth and high-income status.

Malaysia’s decarbonisation framework needs to go beyond technical fixes. The 12MP rightly urges a mindset change and rakyat’s behavioural shift for green growth. Malaysia can then forge a green developmental path that is different from the economic gospel of valuing only consumption, and inspire Asean and the world on how people can attain full physical, mental and spiritual satisfaction that is in harmony with Nature.


Leong Yuen Yoong is professor at the Jeffrey Sachs Centre on Sustainable Development, Sunway University. Michael James Platts is with the Cambridge Institute for Sustainability Leadership, University of Cambridge. Woo Wing Thye is president of the Jeffrey Cheah Institute on Southeast Asia and president of the Jeffrey Sachs Center on Sustainable Development, and acting CEO of the Asian Strategic Leadership Institute (ASLI).

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