September 27, 2022

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Secretary Antony J. Blinken at Energy Transition Roundtable

9 min read

Antony J. Blinken, Secretary of State

Kuala Lumpur, Malaysia

Four Seasons Hotel

MODERATOR:  Brian McFeeters from the U.S. Embassy.  I’d like to introduce Secretary of State Antony Blinken to talk about Malaysia’s energy transition.

Mr. Secretary.

SECRETARY BLINKEN:   Brian, thank you very much, and to all of you, so good to be with you today.  And let me start, Mr. Minister, by thanking you for joining us, for spending the time today.  And to all of our friends, you’re all playing an important part in leading Malaysia’s clean energy transition.  And that’s what we wanted to spend a little bit of time talking about today.

This work is so important because one of the things we know and we feel almost every day is that the climate crisis is not some challenge in the distant future.  It’s here now.  Every country on Earth is feeling its effects.  Malaysia, for example, has had extreme thunderstorms and flooding on the east coast during the monsoon season.  And of course, we’ve had our own experiences in the United States with the immediate effects of climate change.

So I think we all feel that we need to significantly step up collective response to the climate crisis.  A big part of that is transitioning to clean energy.  It’s one of the most powerful ways that we can actually reduce carbon emissions.  It’s also a huge potential source of jobs and growth as new industries, new products, new technologies develop.  It’s a way to get affordable, reliable energy to people and communities who need it.  So in a sense, it’s a triple win.  And I say that without minimizing the challenges and the difficulties that come with the transition and which we can talk about.

As the world’s third largest producer of solar energy cells, Malaysia will be critical to this effort.  And it’s already, in so many ways, leading the way on climate.  Malaysia signed the global methane and deforestation pledges at the recent COP26 meeting in Glasgow.  It set bold renewable energy targets.  And now the government is considering a new climate law that – and also focusing on a domestic carbon trading plan, an updated national energy policy that prioritizes renewables.

But as I said at COP26 a short while ago, this also is not an issue that governments can solve alone.  We need the private sector to make the investments that will get us to net zero emissions.  That’s how we can limit global warming to 1.5 degrees Celsius and prevent what would be a climate catastrophe.

Today we’re announcing a new partnership between Malaysia and the United States to speed up Malaysia’s transition to clean energy.  It’s called the Power Sector Program.  And the goal is to help Malaysia attract more and higher quality clean energy investments, and to create the conditions for that investment to yield the greatest possible results.  The United States will provide advisory support to the Malaysian Government on how to attract the investment needed to meet clean energy goals, including how to evaluate deals to make sure that they actually deliver.

We’ll provide technical assistance on upgrading Malaysia’s electric grid so that it can better handle and distribute power generated by renewable sources, including solar.  And we’re focusing the support in regions of the country where it can do the most good, like East Malaysia, where qualified investors can speed up the transition from diesel to solar and battery power while creating jobs and spurring growth.

And again, ultimately I think that’s what the clean energy transition is about.  It is about creating opportunity; it is about supporting innovation.  It is about protecting communities across the planet for ourselves right now, for our children, and eventually our grandchildren.  So we’re very eager, Mr. Minister, to work with your government and with the private sector inside and outside Malaysia to try to achieve these goals.  And I was very much looking forward to having this opportunity really to hear from all of you about some of the opportunities, some of the challenges, and what we can do to overcome them.

With that, thank you.

MODERATOR:   Well, thank you very much, Mr. Secretary.  YB Minister, may we hear your opening comments as well?

ENERGY MINISTER HASSAN:  Thank you, Mr. Ambassador.  His Excellency Antony J. Blinken, Secretary of State, distinguished guests, members of the media, ladies and gentlemen.  First and foremost, I would like to thank His Excellency and the U.S. Embassy in Malaysia for inviting me to participate in the U.S.-Malaysia Renewable Energy Roundtable today.  It is an honor for me to be given this opportunity to have an engagement with Mr. Secretary on renewable energy, a topic which is widely discussed globally today as the global community is stepping up efforts to mitigate the impact of climate change.

The news of the swarm of tornadoes tearing a 200-mile path through the U.S. Midwest and South, demolishing homes and leveling businesses, is testimony to the reality of climate change, which calls for urgent action by the global community.  Hence it is indeed a good opportunity to be able to discuss with you, Mr. Secretary, and your team of prominent industry players on how we can work together in transitioning Malaysia’s power sector as we play our roles as part of the global community in mitigating the devastating impact of climate change.

Mr. Secretary, ladies and gentlemen, let me share with you the plans that we have in transitioning our power sector.  As we all know, the power sector around the globe plays a significant role in reducing global emission.  And it is also true for Malaysia in achieving our climate aspiration to achieve net zero GHG emission earliest by 2050.  In this regard, Malaysia has chartered a lower carbon pathway by introducing various policy initiative to transition its power sector.  The target set by the government to achieve 31 percent of RE in our installed capacity in 2025, and 40 percent in 2035, has paved a way to a lower carbon future for Malaysia’s power sector.

In terms of megawatt, the RE installed capacity is projected to more than double from the current capacity to approximately 18,000 megawatts by 2035.  With the increase in the RE capacity, there will be a reduction of 45 percent in carbon intensity per GDP in 2025, and a further 60 percent in 2035 compared to the 2005 level.  The RE targets will support the country’s net zero GHG emission aspiration, which was announced by our prime minister during the tabling of the 12th Malaysia Plan in the parliament recently.

The Malaysian Government has also decided not to build new coal plants when the existing plants retire.  And by the year 2033, it is anticipated that more than 7,000 megawatt of coal power purchase agreement, PPAs, will expire and be replaced by gas and RE plants.  As of now, Malaysia has achieved 23 percent of RE in its installed capacity.  I am confident that Malaysia will be able to achieve its target of 31 percent RE in 2025 through the implementation of various programs and initiatives such as, number one, large-scale solar; number two, net energy metering; number three, a quasi-market mechanism known as New Enhanced Dispatch Arrangement, NEDA; and also, number four, we have Fit-in Tariff program.  And – yeah, that’s four initiative and program that we implement.

As solar increasingly significant in our power system, the intermittency related to this variable energy resource has to be addressed to ensure reliability of supply.  Hence, we plan to introduce utility-scale battery energy storage system, BESS, with a total capacity of 500 megawatt from 2030 to 2034 into our peninsular electricity system.  This is one of the areas of cooperation we are looking at to further explore with United States.

The ministry also undertaking a study, through a company limited by guarantee under our ministry called MyPower, with the task of future-proofing our electricity supply industry.  Mr. Secretary, ladies and gentlemen, taking cognisant of increasing demand for green electricity among corporations with ESG commitments, it was only a couple week ago that I launched the Green Electricity Tariff, GET, where under this program the subscribers of Green Electricity Tariff will have exclusive rights to the bundle Malaysia RE certificate that is backed by the international renewable energy certificate – I-REC – standard.

This program will allow members of the public and companies in Malaysia to reduce their carbon footprints in electricity consumption by subscribing to the green electricity tariff at a mere additional cost of 3.7 Malaysian cent per kilowatt hour.  That is not even one U.S. cent per kilowatt hour.  And what is more attractive to this program is that the subscribers will be exempted from any surcharges in electricity tariff due to the increase in field prices for a year.

Given the attractiveness of this program, I am pleased to share that the Green Electricity Tariff has received overwhelming support from multinational companies, with 16 percent of the available quota being subscribed in just a month after its launch.  Therefore, I would like to invite U.S. companies in Malaysia looking for ways to fulfill their ESG commitment to grab this opportunity, as the available green electricity is limited.

Apart from meeting our climate targets, the implementation of this initiative is expected to boost our economic growth by providing new investment and job opportunities.  For example, when we offered 1,000 megawatt of large-scale solar projects and 500 megawatts of solar rooftop projects – in the mid of COVID-19 pandemic last year, approximately USD 1.2 billion worth of investment opportunities were created and 18,000 new job opportunities were opened up, which helped in our economic recovery.

His Excellency, ladies and gentlemen, Malaysia values the strong and longstanding relations with the U.S.  With that in mind, I was made to understand that officials from my ministry, together with the Energy Commission and the Sustainable Energy Development Authority, one agency under our ministry SEDA, have firmed up key areas of cooperation in the power sector with their counterparts from U.S. to assist Malaysia in its energy transition journey.  I’m pleased to inform you that Malaysia is keen to accept U.S. offer to explore collaboration in the areas of sustainability in power sector through the U.S. Power Sector Program.

It is our intent to pursue collaboration with the U.S. to include: one, to conduct a study on hybrid of battery energy storage systems and large-scale solar in the east coast of Sabah, one of the states in Malaysia; to assess its technical and commercial viability as an option to displace old diesel-powered plants.  For Your Excellency’s information, this study is our priority, and we hope to get due consideration by the United States.

Number two, the drafting of a roadmap for increased solar integration in Malaysia.  As mentioned earlier, solar has one of the biggest potential in Malaysia, and issues related to increased integration of solar – such as integration cost and grid readiness – will have to be addressed.

Number three, the drafting of a roadmap for increased grid capability to optimize distributed energy resource, DER, use in Malaysia.  Building huge transmission lines are becoming more challenging as land becomes an issue, especially in urban areas.  So moving away to use forest reserve is not an alternative that is easily accepted by the state governments.  Therefore, Malaysia is looking at optimizing DERs.

Number four, capacity building with National Association of Regulatory Utility Commissioners, NARUC, in specific areas, including the possibility of attachment of the EC and SEDA officials with relevant institutions in the U.S.

And lastly, to propose strategies for Malaysia’s National Energy Efficiency Action Plan post-2025.  Our current EE Action Plan will end in 2025.  Therefore, we are looking at crafting new strategies to further enhance our EE efforts.

Mr. Secretary, ladies and gentlemen, Malaysia is committed to reducing its power sector emission as we journey towards a lower carbon pathway.  Our government provided a lot of opportunities for businesses and industry players, especially in solar industry.  Nevertheless, we know that we can do so much more, as our energy transition journey is not without its challenges.  We believe in taking a pragmatic approach to transition our power sector to ensure a fair and just energy transition for all.

Having said that, Malaysia will not be able to achieve its sustainable energy goals without the support of various international partners.  Therefore, I believe, with the United States’s assistance and support through the Power Sector Program cooperation with the Bureau of Energy and Natural Resources, the U.S. Department of State, Malaysia can take the opportunity to leverage on U.S. expertise to assist us in transitioning our power system.  Alone we can do so little; together we can do so much.  Therefore, it is my hope and our government’s hope we can work together, Mr. Secretary, towards transitioning our energy system for the betterment of our future generations.  Thank you very much.

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