KUALA LUMPUR: Analysts opined that the government's allocation of RM2 billion as a seed fund for the National Energy Transition Facility is a good start to transform Malaysia into a regional leader in the energy transition and renewable energy (RE) industry.
Nusantara Academy for Strategic Research senior fellow Dr Azmi Hassan said the RM2 billion could make a big difference in helping Malaysia switch to renewable energy.
"This money could really help industries use and set up renewable energy technologies. It can really help our industries move to renewable energy more easily," he said.
Azmi said lack of funding has been a major challenge for transitioning to green technology and RE sources in Malaysia.
"The main problem with adopting green technology isn't that the right technology doesn't exist. The real issue is that there isn't enough money to put these technologies into action. "We have the technology, but what we don't have is enough money to make this change happen," he told the New Straits Times.
Azmi highlighted that moving to RE is not immediately profitable.
Despite the crucial need to shift towards sustainable sources for the future, the initial investment in this transition doesn't yield immediate returns.
"When we spend money to change how we make energy into renewable energy, the money we get back takes time. We need to be patient," he pointed out.
Azmi also agreed with Prime Minister Datuk Seri Anwar Ibrahim, who said that Malaysia is still learning how to use RE. "This is because green technology is expensive.This is why Malaysia is behind in using clean energy compared with other countries," he added.
"Even though the Prime Minister used diplomatic language about reducing carbon, the truth is that Malaysia's progress lags significantly behind due to the exorbitant costs of the technology and the sluggish rate of return on investment. "Thus, I believe the allocation would significantly bolster the industry, facilitating a more efficient transition from current energy technology to greener alternatives.The fund could help Malaysia use more clean energy and serve as a catalyst for the adoption of sustainable energy solutions, propelling Malaysia towards a more eco-friendly future and a leader in renewable energy in the region," Azmi said.
Putra Business School economic analyst Associate Prof Dr Ahmed Razman Abdul Latiff said the transition into the renewable energy industry will take time as a developing country primarily dependent on traditional sources of energy; carbon based coal, oil and gas.
"The shift towards renewable energy sector will be a gradual process for a developing country that relies predominantly on conventional energy sources such as carbon-based coal, oil, and gas, including solar energy."In order to transition to create energy and alternative energy the government cannot transition drastically as investments are needed to smoothen that transition," he added.
The fund would also be used to develop local talents and local industrial players. "That's the purpose government is allocating RM2 billion to cater for the need for both attracting continuous investment from abroad and at the same to nurture our local players," said Ahmad.
To recap, Prime Minister Datuk Seri Anwar Ibrahim in unveiling Phase Two of the National Energy Transition Roadmap (NETR), identified six energy transition levers, 10 flagship projects and 50 initiatives under the complete NETR series.
The initiatives, among others, will see the government setting aside RM2 billion as a seed fund for the National Energy Transition Facility.
He said the facility will enable catalytic blended finance to ensure a seamless flow of financial resources towards energy transition projects that are marginally bankable or yielding below-market returns.