Inside Malaysia’s push for net-zero data centers: RECs, cross-border power key to cutting Scope 2 and 3 emissions

The second day of Malaysia “Data Centres towards Net Zero” conference focused on cross-border power, green energy certificates and Scope 3 emissions. (Photo: Hsu Tsu-lin)

As demand for AI-powered infrastructure surges across Southeast Asia, Malaysia is fast becoming a critical hub for data centers. But with the sector’s soaring electricity and water consumption, the country now faces a pressing question: how to strike a balance between economic growth and sustainability?  

At the “Data Centres toward Net Zero” conference, held on Sept. 23 to 24 and co-organized by the Malaysia Digital Economy Corporation (MEDC), government officials and industry leaders gathered to explore solutions. RECCESSARY was the only Taiwanese media invited as a partner, offering exclusive coverage and insights from the ground. 

Facing RE100 and 24/7 carbon-free energy commitments, major data center operators are spurring demand for power purchase agreements (PPAs), renewable energy certificates (RECs) and cross-border electricity trading. Experts at the conference said that if governments harness this momentum, data centers could become a powerful catalyst for investment in renewable energy and storage technologies. 

AI boom widens energy gap, cross-border power key to net zero 

Beni Suryadi, senior manager at the ASEAN Centre for Energy (ACE), noted that while AI applications are expanding rapidly, building a data center takes about 18 to 24 months, and constructing a power plant can take three to six years or even longer. To keep up with accelerating digital growth, he said, data centers will need faster, cleaner and more flexible energy solutions.  

He added that to build a green digital economy, ASEAN nations must advance in three key energy areas: expanding renewable energy capacity, strengthening cross-border power integration, and enhancing grid flexibility and energy storage. 

Speaking on cross-border power integration, Suryadi said the ASEAN Power Grid now encompasses more than 18 interconnection projects that are set to support 62 new renewable energy developments, adding more than 8 GW of solar and wind capacity. The initiative will allow Laos to export hydropower to Singapore and enable wind power from the Philippines to reach other ASEAN markets. By 2040, total cross-border transmission capacity is expected to rise to 24 GW, nearly ten times the current level. 

However, achieving cross-border power integration amid the data center boom will require close coordination among governments, businesses and other stakeholders. Suryadi outlined four key areas of effort: 

• Policy: Data centers must be clearly incorporated into national and regional energy transition roadmaps. 
   
• Technology: Operators should adopt modular facilities, high-efficiency uninterruptible power supply (UPS) systems and AI-driven cooling technologies to reduce energy consumption and accelerate deployment. 
   
• Finance: Positioning data centers as long-term key consumers can help reduce risks for renewable energy projects while attracting investment and innovation in grid infrastructure. 
   
• Regional cooperation: ASEAN should build knowledge hub and collaborative networks to harmonize standards, share expertise and ensure that all member states, not only the frontrunners, advance together toward sustainable data center development. 

Suryadi emphasized that data centers should not be seen merely as energy-intensive facilities but as potential drivers of the energy transition. He called on ASEAN nations to seize the moment and align digital growth with sustainability, aspiring to evolve beyond a regional digital hub into a global leader in green digital innovation. 

Beni Suryadi, senior manager of ACE says the ASEAN Power Grid will drive 62 new renewable energy projects. (Photo: Hsu Tsu-lin)

Malaysia’s new “Auction-as-a-Service” to boost data centers’ access to green power 

Alongside cross-border initiatives under the ASEAN Power Grid, RECs have become another key instrument in helping data centers move toward net zero. 

Jen Wee Kang, founder and CEO of Singapore-based REC trading platform REDEX, observed that companies, including data center operators, are increasingly pushing their supply chains to cut Scope 2 emissions. For most suppliers, using RECs to verify renewable energy consumption offers a simpler and more transparent solution than purchasing carbon credits to demonstrate emission reductions. 

Malaysia is also stepping up efforts to develop its REC market. Muhammad Rizal Azmi, vice president of business and product development at the Bursa Carbon Exchange (BCX), said the newly launched “Auction-as-a-Service” (AaaS) platform is tailored for major electricity consumers, including data center operators, to take part in green power auctions. 

He said this marks BCX’s first bilateral energy supply auction, featuring renewable energy certificates bundled with electricity. The goal is to create an open and competitive marketplace under the Corporate Renewable Energy Supply Scheme (CRESS), which allows companies to access green power through third-party use of the national grid. 

Explaining the participation process, Azmi said that buyers and sellers must first register with BCX, complete an application form, and submit the necessary documents. Once verified, they can access the platform and join the auction.  

For auctions conducted under the CRESS program, participants are required to meet additional criteria, such as submitting electricity bills to confirm they are medium-, high-, or extra-high-voltage consumers. He added that the first auction is tentatively set for November 27. 

Malaysia’s newly launched AaaS platform allows large electricity consumers like data center operators to participate in green power auctions. (Photo: Hsu Tsu-lin)

Data centers drive ICT decarbonization as Scope 3 challenge grows 

Scope 3 emissions from data centers were also a major focus of the conference. Prannoy Chowdhury, associate director for Southeast Asia at carbon consultancy Carbon Trust, noted that data centers account for around 45% of total emissions in the information and communications technology (ICT) sector, ahead of communication networks. This, he said, highlights their pivotal role in driving decarbonization across the industry.

He explained that the carbon reduction challenge for data centers extends beyond electricity use. In France, Scope 3 emissions account for the majority of data center emissions, unlike in markets such as Singapore and the U.S., reflecting how emission structures vary by location and grid conditions. As technology advances, Scope 2 emissions related to energy use are expected to decline, making Scope 3 the next major area of focus. 

Chowdhury explained that Scope 2 emissions can be reduced through PPAs or renewable energy procurement, while Scope 3 emissions largely stem from IT equipment and infrastructure, with a smaller portion tied to purchased goods and services. He said these embodied carbon sources need to be traced back to their origins and addressed by using low-carbon construction materials and extending the lifespan of servers and storage devices. 

He also analyzed emissions across a typical 20-year data center lifecycle, noting that most emissions occur during construction, with additional peaks around years five and ten as servers and batteries are replaced, and another possible rise near year thirteen when UPS systems are upgraded. To move toward net zero, he said operators should chart their full lifecycle emissions and prioritize reduction measures accordingly.  

Read more: 'Race to green data centers' series