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Malaysia's Deputy Prime Minister Fadillah Yusof states the country's plan to phase out all coal-fired power plants by 2044. (Photo: Fadillah Yusof's facebook)
In a public meeting on June 25, Malaysia's Deputy Prime Minister Fadillah Yusof revealed the country's timeline for phasing out coal-fired power plants to achieve its net-zero commitment by 2050. By 2035, Malaysia aims to reduce its coal power plants by half and retire all of them by 2044. Despite coal being a major energy source for the country, decarbonizing the energy sector poses significant challenges.
According to data from the International Energy Agency (IEA), energy-related carbon emissions make up nearly half of Malaysia's total emissions, with coal-fired power plants contributing about 40%. Natural gas and oil follow as other significant sources. In response, the Malaysian government committed in 2022 to cease building new coal power plants from 2040 onwards. Part of the energy supply gap will be filled by renewable energy.
However, there are concerns that the national economy might not keep pace with the energy transition. Yusof emphasized that the transition will be managed to maintain stable power supply and minimize economic impacts while providing reskilling opportunities for workers to tap into new jobs in the renewable energy sector.
Malaysia's National Energy Transition Roadmap (NETR) has set a goal to increase the share of renewable energy from the current 19% to 70% by the end of 2050. This includes deploying solar, biomass, and waste-to-energy solutions, investing in grid modernization, and establishing Malaysia Energy Exchange for cross-border green electricity trading.
Alongside supply-side measures, the Malaysian government aims to reduce domestic demand for fossil fuels. Following the June announcement of the cancellation of most diesel subsidies, plans are underway to cut gasoline subsidies, likely increasing local fuel prices. Additionally, a carbon tax targeting high-emission industries such as steel is set to be introduced.
(Photo: iStock)
Retiring coal power plants is not straightforward. A report from the United Nations Economic and Social Commission for Asia and the Pacific (ESCAP) highlights three major challenges faced by Southeast and South Asian countries: heavy reliance on domestic and foreign government funding, regulated market structures with complex contractual obligations, and the fact that nearly half of the power plants have been operational for less than a decade.
Most countries in the region follow a vertically integrated model, which hinders the entry of new and renewable energy players. Existing power purchase agreements lack flexibility, preventing the natural phase-out of unprofitable operations. Additionally, insufficient technology, finance, and infrastructure policies further complicate the energy transition.
Source: The Edge Malaysia, Bloomberg
