KUALA LUMPUR, Malaysia should consider the Just Energy Transition Partnership (JETP) financial mechanism to drive its ambition to phase out coal and reduce fossil fuel reliance to 77 per cent by 2050, down from 96 per cent in 2023, as outlined in the National Energy Transition Roadmap, according to a sustainable finance expert.
Dr John Vong, adjunct fellow of public policy and management at Monash University, Indonesia, said both Indonesia and Vietnam have outlined their energy transition programmes and secured funding from the JETP to move away from fossil fuels and coal.
‘The way for Malaysia to secure the JETP financing mechanism is by pushing the largest local banks to attend the Glasgow Financial Alliance for Net Zero (GFANZ) Working Group meeting and become more involved with the group,’ Vong told Bernama on the sidelines of a seminar held recently in conjunction with the Economic, Environmental, Social and Governance (EESG) Professional Certification Programme organised by the Salihin Group.
The EES
G 2024 seminar, themed ‘Thriving Sustainability Change’, was co-organised by Salihin, the largest Bumiputra corporate consulting firm in Malaysia, and Universiti Utara Malaysia.
For context, Indonesia secured US$20 billion in public and private funding under JETP Indonesia to assist its energy transition, while Vietnam secured US$7.75 billion in public funding at favourable terms and another US$7.75 billion in private funding at market rates for the period from 2023 to 2030. (US$1 = RM4.71).
JETP is a financial mechanism in which wealthier nations assist coal-dependent developing countries in transitioning to clean energy.
JETP funds can be provided through grants, loans or investments. The donor pool includes the International Partners Group (IPG) and the GFANZ Working Group.
The IPG consists of Japan, the United States, Canada, Denmark, France, Germany, Italy, Norway, the European Union, and the United Kingdom.
The GFANZ Working Group includes multilateral and national development banks and financing a
gencies.
In December 2023, Natural Resources, Environment and Climate Change Minister Nik Nazmi Nik Ahmad reportedly said that the government is interested in understanding the JETP agreement, highlighting the challenges in finding financial solutions for phasing out coal.
Meanwhile, the Association of Banks in Malaysia chairman Datuk Khairussaleh Ramli noted that the association, together with Maybank and CIMB, would be working with GFANZ on a roundtable Practitioners Training session for Malaysian financial institutions in November 2023.
Vong also pointed out that Malaysia must accelerate its energy transformation to avoid importing inflation, which could occur if it continues to buy coal from Indonesia.
“Indonesia is phasing out coal and will eventually reduce coal production. Malaysia imports coal from Indonesia, and this reduction in supply would lead to higher coal prices. This is what I mean by Malaysia importing inflation,” he added.
According to United Nations Comtrade data, Malaysia imported co
al, briquettes, ovoids and similar solid fuels worth US$3.66 billion from Indonesia in 2022.
In the same year, it was reported that Malaysia’s electricity generation comprised 42 per cent coal, 38 per cent natural gas and 17 per cent hydroelectric power, with other renewable energy sources contributing a small fraction.
Source: BERNAMA News Agency
