4. Energy and Environment

This section covers the following topics: energy infrastructure, air quality, water, waste and soil

Indice

• 4.1. Energy
• 4.2. Air
• 4.3. Water
• 4.4. Waste
• 4.5. Soil

4.1. Energy

Electricity supply in Malaysia is considered adequate, with good levels of reliability.

In the Malay Peninsula, the main electricity supplier is Tenaga National Berhad (TNB), a national utility company. However, there are other energy utilities operating in the region, including NUR Power Sdn . Bhd ., an Independent Power Utility (IPU) that generates and distributes electricity to customers in Kulim Hi-Tech Industrial Park (KTHP) located in Kedah . In addition, there are smaller distributors that have been granted licenses to sell electricity in specific dedicated areas. For example, Malakoff Utilities Sdn . Bhd . supplies electricity to the Kuala Lumpur Sentral Development Area (KLS), while Beibu Gulf Holding (Malaysia) Sdn . Bhd . distributes electricity in Malaysia China Kuantan Industrial Park .

In Borneo, electricity supply is handled by Sabah Electricity Sendirian Berhad (SESB) and Sarawak Energy Berhad (SEB) in their respective regions.

Power generation in Malaysia is mainly a mix of thermal, gas and hydropower. Power generation facilities are owned by both utilities and independent power producers (IPPs). Renewable energy sources such as solar, small hydro, biogas and biomass are actively promoted as part of the national green technology initiative.

In August 2023, the Government of Malaysia released the National Energy Transition Roadmap (NETR) 1, which implements and expands the National Energy Policy 2022-2040.

NETR has developed the Responsible Transition Pathway 2050 (RT Pathway 2050) to transition Malaysia's energy systems from fossil fuels to greener, low-carbon systems. The Total Primary Energy Source (TPES) model has indicated that Malaysia's energy demand will increase by 0.2% annually from 95 Mtoe in 2023 to 102 Mtoe in 2050. The RT Pathway 2050 targets the phase-out of coal and reduction of fossil fuel dependence from 96% in 2023 to 77% in 2050. Natural gas is set to become not only a transitional fuel but also the largest contributor to the TPES with 57 Mtoe (56%) followed by renewables which include solar, hydropower and bioenergy, which collectively contribute 23% of the TPES in 2050 from only 4% in 2023.

According to the National Energy Policy 2022-2040 (DTN), the energy sector has contributed approximately 28% to GDP and employs 25% of the total workforce in Malaysia. It is also a key source of national income, with petroleum-related products contributing 31% of fiscal income and energy exports constituting 13% of total export value. The energy sector also benefits more than 10 million customers by providing daily access to electricity and enabling mobility through reliable fuel supply. Jobs and business opportunities created in the energy sector, as well as economic multipliers in energy-related supply chains, also contribute positively to the nation's socioeconomic development.

Reducing dependence on fossil fuels is an ambitious strategy for a country like Malaysia, which is so tied to the oil economy, considering that PETRONAS ( Petroliam National Berhad ) is one of the largest and most influential companies in the world in the Oil & Gas sector 2and, also in terms of the international image of Malaysia itself, the Sepang International Circuit, which hosts the Formula One and Moto GP Grand Prix, will be named after PETRONAS starting from October 2023 3.

Pathway 2050 is projected to generate investment opportunities of between RM1.2 trillion and RM1.3 trillion (EUR236-255 billion) by 2050. This trajectory is expected to contribute an additional RM220 billion (EUR43 billion) to the gross domestic product (GDP) and generate approximately 310,000 job opportunities by 2050. Notably, these economic benefits are expected to be inclusive, benefiting low- and middle-income households and facilitating widespread social progress 4.

There are six strategic levers identified for the transition, divided into 10 key projects, namely:

Table : Key Catalyst Projects, NETR, pg . 53 and following

4.2. Air

In Malaysia, most of the time, air quality is good to moderate in terms of Air Quality Index, except during seasonal pollution episodes influenced by meteorology and transboundary impacts, which consist of smoke cloud caused by forest fires and agricultural waste burning in the Southeast Asian region, and monsoon particulates carried by the Indonesian areas of Sumatra and Borneo. Rapid urbanization, economic development and other socioeconomic activities are also contributing significantly to air pollution problems in Malaysia. 5.

The long-term trend and air quality status suggest that CO, NO 2 and SO 2 concentrations were mainly influenced by heavy traffic while PM 10 was influenced by biomass burning.

The main sources of air pollution in Malaysia include road transport, power generation, industrial activities and others. Transport is responsible for about 70% of air pollution, especially the increase in particulate matter in urban areas.

X emissions are contributed by 70% from motor vehicles, 16% from power plants, 12% from industry and 2% from other sources, while SO 2 emissions are contributed by 41% from power plants, 23% from industry, 16% from motor vehicles and 2% from other sources.

Environmental Pollution Standards Index. Protection Agency of the United States, to measure air pollution. There are currently 65 air quality monitoring stations 6.

The relevant legislation for air quality is the Environmental Quality Act 1974, as amended by the Environmental Quality ( Clean Air) Regulations 2014. The owner or occupier of a property engaged in any activity or industry listed in the First Schedule to the Regulations shall implement specified measures to reduce the emission of air pollutants, in accordance with Best Available Techniques Economically Achievable (BATEA) determined by the Director-General. Each property shall be provided with an air pollution control system to specifications determined by the Director-General. The Regulations also make provision for: monitoring of the air pollution control system, maintenance of records, special licensing, offences and penalties , etc.7

Malaysia participates in regional and ASEAN cooperation mechanisms to combat and reduce the phenomenon of cross-border blankets, although Indonesia has on several occasions rejected the responsibilities attributed to it by Malaysia. When the phenomenon becomes particularly serious, the federal government intervenes with the cloud seeding , to force meteorological precipitation 8.

4.3. Water

Despite an average annual rainfall of about 1 trillion cubic meters, some states in Malaysia experience periodic water shortages. Seasonal rainfall patterns, rapid economic growth, urbanization and migration in some regions, and climate change have created imbalances in water supply and demand.

It is estimated that water consumption is approximately 30 billion cubic meters per year and that it could grow to 61 billion in 2040 and 121 billion in 2060. The current water supply depends 98% on surface water, taken from reserve areas by artificial basins created with dams, while only 2% comes from groundwater, agriculture consumes 80% of water withdrawals from rivers and 45.7% of total withdrawals, industry consumes 29.9% of total withdrawals and civil and urban uses consume 24.5% of the total 9.

The water quality index is calculated based on the six parameters OD (Dissolved Oxygen), BOD, COD, NH3-N (Ammonia Nitrogen), SS (Suspended Solids) and pH (DOE 2018) and classified into three categories based on the index: clean, slightly polluted and polluted 10. The results of a ten-year observation period on Malaysian rivers from 2008 to 2018, published by the Department of Environment (DOE), indicate that 357 rivers (i.e., 56%) are clean, 231 rivers (36%) are slightly polluted and 50 rivers (8%) are polluted.

As of 2018, there were 10,773 wastewater treatment plants (serving approximately 30 million population equivalent) in Malaysia, of which 6,932 were operated by IWK ( Indah Water Konsortium Sdn . Bhd .), a company owned by the Ministry of Finance and the remaining 3,841 managed directly by the relevant municipalities. The sewage treatment plants mainly perform primary and secondary treatment, tertiary treatment is still not very widespread 11.

Disconnected from the purification plants, 1,361,784 septic tanks and 1,185,032 other systems (cesspits) were counted for approximately 13.4 million equivalent inhabitants.

The regulatory basis is the Environmental Quality Act 1974 (EQA 1974), to which are added various EQ ( Environmental Quality) regulations that have been introduced since 2009, mainly to regulate the management of sewerage and the management of industrial waste, in general and for specific sectors.

In the industrial sector, in 2022, the Department of the Environment (DOE) counted 57,584 industrial real estate units, of which 6,015 (10.4%) produce wastewater. The DOE regulates and pays particular attention and monitoring to discharges from palm oil mills, natural rubber processing factories, and 40 other types of industrial activities.

For palm oil mills, for example, effluents discharged into the environment must be treated to meet the parameters set out in the tables in sections 16 and 18 of the EQA 1974, which include a BOD 3 of 100mg/l, and pay an emission tax of MYR 10 (approximately €1.96) per tonne of BOD load if discharged into a watercourse or MYR 50 (€9.8) per tonne of BOD load if discharged onto land. Violations are punishable by an initial fine of MYR 25,000 (approximately 4,900 Euro) if discharging into a watercourse or MYR 50,000 (approximately 9,800 Euro) if discharging into a field, to which is added MYR 1,000 (approximately 196 Euro) for each day in which the facility does not fall within the parameters from the time of notification, in addition to a prison sentence of up to 2 years 12.

The main problems and challenges identified in the wastewater treatment sector include the need to increase penalties and controls, extend sewerage and connect isolated plants, implement information and training programs (especially for enterprises). In addition, Malaysia intends to fully implement the “total maximum daily load” model and is open to international cooperation and exchanges on this issue.

4.4. Waste

Waste management in Malaysia is primarily handled by the public sector, supported by a regulatory framework that governs the generation, storage, collection, transfer and transportation, treatment and disposal of waste. The two main bodies in Malaysia responsible for implementing and enforcing policies and regulations for solid waste management are the National Solid Waste Management Department (JPSPN) and the Solid Waste and Public Cleansing Management Corporation ( SWCorp ) 13.

The regulation of the sector has been rather troubled over the decades, starting from an initial situation in which the competence fell to the individual States, with uneven developments, first leading to bringing the sector as much as possible under federal control and, recently, aiming at the privatization of a part of it.

The federal law of reference, which has brought about a turning point in the sector, is the “Solid Waste and Public Cleansing Management Act 2007” (Act 672), which came into force in September 2011, but has only been implemented by six of the thirteen states ( Perlis , Kedah , Pahang , Negeri Seri Begawan , etc.). Sembilan , Melaka, Johor ) and two of the three Federal Territories (Kuala Lumpur and Putrajaya ), leading to an improvement in the overall situation, but still with disparities and a large need for investment 14.

In Malaysia, municipal solid waste (MSW) comprises household waste, waste generated from institutional and commercial activities, and industrial waste. In 2021, the “Ministry of Housing and Local Government” (MHLG) estimated that approximately 14 million tonnes of MSW was generated, of which household solid waste (65%) constitutes the dominant fraction of the total, followed by commercial and institutional waste (28%) and industrial waste (7%).

Daily municipal solid waste generation in Malaysia has more than doubled in the last 20 years due to population growth and increasing urbanization, reaching 32.8 million in 2021, with an estimated household waste generation of 38,207 tonnes per day (1.17 kg/capita/day), of which 82.5% is landfilled 15.

The declared percentage of recycling of total waste in 2021 is 31.52%, in 2020 it was 30.67% and the national target set for 2025 would be 40% 16.

Municipal Solid Waste is composed of 36% food scraps, 24% plastic, 9% paper/cardboard, 2% metals, 2% glass, 4% grass clippings and prunings and 23% a mix of textiles, leather, rubber, hazardous waste, diapers and other materials.

Waste management has an average cost of MYR 148/t/d, approximately 29 Euro per tonne per day, which justifies Malaysia's reputation for having one of the lowest waste management budgets in South East Asia.

About 40-80% of local government expenditure was derived from waste management costs and public cleaning, while about two-thirds of the taxes collected by local government were spent on solid waste collection and disposal.

On average, the capital expenditure of a new landfill is more than MYR 30 million (approximately €5.8 million) and the operating expenditure is approximately MYR 35/t (€6.9 per tonne).

The privatisation of waste management services has cost the government more than MYR 300 million (approximately €59 million) and is expected to continue to increase, as more areas seek federal management of public sanitation and waste services through the adoption of Act 672.

According to MHLG, 61% of the total costs of waste management and public cleaning are paid by the federal government, with the remainder paid by local authorities, this is because many local authorities are unable to pay the costs of implementing the systems: it has been found that the actual costs of waste management can be up to 2.5 times higher than the budget actually allocated.

The three main sources of funding for MSW are municipal taxes, utility fees, and government subsidies. Municipal taxation is essential to funding MSW services because utility fees do not cover the costs of collection and transfer operations.

Currently there are 141 operational landfills and 182 closed landfills, of which only 21 (15%) are sanitary landfills, while the remainder are open-air landfills.

Incineration is the second method of waste disposal, however the composition of household waste is not easily manageable in incinerators, due to high humidity, therefore incineration is mainly used for hospital waste, in 2021, 5 incinerators with a capacity between 200 and 500 kilos/hour and 7 incinerators with a capacity between 20 and 50 kilos/hour were registered.

The Kajang Municipal Council WtE facility is the first waste-to-energy plant in Malaysia, it was inaugurated in 2006 and brought to full capacity in 2010, with a capacity of 1100 tons of waste per day and produces 8MW of electricity per day. Before being incinerated, the municipal solid waste is treated and transformed into Secondary Solid Fuel.

MHLG intends to build at least one waste-to-energy plant for each State that adopts Law 672, in order to further reduce dependence on landfills. Furthermore, to facilitate investments, a basic Feed -in- Tariff ( FiT ) is foreseen which varies from 0.2687 to 0.3085 MYR per kWh (from 5.28 to 6.07 eurocents per kWh) depending on the size of the plant, to which are added smaller premium 17FiTs depending on the technological characteristics of the plant .

There are two main types of recycling collection centers: buy-back centers and curbside collection.

In buyback centers, people sell their sorted recyclables and are paid directly or indirectly through a reduction in the waste collection fee . There are 599 buyback centers and they are usually located in places like supermarkets or shopping malls.

Kerbside collection is set up and managed by Local Authorities, Non-Governmental Organisations (NGOs), concessionaires or other private organisations. Recyclable materials are separated at source and only need to be transported to the kerbside, which leads to much higher participation rates than buy-back centres. Kerbside collection is recognised as an effective way to minimise recycling costs and times.

The collected recyclable materials are then sold to recycling factories or companies that export the recyclable materials abroad.

The Malaysian government has extended the tax relief measures for investments in integrated waste management and waste-to-energy until 2026 18.

4.5. Soil

Malaysia's growth from an agrarian economy to a thriving developing country has brought increasing stress on the natural and living environment; the country has been faced with the reality of environmental degradation, exploitation of natural resources, environmental pollution due to climate change and loss of biodiversity as a consequence of development 19.

Potentially contaminated sites such as petrol stations, fuel depots, railway yards, landfills, industrial sites and former mining lands have been a growing concern, until the Department of Environment addressed the situation and, during the 9th Five Year Plan (2006-2011), first initiated a systemic study on “Criteria and Standards for the Management and Rehabilitation of Contaminated Land in Malaysia”, and then published three guidelines for “the Management and Control of Contaminated Land in Malaysia” 20:

1. Malaysian Recommended Site Screening Levels for Contaminated Land21

2. Assessment and reporting of contaminated sites22

3. Remediation of contaminated sites23

Contaminated land is defined as a site:

• where a substance is present in concentrations higher than the concentration at which the substance is normally present in or on land in the same locality and poses (or is likely to pose) an immediate or long-term danger to human health or the environment

• or exceeds the concentration specified in the Site Screening Levels (SSL).

General screening parameters are specified in Appendix C of Guideline 1, while remediation objectives are determined in the site-specific Risk Analysis.

The competent authority for the entire national territory is the Department of the Environment (DOE), the "polluter pays" principle applies, therefore the polluter is responsible both in criminal and civil proceedings, however the DOE refers directly to the owner of the area, even if innocent, who, in the event that the polluter cannot be found, has the obligation to start the process of preliminary investigation, characterization, risk analysis and, finally, remediation.