Current World Environment

Introduction

Energy sector is the backbone of Malaysia’s economic development striving for high income developed nation, inclusiveness and sustainability by 2020 (KeTTHA 2009; MNRE, 2009; NEAC, 2010a; 2010b). Energy isan essential element for social and economic growth (Haw et al., 2006) and economic competitiveness requires sustainable energy production and consumption (MNRE, 2010). Malaysia’s Green Technology Policy has recognised energy sector as one of the four pillars in accelerating the Malaysia’s economic development (KeTTHA, 2010). However, rapid economic development has drastically increased the country’s energy consumption and subsequently contributing to environmental degradation. According to EU (2011), electricity generation from fossil fuels is one of the principal sources of green house gases (GHGs) emissions globally. Available evidences have shown energy production is the largest contributor toair pollution in Malaysia (KeTTHA, 2009). Moreover, Malaysia’s GHGs emission intensity levels in the energy sector are above the global average (UNDP, 2009). According to the Second National Communication to the United Nation Framework Convention on Climate Change, energy industries in Malaysia are the largest carbon dioxide (CO₂) emitters amounting to 35% of the total CO₂ emission (MNRE, 2009). This shows energysustainability is vital todeal withthe growingpressure on environment. For these reasons, sustainable energy development measures have become one of the Malaysian government strategies towards ensuring its vibrant and sustainable economic growth. In recognising the importance of energy sustainability, the Malaysian government has takenvarious measures to ensure long term reliability and security of energy supply, efficient utilization of energy and at the same time reducing the negative impact on the environment. In the context of Malaysia, SEDA (2011a) defines sustainable energy as an energy which in its generation, provision and use has minimal negatives impact to human and environment, and can be supplied continuously to future generation. One of the approaches in achieving sustainable energy is by promoting the use of renewable energy (RE). RE refers to any form of primary energy from recurring and non-depleting resources (KeTTHA, 2009) or energy derived from natural processes that are constantly replenished (MNRE, 2010). According to EU Directive 2009/28/EC on the promotion of the use of energy from renewable sources, RE sources are renewable non-fossil energy sources including wind, solar, geothermal, wave, tidal, hydro-power, biomass, landfill gas, sewage treatment plant gas and biogases (EC, 2004). The use of RE is expected toreduce the environmental pollution due to the GHGs emissions such as CO₂, nitrogen oxides (NO_x), sulphur oxides (SO_x) and particulate matters as a result of power generation from oil, natural gas and coal (Mustapa et al., 2010; KeTTHA, 2011). RE resources in Malaysia include palm oil biomass wastes such as empty fruit bunches (EFB), mesocarp fibres, palm kernel shells (PKS) and palm oil mill effluents (POME); mini-hydro; solar power; solid waste and land-fill gas; wind energy and geothermal; wastes and gases from agro-based and farming industries (KeTTHA, 2009). Malaysia aims to achieve RE target of 985MW (contributing 5.5% to Malaysia’s total electricity generation mix) by 2015 (KeTTHA, 2009) and 2,080MW (11%) by 2020 (KeTTHA 2009).In achieving sustainableenergy, the Malaysian government has made efforts to intensify the development of RE and encourage energy efficiency practices. However, the paper focuses only on the development of RE. The paper highlights on how government procurement could be used as one of the instruments towards promoting RE generation.

Materials and Methods Methods

The study is review in nature. The study used secondary sources such as policies, acts, data and regulations from relevant ministries and agencies of the Malaysian Government. Published materials such as relevant research reports, articles, books, annual reports also are reviewed in order to accumulate secondary data.

Government green procurement (GGP)

Government procurement refers to the acquisition of supplies, services and works in accordance with government rules and regulations (Adham&Siwar, 2012b). Government procurement plays a crucial role for socioeconomic development in Malaysia as it represents 24-33 percent of gross domestic product (GDP) (Adham&Siwar, 2011). In dealing with environmental degradation issues, government procurement could also be used to minimize the impact to the environment or known as government green procurement (GGP). Bouwer et al. (2005) have definedGGP as the approach by which Public Authorities integrate environmental criteria into all stages of their procurement process, thus encouraging the spread of environmental technologies and the development of environmentally sound products, by seeking and choosing outcomes and solutions that have the least possible impact on the environment throughout their whole life-cycle. GGP among others includes purchasing of energy-efficient computers, office equipment made from sustainable timber, recycled paper, hybrid or low-emission vehicles and constructing green/low energy buildings (EC, 2004; EU, 2011).According to Geng&Doberstein (2008), the effective implementation of GGP could offer greater impacts for the developing countries where many of them are facing natural resource scarcities. Benefits associated with the implementation of GGP are not only limited to environment but also on the economic and social aspects. Empirical studies have found that GGP has the potential to reduce CO₂ emissions and operating costs by the government in the long run (PWC et al., 2009; EC, 2004). EU found that if all public authorities across the EU demanded for green electricity, it will save about 60 million tons of CO₂ which is equivalent to 18% of the EU’s greenhouse gas reduction commitment under the Kyoto Protocol (EC, 2004). GGP practices have been implemented in many countries throughout the world and have been regarded as an effective means of reducing environmental burdens. For this reason, more and more countries have established GGP policies at national levels to integrate environmental considerations in their government procurement decisions. In the context of Malaysia, GGP has been defined as the acquisition of products, services and work in the public sector that takes into account environmental criteria and standards to conserve the natural environment and resources, that minimises and reduces the negative impacts of human activities (KeTTHA, 2012). Environmental criteria in the given definition refers to products, equipment or systems that minimize degradation to the environment, have zero or low green house gas (GHG) emission, safe for use and promote healthy and improved environment for all forms of life, conserve the use of energy and natural resources, and promote the use of renewable resources such as RE as outlined in the NGTP (KeTTHA, 2009).

Sustainable energy

The importance of energy sustainability in Malaysia had been recognised many years ago. Initial efforts towards achieving energy sustainability have been initiated since 1975 when the National Petroleum Policy (NPP) was introduced to ensure optimal use of petroleum resource. Four years later, the National Energy Policy (NEP) was formulated with three primary objectives which are to ensure the provision of adequate energy supplies, efficient utilization of energy and minimization of environmental burden. In achieving these objectives, subsequent energy policies such as the National Depletion Policy (NDP; 1980) and Four-Fuel Diversification Policy (4FDP; 1981) were formulated. NDP is intended to conserve Malaysia’s energy resources particularly oil and gas whereas 4FDP aims to reduce Malaysia’s overdependence on oil as the energy source (Hitam, 2000).

Analysis and Discussion

The Malaysian government has introduced several initiatives to support the development of RE such as the implementation of photovoltaic (PV) System for Rural Electrification Program, Small Renewable Energy Programme (SREP), Biomass Power Generation and Demonstration Project (BioGEN) and Malaysian Building Integrated Photovoltaic Technology Application Project (MBPIV) (MNRE, 2009).Besides that, fiscal incentive and funding such as the Pioneer Status (PS) or Investment Tax Allowance (ITA), have also been introduced (KeTTHA, 2009).

Renewable energy initiative in Malaysia

In recognising the potential of RE, the Malaysian government has embarked on a number of initiatives toencourage the use of RE as an additional source of fuel as outlined in the Five-Fuel Diversification Policy (5FDP; 2001) under the8^th Malaysia Plan (8MP; 2001-2005) (EPU, 2001). Besides oil, gas, hydro and coal, 5FDP has identified additional sources of energy from biomass, biogas, municipal waste, solar, wind and mini-hydro for electricity generation. Efforts to develop and promote the utilization of RE were further intensified under the 9^th Malaysia Plan (9MP; 2006-2010) (EPU, 2006). The use of PV systems (solar generating sets and solar hybrids) for rural electrification has been initiated way back in 1980s for rural villages without electricity supply. SREP was launched in 2000 to intensify the utilization of RE in power generation with RE targeted to contribute 5% of generation capacity by 2005. Five RE sources have been identified under SREP which are biomass, biogas, solar, mini-hydro and solid waste. SREP allows renewable energy projects of up to 30MW in capacity to sell output to the utility company (Adham et al., 2013). BioGEN aims at developing and exploiting energy potentials of biomass from palm oil industries while MBIPV attempts to act as a catalyst for greater Building Integrated Photovoltaic (BPIV) technology acceptance among the public and private sector. MBIPV focuses on three major areas namely policy and education, technical skill and market implementation and technology development support to increase BPIV applications and induce long term cost reduction (KeTTHA, 2009). The use of biofuel has been identified as one of the strategies to reduce dependency on fossil fuels. In this regard, the Malaysian government has set the platform for the development of the biofuel industry in Malaysia with the release of the National Biofuel Policy (NBP) on March 2006. The policy is primarily aimed at reducing the country’s dependence on depleting fossil fuels, promoting the demand for palm oil as well as stabilizing its prices at a remunerative level. NBP envisions use of environmentally friendly, sustainable and viable sources of energy to reduce the dependency on depleting fossil fuels; and enhanced prosperity and well-being of all the stakeholders in the agriculture and commodity based industries through stable and remunerative prices. Five strategic thrusts have been underpinned NBP viz. biofuel for transport; biofuel for industry; biofuel technologies; biofuel for export; and biofuel for cleaner environment. NBP encourages the use of biofuel by providing incentive for biofuel infrastructure development and developing industry standards (MPIC, 2006). The National Green Technology Policy (NGTP) was launched in 2009 to promote the use of green technology in accelerating the Malaysia’s economy and promote sustainable development. NGTP has clearly stated Malaysia intentions to promote the use of renewable resources and attaining energy independence (KeTTHA, 2010). The National Policy on Climate Change (NPCC) was formulated in 2010 to encourage wise management of natural resources and enhance environmental conservation as a measure to strengthen economic competitiveness and improve the people’s quality of life (MNRE, 2010). NPCC in its strategic thrust aims at enhancing RE. The National RE Policy and Action Plan (NREPAP) was launched on April 2010 to enhance the utilization of indigenous RE resources to contribute towards national electricity supply security and sustainable socio-economic development. It has five key objectives namely (i) to increase RE contribution in the national power generation mix; (ii) to facilitate the growth of the RE industry; (iii) to ensure reasonable RE generation costs; (iv) to conserve the environment for future generation; and (v) to enhance awareness on the role and importance of RE. In order to achieve the policy objectives, 5 strategic thrusts have been drawn namely (i) introduction of appropriate regulatory framework such as RE Act and Feed-in-tariff (FiT) mechanism; (ii) providing conducive environments for RE businesses such as the provision of fiscal incentives; (iii) intensifying human capital development; (iv) enhancing RE research and development; and (v) designing and implementing RE advocacy programme. NREAP aims to produce 985MW (6%) of RE in the year 2015 and 21.4GW (73%) by 2050 (KeTTHA, 2009). The Malaysia’s RE Policy and Action Plan has highlighted a number of RE resources in Malaysia and their potentials as shown in Table 1.

Table 1: RE resources potential in Malaysia

The 10^th Malaysia Plan (10MP; 2011-2016) indicates the Malaysian Government path in advancing RE. The 10MPrecognizes the importance of RE as one of the new growth areas to ensure reliable, high quality and cost-effective supply of energy. Among other measures to secure and manage reliable energy supply are by enhancing the use of alternative resources (particularly hydro), regulating the use of biofuel in the transport sector, developing new-coal based plants and applying critical coal technology. For these reasons, besides ensuring reliability of electricity supply, the 10MP emphasizes in creating demand for RE to spur business opportunities. In achieving the goals, three main strategies have been outlined namely (i) developing and enforcing regulations especially on energy efficiency in buildings for new developments; (ii) promoting investment in RE to provide long-term contracts for RE providers and create the spill over effects on the related domestic service providers; and (iii) promoting culture of conservation and efficiency in energy and water use. The 10MP is aiming at increasing RE contributions to 5.5% of Malaysia’s total electricity generated by 2015 (EPU, 2010). The Government Transformation Program (GTP) draws the need of using creative and innovative solution such as implementing solar hybrid power generation or micro hydro-electricity as a catalyst for the development of sustainable energy in Malaysia (PEMANDU, 2010a). The New Economic Model (NEM) under its Strategic Reformation Initiatives 8 (SRI8) targets to preserve natural environment by formulating comprehensive energy policy as a push factor to shift into RE (NEAC, 2010a; 2010b). Under the Economic Transformation Program (ETP), the Malaysian government has identified four entry point projects (EPPs) as a platform to promote sustainable energy development namely improving energy efficiency (EPP9); building up solar power capacity (EPP10); developing nuclear energy for power generation (EPP12); and tapping Malaysia’s hydroelectricity potential (EPP12).  EPP10 intends to increase solar power capacity of at least 220MW by 2020 while EPP12 realizes the potential of hydroelectricity in providing a secure and long term supply of electricity particularly in Sarawak and Borneo region (PEMANDU, 2010b). In order to provide a more favourable environment for RE development, the Renewable Energy Act (REA; 2011) and Sustainable Energy Development Authority Act 2011 (SEDAA; 2011) have been enacted under the 10MP. REA is an act to facilitate sustainable RE growth and development. REA provides a special tariff system to stimulate the generation of RE and outlines provision for Feed-in Tariff (FiT) mechanism’s implementation. The FiT is a mechanism that allows electricity produced from indigenous RE resources to be sold to power utilities at a fixed premium price for a specific duration (KeTTHA, 2011; SEDA, 2011b). REA is also allows the establishment of Sustainable Energy Development Authority (SEDA) as an implementing agency for FiT. SEDA is tasked to manage the RE Fund to ensure RE becomes a viable and sound long-term investment for companies, industries and individuals (SEDA, 2011b). RE initiatives in Malaysia are summarized in Table 2.

Table 2: RE initiatives in Malaysia

Issues and challenges for RE development in Malaysia

Prior to NREPAP, the development of RE in Malaysia has been generally slow due to a number of issues and challenges in Table 3. Despite a range of RE’s initiatives and incentives, the RE target set out under 8MP and 9MP was not achieved (EPU, 2010). For instance, the BioGEN was unable to achieve its intended objectives due to inability to control certain parameters (MNRE, 2009). The Government has set a target of 300MW of the country’s electricity from RE by 2010, but only achieved up to 56.7MW (KeTTHA 2009). Presently, RE development has shown good progress but its development is still considered slow. As of December 2013, SEDA has approved RE projects with RE capacity of 482MW, comprising solar PV (40.2%), biomass (27.2%), hydropower (27.2%) and biogas (4.9%) (SEDA, 2013). Based on this trend, the authors find PV has shown good progress while the developments of other RE sources are under-performed. If this trend continues, it will be difficult to meet Malaysia’s goal of producing 985MW of RE by the end of 2015. The issues and challenges need to be addressed wisely to ensure the RE targets could be achieved.

Table 3: RE implementation issues  

Government green procurement in Malaysia

GGP is still a new concept in Malaysia (Adham&Siwar, 2011; 2012a; 2012b). At this point in time, GGP has not been formally adopted and there is no policy, regulation and legal framework with regards to GGP (Adham&Siwar, 2011; 2012a; 2012b). While Malaysia is somewhat behind the line in term of GGP implementation, as compared to its neighbouring countries, the Malaysian government has acknowledged the importance of GGP and initial steps have been taken towards its implementation. The Malaysian government commitments have been outlined in 10MP, NEM, ETP, NGTP, NREPAP, Small and Medium Enterprises Master Plan (SMEMP) and Annual Federal Government Budget. Under the ETP, the Government has made GGP as one of its Entry Point Projects (EPP). Table 4 shows details of the Malaysian government commitments.

Table 4: Malaysian government commitments towards GGP

Source: Adham&Siwar (2012a; 2012b); SME (2012), MOF (2010) &KeTTHA (2010)

Strategic use of GGP

GGP could be considered as enabling factors that would promote the generation of RE. One of the GGP approaches is by giving preferences to designs which incorporate RE systems or require electricity (or a proportion of electricity) to be generated from renewable energy sources (EC, 2004; EU, 2011). Electricity produced from renewable energy sources refers to electricity produced by plants using only renewable energy sources as well as the proportion of electricity produced from renewable energy sources in hybrid plants also using conventional energy sources (EU, 2011). In this aspect, many EU’s public authorities are now procuring electricity from RE sources. Some related examples can be seen in the construction of school in Pembroke, Malta and hospital in Vienna, Austria. The use of on-site RE production is required in constructing new school buildings in Pembroke whilst the use of RE sources is one of the requirements in constructing new hospital in Vienna. Likewise, government procurement in Malaysia could also be used strategically to spur RE generation. This approach is in line with NREPAP where NREPAP suggests government to include the use of building integrated RE as a requirement in upgrading its federal buildings (KeTTHA, 2009). To achieve this, design elements for RE technology in particular BIPV, could be incorporated into the Malaysia’s government standard and cost guidelines and procedures. The preference to RE, RE technologies and the requirement for building integrated RE could also demonstrate the government’s commitment to RE, create demand for RE materials and enhance RE skills which in turn will encourage market entry of related businesses (KeTTHA, 2009).

Conclusion

Energy sustainability contributes greatly to Malaysia’s agenda to become high-income developed nation, sustainable and inclusive in the year 2020. Since time of abundant and low-priced resources that the people enjoyed in the past decade is coming to a full stop, the use of RE is one of the approaches in dealing with this situation. The implementation of GGP could serve as one of the solutions by utilizing the huge government spending as a market force to spur RE generation. In long term, widespread RE generation would ensure reliability and security of energy supply, reduce GHGs emission and enhance the people’s quality of life.

Acknowledgments

The authors would like to acknowledge the Ministry of Education of Malaysia and National University of Malaysia for providing Fundamental Research Grant Scheme (FRGS) on ‘Greening the Economy’ (FRGS/1/2012/SSO7/UKM/01/3) and Exploratory Research Grant Scheme (ERGS) on ‘The measurement of Oil Palm Economic Potential’ (ERGS/1/2013/SS07/UKM/01/1) which made this study possible. Both grants are headed by Emeritus Professor ChamhuriSiwar. Sincere gratitude also to Public Service Department of Malaysia for providing the scholarship under Federal Training Award Scheme to the first author.

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