Industry accounts for the second largest share of Malaysia’s primary energy demand, at 28% in 2017.¹³ The share of electricity in the sector’s final energy mix is also steadily increasing since 1990 reaching 50% share in 2019.⁵ 1.5°C compatible pathways show that electricity use in the sector could increase by up to 35% by 2030 and 61-73% by 2050. All scenarios see a rapid decline in direct CO₂ emissions from the industrial sector to 24 MCO₂/yr by 2030 and 4-7 MtCO₂/yr by 2050 from 2019 level of 50 MtCO₂/yr, mostly driven by an increased penetration of renewables in the energy mix and increased energy efficiency.

Primary energy demand in industry is mostly met by fossil fuels (65% in 2020), comprises of natural gas 32% and oil 25%. All analysed scenarios except one, show a peaking of the share of fossil fuels in the energy mix by 2025-30 and a declining trend after that to reach 35-40% share by 2050.

The share of industrial process emissions is 9% of total emissions (excl. LULUCF) in 2019and it has been increasing since 1990.¹⁴ 1.5°C compatible pathways show a declining trend of process emissions from 33 MtCO₂e/yr down to -2 to 19 MtCO₂e/yr by 2050.

To manage energy efficiency, the government proposed in its 2016 National Energy Efficiency Action Plan energy audits in large and medium sized industries and cogeneration in industries and commercial buildings. The Green Technology Master Plan projects a 50% increase in the number of green manufacturers from the 2015 level with increased adoption of green energy, green product certification and green industrial process.

¹ The Edge Markets. Environment ministry to develop LT-LEDS for UNFCCC consideration. The Edge Markets. (2021).

² Global Forest Watch. Malaysia Interactive Forest Map & Tree Cover Change Data. (2021).

³ WWF. Deforestation Fronts, Drivers and Responses in a Changing World. (WWF, 2021).

⁴ Malaysia Government. Report on Peninsular Malaysia Generation Development Plan 2020 (2021 – 2039). (2021).

⁵ IEA. Malaysia. International Energy Agency. (2021).

⁶ Ministry of Environment and Water. Malaysia Third Biennial Update Report to the UNFCCC. (2020).

⁷ Greenpeace. Southeast Asia Power Sector Scorecard.(2020).

⁸ British Malaysian Chamber of Commerce. BMCC Sector Report 2018/2019: Oil, Gas & Energy. (2018).

⁹ Susskind, L. et al. Breaking Out of Carbon Lock-In: Malaysia’s Path to Decarbonization. Front. Built Environ. 6, 21 (2020). doi:10.3389/fbuil.2020.00021/full

¹⁰ KeTTHA. Green Technology Master Plan Malaysia 2017-2030. (2017).

¹¹ Mustapa, S. I. & Bekhet, H. A. Analysis of CO2 emissions reduction in the Malaysian transportation sector: An optimisation approach. Energy Policy 89, 171–183 (2016).

¹² Shaikh, P. H. et al. Building energy for sustainable development in Malaysia: A review. Renew. Sustain. Energy Rev. 75, 1392–1403 (2017).

¹³ Suruhanjaya Tenaga (Energy Commission). Malaysia Energy Statistics Handbook 2019. (2019).

¹⁴ PIK. The PRIMAP-hist national historical emissions time series. (2021).

¹⁵ Lee, J. Affordable EVs in Malaysia – how cheap can electric cars be priced with zero import, excise and road tax? (2021).

¹⁶ Malaysia Government. Malaysia Third National Communication and Second Biennial Update Report to the UNFCCC. (2018).

¹⁷ Using Global Warming Potential AR4.

¹⁸ While global cost-effective pathways assessed by the IPCC Special Report 1.5°C provide useful guidance for an upper-limit of emissions trajectories for developed countries, they underestimate the feasible space for such countries to reach net zero earlier. The current generation of models tend to depend strongly on land-use sinks outside of currently developed countries and include fossil fuel use well beyond the time at which these could be phased out, compared to what is understood from bottom-up approaches. The scientific teams which provide these global pathways constantly improve the technologies represented in their models – and novel CDR technologies are now being included in new studies focused on deep mitigation scenarios meeting the Paris Agreement. A wide assessment database of these new scenarios is not yet available; thus, we rely on available scenarios which focus particularly on BECCS as a net-negative emission technology. Accordingly, we do not yet consider land-sector emissions (LULUCF) and other CDR approaches which developed countries will need to implement in order to counterbalance their remaining emissions and reach net zero GHG are not considered here due to data availability.

¹⁹ LULUCF emissions are projected to be -227 MtCO₂e in 2030 following a business-as-usual scenario reported in Malaysia’s Second Biennial Report.

²⁰ As stated in the NDC. However, Malaysia participated in the Clean Development Mechanism and Voluntary Carbon Market, but these are not accounted as national mitigation actions as noted in the Biennial Report 3.

²¹ Fuel-efficient vehicles is defined as hybrid, electric vehicles and alternatively fuelled vehicles such as Compressed Natural Gas (CNG), Liquefied Petroleum Gas (LPG), biodiesel, ethanol, hydrogen and fuel cell.

²² The total financial support required totals USD 71,900,000, in additional to technical and capacity building support.

²³ In some of the analysed pathways, the energy sector assumes already a certain amount of carbon dioxide removal technologies, in this case bioenergy carbon capture and storage (BECCS).