POSITION PAPER ON HYDROGEN ECONOMY
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Introduction
Malaysia’s initial discovery of oil and gas reserves in its waters in the late 60s and early 70s. Its strategic geographical position along important trade routes for seaborne energy trade had increased Malaysia’s global competitiveness in the energy industry. Oil and gas have contributed up to 20% of Malaysia’s total GDP and have since become a significant industry in Malaysia and Southeast Asia. Malaysia is the third-largest oil producer and has the third-highest reserves in Southeast Asia.
Renewable energy (RE) other than hydropower, such as biomass, biodiesel, biogas, solar and wind energy, could replace some of the fossil fuels in Malaysia’s fuel diversification plan. RE was added as the fifth fuel to the four-fuel mix for electricity generation in 2001, transforming the latter into the present five-fuel mix. The RE target of 5% of the total electricity generation by 2005 was not met. Only small-scale biomass and biogas power stations were deployed.
Although oil is still profitable to produce in Malaysia, there has been a gradual decline in oil production at major producing oil fields in the last decade. Natural gas is currently the largest contributor to Malaysia’s energy industry and accounted for about half of the country’s total supply and electricity generation.
However, since RE target could not be reached due to high cost, capacity and seasonal changes issues, as well as market uncertainties of solar energy, a Feed-in Tariff scheme for RE was implemented by Malaysia in 2011. This was done to attract RE investment by offering higher tariffs in the early years in order to pay back the capital investment quickly before the tariff dropped to prevailing industry rates. RE deployment was further accelerated in 2016 with the deployment of large-scale solar farms that also helped drop the costs of solar PV panels significantly.
Malaysia, along with the rest of the world, is fighting the threat of climate change due to global warming as a result of greenhouse gases (GHG)/carbon emissions from man-made sources, primarily from the utilisation of fossil fuels such as oil and gas. As an oil and gas producing country, Malaysia contributes directly to the global emissions of carbon through the utilisation of its oil and gas domestically, Malaysia also contributes indirectly to global carbon emission, albeit to a lower degree, through the export of its oil and gas to other countries. Since the widespread utilisation of fossil fuels in the world constitutes the largest contribution to global carbon emissions, there is cause for concern that the continuous use of oil and gas without adequate mitigations would continue to emit carbon for some time, eventually causing a worldwide climate disaster.
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To mitigate the large contribution of transportation to carbon emissions, biodiesel from palm oil was added to the transportation fuel mix in the form of 5% , 7% and 10% biodiesel blends with petroleum diesel, B5, B7 and B10 in 2010. However, its deployment is still relatively small because of the increased price of palm oil. Despite all the schemes being employed to accelerate the replacement of fossil fuels with RE in the last 5 years, Malaysia still far short of the target of carbon emission intensity reduction of 45% from 2005 level as committed at the COP21 Paris 2015. Alternative zero-emission nuclear energy is now no longer viable because of strong public opposition. However, Malaysia has a golden opportunity to deploy another zero-emission energy, called hydrogen energy, for which Malaysia has developed significant
