Shedding Coal: The Good, The Bad, The Ugly of Malaysia’s Coal Power Industry
Darshini Kandasamy & Edward Gomez
Who wants to talk about coal? Hardly anyone. But we have to. With the ever-increasing threat of climate change, global powers are moving away from “dirty” fossil fuels. Malaysia has repeatedly pledged to as well. But the clock is ticking.
Can Malaysia shed its dependence on coal fast enough to keep up with its own green promises? Malaysiakini zooms in on the business of coal energy in Malaysia.
THE United Nations (UN) calls it a "code red for humanity".
In a damning report to the world's governments, hundreds of its scientists warned of global warming beyond 2°C within this century.
Human activity had "unequivocally" changed Earth's climate on an "unprecedented" scale.
And unless immediate and drastic measures are taken to cut heat-trapping carbon dioxide (CO2) and other greenhouse gas emissions, more extreme weather changes and dire consequences are sure to follow. In fact, experts have said the effects of climate change are already here, even in Malaysia.
The International Panel on Climate Change (IPCC) report, released by the UN in August, places renewed urgency on the lofty goals of the 2015 Paris Agreement — signed by close to 200 countries, including Malaysia — to limit global warming to below 2°C, and preferably 1.5°C.
In fact, Malaysia made several pledges in 2009 and later in Paris in 2015 to conditionally and drastically cut its greenhouse gas emissions, ultimately promising to reduce emissions intensity by at least 35 percent in relation to 2005 levels, by 2030.
While efforts are underway, critics say not enough is being done to meet Malaysia’s ambitious decarbonisation plan. After all, coal, which is the biggest polluter of all fossil fuels, is the largest source of electricity in the country. The last coal-fired power plant is only expected to retire in 2044, over two decades away.
Seemingly responding to global pressure on climate change, the new government had last month followed up its 2015 plan with what critics say is a “vague” promise to become a carbon-neutral nation by 2050 at the earliest and to end the construction of new coal-fired plants.
Putrajaya has yet to follow this up with details.
So where do we stand today? Is the country any closer to meeting all its goals, or has it been more greenwashing, than green planning?
Coal power plants in Malaysia
A coal love affair
Despite the country’s long-term plan to reduce its dependence on coal, without a comprehensive blueprint, Malaysia will likely find it hard to shake its fossil fuel habit. If anything, consumption is growing.
That figure is expected to have grown even further, pushed in part by the commissioning of two new coal-fired power plants, Jimah East Power in Negeri Sembilan and Balingian in Sarawak, in 2019.
Based on publicly available data by federal and Sarawak energy agencies, last year’s coal consumption is estimated to be 42.9 million metric tonnes — almost two-fold from 2009 when Malaysia first made its CO2 pledge.
And some 94 percent of that was converted to electricity.
The large demand meant Malaysia has been importing more and more coal each year, especially in the peninsula.
While coal was once produced in West Malaysia, such as in Selangor’s Batu Arang, named after the large coal reserves found there by the British in the early 1900s, Sarawak is now the only place in Malaysia where it is mined.
The majority of coal produced in the East Malaysian state is used to generate electricity by state-owned Sarawak Energy Berhad (SEB) that is then fed into the state’s energy grid. Even so, 75 percent of Sarawak’s power currently comes from hydro. Coal is not mined or consumed for energy in Sabah.
Government-linked energy company Tenaga Nasional Berhad (TNB) is the dominant electric utility in Malaysia as well as the coal supplier to its own energy plants in the peninsula and to other independent power producers (IPPs), with some of its supply travelling from halfway across the world.
More than 63 percent of coal comes from neighbouring Indonesia followed by Australia (22 percent), Russia (14 percent), and South Africa (1 percent).
TNB spent some RM9.1 billion last year importing it. Yet, according to TNB’s own annual report for 2020, coal “has been and continues to be the cheapest source of fuel in Malaysia”.
The matter with coal
While coal may be the cheapest source of fuel, for now, it is certainly the dirtiest.
Simply put, of all the forms of fossil fuel, including natural gas, oil and petroleum, coal releases the most CO2, which, in turn, is the most abundant greenhouse gas.
Yet coal fuel remains the most dominant energy source worldwide.
According to a recently published study in the peer-reviewed scientific journal Environmental Research Letters, just five percent of the world’s power plants — all coal-fired — contribute 73 percent of global carbon emissions by the energy sector.
True, the main culprits, i.e. top energy carbon emitters are centred in the US, Europe, East Asia, and India. Not Malaysia.
The Asian Development Bank puts Malaysia along with Indonesia, the Philippines, Thailand, and Vietnam, as the top five emitters, collectively responsible for 90 percent of emissions in the Southeast Asia region.
Even so, as pointed out by former energy, science, technology, environment and climate change minister Yeo Bee Yin, the amount of greenhouse gas emitted by Malaysia is not going to significantly move the needle on a global scale.
Hence, she said, we’re “just not going to change the world” no matter how much we cut. But, Yeo said, that is no reason not to.
“The concept is very simple...we are going into it to do our part for the environment,” she told Malaysiakini.
However, reducing Malaysia’s coal-carbon footprint is also necessary beyond our moral and ethical duty.
Life and death
Climate change isn’t the only driving force behind the global need to divest from coal. It is literally a matter of life and death.
A study in the journal Cardiovascular Research labelled fossil-fuel caused air pollution as an anthropogenic health risk. This term means it is induced by humans.
Using 2015 data, the study found air pollution to be a “major global health risk factor”. More so than AIDS/HIV, parasitic or most vector-borne diseases.
“It exceeds the (loss of life expectancy) due to all forms of violence by an order of magnitude and that of smoking by a third.”
A Harvard study estimated that 8.7 million people died around the world, notably in China, India, Eastern North America, Europe and Southeast Asia from fossil fuel-related pollution in 2018.
That’s 18 percent of global deaths that year, or about one in every five deaths.
Meanwhile, the International Energy Agency has projected over 614,000 premature deaths from air pollution by 2040 in Southeast Asia, the region with the fastest-growing electricity demand.
The deaths are cut considerably by 63.2 percent if more sustainable energy practices, including those aligned with the Paris Agreement, are put in place.
Projected 614,135 premature deaths from air pollution by 2040 in Southeast Asia
The number would be reduced to 226,036 with sustainable energy practices
= 10,000 premature deaths
But what is causing all this?
Power plants emit toxic and carcinogenic pollutants including nitrogen dioxide (NO2), carbon monoxide (CO) and sulfur dioxide (SO2) during the coal-burning process.
But the main culprit, a major silent killer, is the fine particles known as PM2.5 which when inhaled, can settle deep in the lungs, potentially leading to cancer, heart attacks, asthma and other diseases, and fatalities.
It is among six pollutants, which concentration is regulated by Malaysia’s Department of Environment (DOE) when monitoring air quality.
While Malaysiakini has been unable to find any reports on premature deaths or adverse health impacts due to fossil fuel-linked air pollution in the country, local villagers in coal plant towns have long complained of the pollution.
A local study of a hospital in KL published earlier this year also suggested how PM2.5 particulates are carriers of the Covid-19 virus.
It should be noted, however, that thermal plants are not the only source of these harmful particulates. Other sources of these emissions are vehicles and diesel-powered equipment.
And it is not just air pollution. Local fishermen, too, have previously raised the matter of the cost of coal on their livelihood as coal dust dumping and spillage by exposed coal barges polluted the waters off the Straits of Malacca.
For Aroe Ajoeni, another ugly side to the coal energy business is the often unaddressed impact of coal mining on the environment and the local communities.
The researcher for Malaysia’s climate group Klima Action Malaysia (Kamy) comes from Kalimantan, where Malaysia sources a lot of its coal.
She recalls family members who were impacted by floods, largely believed to be linked to mining activities there.
Coal mining is among the causes believed to be behind the massive flooding in South Kalimantan earlier this year, which led to over 100,000 people being displaced.
“Coal mining (in Indonesia) is crazy. It’s rampant and it directly affects communities there,” she said.
The problem, she added, is compounded by the fact that it is incredibly difficult to calculate the sheer impact this has on the population.
In Sarawak, which has active mining operations, three miners were killed and scores of others injured at an explosion at the underground Selantik mines in Sri Aman back in 2014.
Such explosions, while rare, can sometimes occur due to the build-up of combustible methane gas and coal dust.
What exactly has Malaysia promised, and what is being done?
Call it ambitious, but Malaysia’s shift from a coal-minded developing nation to a coal-conscious one began years before the Paris Agreement was ratified.
In 2009, during the UN Copenhagen Summit on climate change, then-prime minister Najib Abdul Razak boldly proclaimed the country’s intention to make “credible” cuts of 40 percent emissions intensity of GDP by 2020 compared to 2005 levels.
He followed this up with the 2015 commitment to cut greenhouse emissions intensity of GDP by 35 - 45 percent by 2030.
“I am not just going to call on the developed world. I am going to commit Malaysia and I am going to commit Malaysia to very credible cuts, which means we have to spend, which we will do.” - Najib Abdul Razak
The move earned Najib bouquets from other countries for leading the way among developing and Southeast Asian nations.
But it did earn him brickbats as well.
Among those throwing brickbats were Sharan Raj, National Coordinator for Parti Sosialis Malaysia’s (PSM) Bureau for Environment and Climate Crisis, who has accused Najib and subsequent governments of playing a “dirty trick”, by relying on statistical manipulation that “looks good on paper”.
The key phrase here is “emissions intensity of GDP”. What this simply means is that from 2009 to last year, Malaysia has coupled its absolute carbon emission with its nominal economical size.
Sharan said the former premier had set a bad precedent on the global stage by coupling greenhouse emissions reduction to the country’s GDP instead of total or absolute emissions.
This is because the benchmark does not address the actual concentration of the harmful gasses that make their way into the atmosphere.
“As long as Malaysia’s GDP keeps increasing, as long as we don’t hit a recession, it will be easier for Malaysia to hit the (emissions intensity of GDP) set target.
“We can appear to be hitting our emission goals while actually being CO2 emission positive or showing carbon emission growth,” he said.
Note that in August this year, the Muhyiddin Yassin administration updated the 2015 commitment to 45 percent to GDP, without conditions.
2015 Paris Agreement
An international treaty on climate change involving 196 countries. It goes further than the Kyoto Protocol (1997) that did not require developing countries to reduce greenhouse gas (GHG) emissions.
- Involves a long-term commitment to limit the rise in global temperatures to below 2°C while pursuing efforts to limit them further to 1.5°C.
- To achieve the temperature goal, GHG emissions must peak as soon as possible. This will take longer for developing countries.
- Participating countries must prepare, maintain and publish comprehensive national climate action plans (Nationally Determined Contributions or NDCs) for reducing emissions.
- Emission reduction targets should be greater than current ones and be reviewed and revised every five years. Countries must also work towards decreasing carbon output.
- Developed nations should contribute US$100bil yearly by 2020 (to be extended until 2025) to support developing nations in combatting climate change.
To cut GHG emissions by 45% by 2030 in relation to 2005 levels. On this, 35% is set on an unconditional basis with 10% dependent upon receipt of climate financing, technology transfer, and capacity building from developed countries.
Emissions in base year
288,663 Gg CO2eq
GDP in base year
Time frame for implementation
Clean-er coal energy and renewable momentum
Of all the missteps, one step made in the right direction was to make the coal energy-producing process somewhat ‘cleaner’.To this end, Malaysia has four ultra-supercritical coal-fired plants; modern designs that rely on extremely high temperature and water pressure to allow for the burning of less coal per megawatt-hour.
The result? Increased efficiency (up to 40 percent) with lower emissions of carbon and other pollutants, and less waste.
The RM6 billion Manjung 4 station in Perak, which began operating in 2016, was the first of such high-efficiency supercritical power plants in Southeast Asia. It was followed by Manjung 5 a few years later.
The other two über-efficient ultra-supercritical plants are the Tanjung Bin Energy in Johor and the Jimah East Power in Negeri Sembilan.
The Najib administration also saw a concrete push towards increasing the use of renewable energy (RE).
Launched in 2009, the National Renewable Energy Policy and Action Plan — which was later supported by the Renewable Energy Act 2011 and the establishment of the Sustainable Energy Development Authority (Seda) — sought to swell the contribution of renewables in generating power for the country.
RE had already been considered as a viable energy source about a decade earlier. However, the idea with the 2009 policy was to reduce reliance on fossil fuels by increasing the use of cleaner energy sources like solar, biowaste and water to power homes and industries.
The efforts, to the government’s credit, have not been mere rhetoric.
Ten years ago, RE accounted for less than one percent of Malaysia’s power mix. However, that figure has since grown, with the government now focused on a target of 31 percent of installed RE capacity by 2025.
While lauding the move towards including more renewable energy in Malaysia’s power generation mix, PSM’s Sharan, is, nevertheless, critical of the government’s target.
This is because “installed capacity” refers to the maximum output energy facilities can potentially produce, but does not refer to what is actually generated.
“Installed capacity is an energy term that’s being used to shift the goalposts.
“It doesn’t mean that Malaysia will be generating 31 percent renewable energy by 2025. It means we will have the capacity to do it. Whether we do or not, isn’t fixed.”
He offered an analogy:
In fact, power projections for the next 20 years clearly show fossil fuels, and in particular coal, as still playing a dominant role in Malaysia’s energy matrix.
The Peninsular Malaysia Generational Development Plan 2020 also makes mention of 2.8GW of new coal-fired capacity which will replace Malaysia’s retiring coal-fired fleet from 2031.
When tabling the 12th Malaysia Plan last month, Prime Minister Ismail Sabri Yaakob reiterated an earlier assurance that no new coal-fired plants would be built. Hence, the additional coal energy capacity could mean an extension to the operations of existing plants.
So why not completely remove fossil fuels from the mix?
First, Malaysia would need to cease operations of its fleet of power stations, which is not an immediate option considering existing power purchase agreements.
Power purchase agreements are the long-term electricity supply agreements between the independent power producers, which operate the power plants generating and supplying the national power grid, and the government.
Under current agreements, the majority of active coal-thermal power stations have one to two decades left in service before they are retired.
Second, as former minister Yeo, who headed the portfolio under the former Pakatan Harapan government, explained, we must consider the base load.
“As a policymaker, especially on planning...(the) generation mix, we have to always take care of three things — sustainability, affordability and security.
“In power planning, you need to have a base load energy (source, which) means electricity you must always have. Solar, for example, is intermittent, so it cannot replace a base load.
“So until and unless biomass, biogas or hydro can actually meet the base load, we will not be completely free from fossil fuels.”
But while RE may not be a stable base load energy, at least for now, Yeo brings up the possibility of natural gas as a bridge fuel.
“Gas is actually 30 percent less carbon-intensive than coal,” she claimed.
But is it that simple?
Natural gas: Bridging fuel or more of the same?
Natural gas has long been touted by advocates as a transition fuel to renewables. The idea is to replace dirtier energy sources like coal with gas, and then gradually decrease reliance on the latter.
This, proponents say, will help reduce greenhouse gas emissions in the short term.
To this end, Ismail Sabri last month said that "cleaner electricity generation will be implemented through the operation of several gas power plants in Peninsular Malaysia to replace coal-fired power plants."
But not everyone agrees that gas is the way to go. Some former proponents, like PSM’s Sharan, have changed their minds.
“That argument was made pre-Covid. (And) what has happened ever since then is there's been a very steady drop in the price of renewable energy and (we have seen) the rapid global adoption of renewable and green technologies by countries.”
Renewables have indeed decreased steadily in cost in recent years and continued to plummet in 2020. Furthermore, what makes clean energy appealing is the lack of recurring costs for energy supply.
For example, while a coal-fired plant would see recurring expenditure for the purchase of coal, no similar cost for sunlight would be incurred by a solar power plant.
Fast developing technology and innovation, too, are expected to improve our green energy. One recent Australian study in particular, which ran thousands of computer simulations, found that a mix of RE — like solar, biofuel and hydro — was more than capable of solving the country’s base load needs.
The downward trend in the cost of renewables was noted by TNB in its 2020 annual report when remarking on more sustainable energy strategies the power company’s adopting.
“The levelised cost of electricity from solar is now cheaper than gas, and could very well be at par with coal in the near future.
“As we approach price parity, our energy transition will not just be environmentally sound but also economically viable.”
But the lure and cost-effectiveness of renewables aside, there is another problem with advocating for gas as a transition fuel to carbon-neutral options, said Tim Buckley, who is an expert on energy finance.
It may not be necessarily cleaner.
“For a decade or more, we've had the global fossil gas industry telling us that gas is a transition fuel...but is it today?
“If you need to reduce emissions, you don’t reduce emissions by investing in more emissions,” said Buckley, who is attached to the Australia/South Asia division of the Institute for Energy Economics and Financial Analysis (IEEFA).
Natural gas’ main component is methane, a greenhouse gas that, while not as plentiful in the atmosphere as CO2, is 25 times more potent at trapping heat.
Buckley said little research had been done previously to track methane pollution. But satellite verification now makes it easier to detect the source of emissions.
“You can see that they're coming from coal mines. And you can see they're coming from leaks in gas pipelines. You can track it now to the nearest metre square. So we know exactly who’s doing what.”
Yeo concedes to the point somewhat.
“The problem with gas is that gas can be leaked in the transportation, in the pipes...methane is a much more potent greenhouse gas than carbon dioxide. We need to look into these fugitive emissions (accidental leaks) and how much is being released,” she said.
“(However) at this moment, there is a general assumption in the power sector that gas is still cleaner (than coal). Then again, if gas is not cleaner, we still need to think about the base load.
“Hydro can be a good base load, as long as you don't sink a big rainforest.”
Is close enough good enough?
By all accounts, Malaysia is on course to reach its commitments under the Paris Agreement. However, there is a feeling that in terms of coal consumption, the country has hid behind the world’s biggest economies for far too long.
“When you take out India and China and you start comparing us with Vietnam and Indonesia, the growth rate of coal here is actually quite exponential.
“We have been hiding behind the big dragon China. And that is actually quite insulting because, in terms of our energy and financial capacity, we can actually do better,” said PSM’s Sharan.
So should net-zero carbon emissions be the real target? Net-zero carbon emission is when the amount of carbon released into the atmosphere is no more than that removed.
The past governments, including the recently collapsed Muhyiddin Yassin administration, had refrained from committing to a net-zero target.
But even China, the world’s largest carbon emitter, has set its sights towards zero carbon and Malaysia’s fuel producer Petronas eyes a similar target. Hence a realignment of the country’s commitments is the next natural step.
This is why Ismail Sabri’s 12th Malaysian Plan speech, where he announced the net zero grand plan, may seem timely. Yet, critics were fast to point out that he failed to commit to a deadline. Instead, he said Malaysia would become a carbon-neutral country by as early as 2050.
Additionally, checks on the actual 12th Malaysia Plan document revealed no mention of a deadline beyond saying in the “long term”.
PSM’s Sharan points out that there is therefore nothing binding businesses, industries and the government. This would have been very different if he government replaced the words “at the earliest” with “at the latest”, he said.
“At this rate, even (the year) 2100 is acceptable.
“(Replacing the phrase from “at the earliest” to “at the latest”) would spur everyone to align because they know the government will be enforcing this.”
But experts also view some parts of the five-year Malaysian Plan kindly. For example, the plan to introduce a comprehensive national energy policy and roadmap, which will include the introduction of carbon pricing, carbon tax and other measures.
Such measures would be in line with what energy experts have been calling for to encourage this decarbonisation strategy among industry players.
Renato Lima de Oliveira, an assistant professor at Asia School of Business and an expert on energy and environmental politics, said this was part of the “carrot and stick” that other countries have adopted.
“You have policies to promote renewables, such as net metering, feed-in tariffs, large scale solar options, tax credit subsidies and you also have policies to discourage fossil fuels.”
But like the net zero plan, the devil is in the details. Specific carbon reduction measures by Putrajaya are only set to be announced after 2022.
If Malaysia needs more motivation to make good of its shiny new promises, then the best bet, according to energy finance expert Buckley, is to follow the money.
“(So) it’s not about closing a whole lot of plants across Malaysia in the next five years. It’s about redirecting new capital to the (right) solutions, which in turn then buys you 10, 20 years for transition,” Buckley said.
Yeo agrees, noting that the move to greener portfolios was almost a natural next step.
“It is very natural because it is a green industry that we can grow. And if you see our RE target, it actually will give a net job creation of 50,000 new green jobs. Then it (can) actually bring in investments of RM33 billion.
“So you are actually talking about a green industry and the whole ecosystem that we can build,” she said.
Past and Present: Malaysia’s key energy policies
National Energy Policy
In response to the global oil crisis, Malaysia formulates its first formal energy policy.
The core purposes are to ensure adequate energy supply; efficient utilisation; and minimise the negative impacts of energy production on the environment.
This is supplemented by the National Depletion Policy in 1980 to control the depletion of oil reserves.1979
Four-Fuel Diversification Policy
In line with the NDP, the diversification policy aims at preventing over-dependence on oil as the main energy source.
Instead, it promotes widening the energy base to include gas, hydropower and coal.
The policy is recalibrated as the Five-Fuel Diversification Policy in 2000 to include RE in the energy mix.1981
National Policy On Climate Change
Launched just prior to the 10th Malaysia Plan, the NPCC’s aims to ensure Malaysia’s development was in line with sustainability and climate goals.
Later this year, at the United Nations Climate Change Conference, Malaysia would pledge to reduce carbon emissions by up to 40% by 2020.2009
National Renewable Energy Policy and Action Plan
The principal objective of the policy is to increase RE in the power generation mix and to facilitate the growth of the RE industry.
The action plan is supported by the Renewable Energy Act 2011 and Sustainable Energy Development Authority Act 2011, which establishes the Sustainable Energy Development Authority (SEDA).
SEDA is tasked with, among other things, promoting sustainable energy efforts and energy-efficient technologies.2010
10th Malaysia Plan & New Energy Policy
Contained within the 10th Malaysia Plan, the NEP introduces a broad range of initiatives.
Essentially, the plan is divided into five pillars which focuses on governance, change management, energy pricing, energy efficiency and energy supply.
The last of these expand on the National Renewable Energy Policy and Action Plan and Renewable Energy Act.2011-2015
Malaysian Electricity Supply Industry 2.0
MESI 2.0 aims to reform power generation and better promote the use of green energy while still honouring current power purchase agreements.
A key reform sees the government aim for RE to make up 20% of the energy mix by 2025.2019
Peninsular Malaysia Generation Development Plan 2020
Formulated as an energy development plan for Malaysia until 2039, the PMGDP revises the 20% by 2025 RE mix target to 31%.
The plan also targets a reduction in gas and coal capacity, with coal’s share projected to fall to 22% by 2039.2021 – 2039
12th Malaysia Plan
Tabled in Sept 2021, this reaffirms Malaysia’s 31% RE capacity target while promising the introduction of enabling instruments for climate action. It also moots a new streamlined, comprehensive National Energy Policy.
Curiously, while PM Ismail Sabri Yaakob’s speech set out the aspiration for Malaysia to become a carbon neutral country by 2050 at the earliest, the official document makes no mention of this. Also not mentioned is the promise to cease the building of new coal-fired plants.2021 - 2025
Where to from here?
The clearest answer to ridding ourselves of dirty coal, then, appears to be a concrete policy push towards clean energy. Yet, despite the latest government announcement, clear and definite plans to improve the country’s commitments to climate change are still lacking.
More needs to be done, specifically in the formulation of laws that cannot easily be ignored by changing ministers or governments.
“A precedent from (former prime minister Dr) Mahathir Mohamad’s time was that a lot of these policies were introduced as executive policy.
“There is no statutory backing. And without acts of law to specify targets, when the next minister comes in, he or she doesn’t have to follow,” PSM’s Sharan said.
But pressure groups and grassroots movements could, perhaps, instigate and influence more robust changes; just like in more developed countries.
“A key thing within the political economy of any transition has been societal pressure. If you see where these policies have been adopted most, you will see a lot of activity coming from NGOs and from green parties, pushing society in one direction,” Lima de Olivera noted.
Aroe of Kamy agrees, noting that climate justice groups in the region are aligning and collaborating towards this end.
“Kamy works closely with climate justice groups. We’re slowly building a new loose coalition called the Southeast Asia Climate Alliance.
At the end, she noted that there’s no silver bullet out of the coal dilemma.
And while it’s important for Malaysia to set the right targets, “we don’t need empty promises”.
Editor’s Note: Malaysiakini contacted the Sustainable Energy Development Authority (Seda) and the Energy and Natural Resources Ministry for comment. Seda has said it was compiling data and would be issuing a response soon, while ministry officials were unable to comment due to a change in government, at the time of reporting.
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