Fuelling energy security via efficiency

 Previous and current energy crises have underscored the critical role of reducing energy consumption through energy-efficient practices.

From the energy transition and water transformation ministry (Petra)

The current geopolitical uncertainty has caused an unprecedented global energy crisis, with immense repercussions felt across nations, from multinationals to micro-businesses, NGOs, government institutions and the people on the street.

The 1970s saw similar disruptive energy crises, and the resulting economic recession lasted well into the 1980s. Many industrialised economies suffered but have since introduced robust measures to guard against similar shocks.

The EU, US, Japan and most recently China have pursued aggressive energy security policies, including stockpiling fuel, exploring new petroleum sources, and pursuing alternative energy sources such as renewable energy and nuclear power.

Although the 2020 Covid-19 crisis was health-focused, the impact on the energy sector was also significant. To help consumers, the government provided RM2.6 billion in electricity subsidies between 2020 and 2021, as households experienced higher bills during the period.

Malaysia was not shielded from the effects of the crisis. And as the saying goes, better safe than sorry – Malaysia needs to be well-prepared for any future crisis.

The essential ‘fuel’ for energy security

Besides securing energy supply, the previous and current energy crises have underscored the critical role of reducing energy consumption through energy-efficient practices.

Energy efficiency has been described as the “first fuel”, and in times of crises, must be positioned as the essential fuel for energy security.

Energy security is not the exclusive purview of nations and leaders at international forums; it is a lifeline for the entire supply chain and users. All individuals, businesses and governments need access to an affordable, uninterrupted energy supply.

Govt empowers adoption of energy efficiency

For governments, supply measures such as stockpiling fuels, exploring renewable energy and finding new fossil fuel sources, coupled with effective demand management, are important.

Nonetheless, this crisis has shown that energy efficiency is crucial to weathering these tumultuous times.

With consistent and well-planned execution of energy efficiency policies that target lower consumption, a nation can boost resilience and better cushion itself from the effects of energy supply disruptions.

Energy efficiency reduces overall energy demand and dependency on imported fuels while helping manage limited natural resources. Without energy efficiency policies, economies’ agility to withstand these energy shocks is reduced.

To ensure that energy efficiency policies can become an effective strategy for energy security, a sustainable fund must accompany any policy instrument or action plan. Thailand, Singapore and Japan have good track records in energy efficiency adoption due to readily available funding.

An economy’s energy use can be measured through energy intensity, a metric that measures the energy used to produce a unit of economic output.

For example, Japan – one of the most energy-efficient countries in the world – uses 65.2kg of oil equivalent for every US$1,000 of GDP, while Thailand uses 87.4kg and Malaysia 91.6kg. This shows that a lot more can be done to improve Malaysia’s energy efficiency.

In Malaysia, the National Energy Efficiency Action Plan 2016-2025 (NEEAP) was implemented to drive energy efficiency initiatives in the industrial, commercial and domestic sectors.

It saved 60,886 GWh of electricity over a 10-year period, exceeding the initial target of 52,233 GWh. This is equivalent to a 35.6 million tonne reduction in carbon dioxide gas emissions, with an estimated RM16.1 billion in savings.

The new Energy Efficiency and Conservation Act 2024 provides the legal muscle for Malaysia to regulate the various sectors in implementing energy efficiency initiatives, directly supporting the NEEAP.

Prioritising energy efficiency makes business sense

For businesses to thrive and survive in both peace and crisis, investing in energy efficiency measures and technologies is a must. Energy efficiency reduces business vulnerability as lower energy demand means less exposure to supply disruptions and price volatility.

Before investing in energy efficiency, businesses are encouraged to conduct energy audits to gauge their actual energy consumption and diagnose potential leaks in their systems.

These audits allow businesses to get the most out of their energy savings investment. In Malaysia, the government provides incentives for industries and commercial building owners to conduct energy audits through the Energy Audit Conditional Grants (EACG) programme, which has been a mainstay of three consecutive Malaysia Plans.

Some may argue that investing in energy efficiency is too expensive. But in the long run, the economic and non-economic benefits of energy efficiency outweigh the initial investment.

Data gathered from EACG recipients shows that most returns on investment and payback periods for energy savings investments are attractive indeed.

Nudging individuals to choose energy efficiency

In the end, energy security is for everyone. Everyone has specific energy needs, and every sector requires energy.

Currently, people’s energy-hungry lifestyles demand a constant supply of energy. Therefore, shifting their mindset and behaviour is the precursor to adopting energy efficient lifestyles.

The current energy crisis is already teaching individuals the importance of energy and its real cost. Building on this growing awareness, there must be a concerted effort to shift people’s behaviour towards energy-efficient practices.

A key initiative to achieve this is the Sustainability Achieved Via Energy Efficiency programme and its successor, NUR@Petra.

These programmes provide instant rebates to consumers who opt to buy four and five-star energy efficient equipment labelled by the Energy Commission. These initiatives under Petra are a great example of how incentives can spur awareness and behavioural change.

Keeping the energy efficiency engine running

In times of energy crisis, let’s not be so busy doing the urgent things that we don’t have time to do what’s important.

Yes, we need to ensure that our fuel supply is adequate and affordable, but we must also enhance our demand management strategies, as well as increase energy efficiency efforts at all levels: from governments to businesses and individuals. - FMT

The energy transition and water transformation ministry, or Petra, oversees Malaysia’s energy sector.

The views expressed are those of the writer and do not necessarily reflect those of MMKtT.