Green Economy

:
Foundation and Emerging Influence

Hezri Adnan, Ph.D
Avillion Legacy, Malacca, 7-9 October Rio+20 Kick Off Workshop

Presentation Outline
1. 2. 3. 4. 5. Debate on ‘green’ ideas & products Approach to green economy Key concepts of green economy transition Political acceptability of green economy Development of ‘green economy’ in Malaysia

Green Economy Transition

OLD OR NEW DEBATE?

in the USA . NVCA 2009. NEF 2009). – An increasing number of major industrial and service groups are diversifying and investing in cleantech and renewable energy sectors (Fritz-Morgenthal et al. . IEA 2008. 2009. Europe and developing countries (UNEP/NEF 2009. 2009).Growing Green Investment • The total world market for environmental products and services is currently estimated at around $1370 billion. Payton and Kneller 2009. • Several indicators confirm these forecasts. ethical funds and pension funds increasingly invest in green business (Cleantech Network 2007). – A rise in the number and size of stock market operations in these sectors. Makower et al. – Venture capital firms. and is set to double by 2020 (UNEP/ILO 2008). NEF 2009).

Growing Green Investment • South Korea embraces a ‘low carbon green growth’ vision with USD31 billion allocations to fund research in 27 green technologies. • Green New Deal: government-led investment in energy efficiency – Green banking – National economic stimulus package adopted in late 2008 & early 2009 had a ‘green investment’ component .

and move towards a sustainable low-carbon economy.The Green Economy Debate • Driven by the 3 F Crises. industrial competitiveness. • Creating the Next Industrial Revolution – The globalisation of the market economy often makes technical change and its diffusion seem inevitable. pointing to weakness of current economic system • The world needs to diversify from fossil fuels. – – How to break out of the current lock-in to fossil fuels? What are the most promising ways forward? • The low carbon goal recalls the complex relationship between the triad • sustainable development. and technological change. – It is unlikely for the market to deliver a sustainable energy future by itself – Indeed the world is seeing a race for leadership in the low-carbon age .

New buzzwords Green Economy Green Wave Green Technology • Green growth (Korea [low carbon. Cambodia) • Green job (UN Labour) • Green collar economy • Firm level innovation and efficiency • Greener supply chain • WaveRiders • Not only clean technology • Governance of sustainable technology • New Industrial Revolution . green growth].

while ensuring that natural assets continue to provide the resources and environmental services on which our well-being relies” . acknowledging that “green and growth can go hand in hand” by “fostering economic growth and development.International GE Formulation 1 • The Organisation for Economic Co-operation and Development (OECD) promotes ‘green growth’.

a green economy is “one which is low carbon. . while significantly reducing environmental risks and ecological scarcities”. resource efficient and socially inclusive”. For UNEP.International GE Formulation 2 • UNEP makes a macroeconomic case for jobs and output • Towards a Green Economy (UNEP 2011) presents a working definition of a green economy “as one that results in improved human well-being and social equity.

UNESCAP identified four pillars for the transition to a greener growth namely: eco-tax reform. sustainable infrastructure. the greening of business.International GE Formulation 3 • The basic principles for greening growth in UNESCAP countries are quality and ecoefficiency of economic growth as well as environmental sustainability vis-à-vis environmental performance. and sustainable consumption .

UNESCAP . mimicking nature Yesterday Pollution Control • Effluent management • Produce more with fewer resources Source: Ekins.Steps to Greening the Economy Future Tomorrow Today Ecoeffectiveness Ecoefficiency • Production without pollution and environmental degradation Sustainable Economy • Cradle-tocradle resource use within environmental limits.

since greener growth would also ensure that planet resources are available to develop the poorest countries and their populations. … The framing of the problem is mainly in terms of allocation. and to promote justice. to fight against poverty. arguing that proposed solutions will contribute to economic recovery. which seeks solutions through the well-rehearsed pursuit of greater resource” Bina and La Camera 2011 .Common approach • “All responses subscribe to mainstream economic thinking. a traditional and a central concern of mainstream economics.

Green Economy Transition KEY CONCEPTS .

Old and new ‘greening’ Hezri & Ghazali 2011 .

Key Ideas • Redefinition of wealth. creating less waste and reducing social disparities” (UNEP) . from quantity to quality – What are the conditions for the compatibility between economic growth and environmental sustainability? • New philosophy – ecology as a productive force • A more constructive role of technology • Greening the economy refers to the process of: – “reconfiguring businesses and infrastructure to deliver better returns on natural. extracting and using less natural resources. human and economic capital investments while at the same time reducing GHG emissions.

Pillars of Green Economy Sustainable Infrastructure Greening of business & industry Soft Energy Path Sustainable Consumption Green Economy Innovation .

The 2001 SONY Playstation ‘Cadmium Crisis’.g. cost $130m Source: Esty & Winston 2006. From Green to Gold Ford IBM 13 Holcim 14 STM Microelectronics 15 Alcan Starbucks Intel .Threaten the planet’s well-being Companies face a growing spectrum of stakeholders who are concerned about the environment NEW LOGIC: Recognition the business strategy of using the environmental lens to promote innovation WaveRiders International 1 2 3 4 5 6 7 BP Shell Toyota Lafarge Sony Unilever BASF USA Johnson & Johnson Baxter DuPont 3M Hewlett-Packard Interface Nike 8 9 ABB Novo Nordisk Dow Proctor & Gamble 10 Stora Enso 11 Philips SC Johnson Kodak 12 Bayer E.Realign markets 3.Green Wave Can commerce lead us to sustainable society? When does it pay to be green? PRESSURE: The limits of the natural world could: 1.Constrain business operations 2.

e.Criticisms on green economy 1. and debt rescheduling or debt relief . loans. the strategy of using environment for trade protection Not limit the policy space or by enforcing technical standards that their exporters cannot meet Not impose new conditionality on developing countries for aid. Trade barrier or ‘green’ protectionism. i.

Greenwashing – not all ‘green’ is green 5. Social dimensions – justice – take a back seat . Intensify technology transfer and its attendant problems – Technology transfer is still a ‘stuck issue’ in international negotiations Poverty eradication objective and improving rural welfare 3. where quantitative growth is still key 6.Criticisms on green economy 2. Urban bias and rural vulnerability – 4. Business-as-usual.

Australia. Senegal. NGOs. Cuba. Ecuador. USA. Japan. Indonesia. Mexico.Country Positions Following Prepcom I Supportive: Barbados. UNEP. Local Authorities Sceptical/Negative: Bolivia. Indigenous Peoples . EU. Republic of Korea. Workers and Trade Unions Unclear: Argentina. Mauritius. Colombia. Egypt. Sweden. Switzerland. G77 and China. Brazil. UNIDO. FAO. Women. Norway. Uruguay. China.

Transition to Green Economy MALAYSIAN CASE STUDY .

Total CO2 Emissions in Malaysia by Sectors .

Policy Challenge How to manage deep change on a wide scale throughout Malaysia? what obstacles have to be negotiated? what means have we to negotiate them? .

solar and mini hydro.Policy Direction for Renewable Energy The Malaysian energy sector is still heavily dependent on non-renewable fuel such as fossil fuels and natural gas as a source of energy • The Seventh (7th MP) – Renewable energy was made the fifth fuel in the energy mix together with oil. coal and hydro • The Eighth (8th MP) – In-house biomass-based cogeneration for the production of electricity. especially through the implementation of Clean Development Mechanism (CDM) projects. municipal waste. – By 2010. and – Promotion of co-operation between government agencies and private institutions • The Ninth Malaysia Plan (9th MP) – Development of other RE sources such as stand alone systems of solar hybrid and Municipal Solid Waste (MSW). biogas. – Extension of financial and fiscal incentives for as biomass. the target for electricity generation from RE resources was set at 300MW in Peninsular Malaysia and 50MW in Sabah . gas.

.Fiscal Incentives for Renewable Energy 2003 • Pioneer status and Investment Tax Allowances incentives for biomass extended to include the usage of hydro electric power of not more than 10 megawatts as well as to solar energy 2004 • Incentives for existing companies using oil palm biomass with the following: Pioneer Status with tax exemption of 100% for 10 years on the increased income from reinvestment. and Investment Tax Allowance of 100% for 5 years on additional investment 2005 • Capital allowance for expenses incurred by companies in generating energy from renewable and environment friendly resources for their own use be reduced from between 4 and 8 years to one year.

. 2007 • Bank Pembangunan established the Biodiesel fund of RM 500 Million to further develop Malaysia’s Biodiesel Industry 2009 • Pioneer Status with income tax exemption of 100% of statutory income for 10 years. and sales tax on locally manufactured solar heating system equipment.Fiscal Incentives for Renewable Energy 2006 • Tax exemption under Pioneer Status from 70% to 100% for 10 years. The allowance to be set-off against 100% of statutory income for each year of assessment. and • Exemption of import duty and sales tax on solar photovoltaic system equipment. and the rate of Investment Tax Allowance from 60% to 100% for five years. or • Investment Tax Allowance of 100%.

a 240 – Projection as provided by KPKT Source: MGTC .Renewable Energy Resources Potential RE Resource Palm oil EFB Potential (MW) 2000-3000 – In consideration that the EFB is fully utilised for power generation only 480 Biogas from POME Hydro Solar PV Landfill gas MSW 20.000 Limited by production capacity of PV panels and financial resources n.

Objectives are to promote the growth of small power generation plants that utilise RE and to facilitate the implementation of grid connected RE. Tenaga Nasional Bhd and Sabah Electricity Sdn Bhd (SESB) under a 21-year license agreement. including biomass. – RE project developers can sell up to 10 MW of their electricity output to the stateowned electricity utility. but the maximum capacity that will be allowed for power export to the distribution grid must not be more than 10 MW. are allowed. solar. – Under SREP. biogas. municipal waste. SREP was launched on 11 May 2001.Small Renewable Energy Power Programme (SREP) • SREP activities are targeted at Peninsular Malaysia and Sabah.3% was achieved . mini-hydro and wind. Only 0. the utilisation of all types of RE. • • SREP target: to generate 5% or 600MW of the country’s electricity from RE by 2005. as SREP is a federal government initiative and the federal government has no jurisdiction over the electricity industry in Sarawak. – A power plant can be more than 10 MW in size.

5MW 1 2MW 2 Approved Projects (yet to be licensed) 10 61.Small Renewable Energy Power Programme (SREP) Status of SREP Projects in Malaysia as of April 2009 N o Status Mini hydro Biomass Biogas No project of Capacity No project of Capacity No project of Capacity 1 Licensed projects 5 15.5 MW 7 65MW 7 17.3MW 16 144.5MW 8 19.85MW .85MW Total 15 77.8 MW 9 79.

a) b) c) d) TSH Bio Energy Project – Palm Oil EFB Fired Grid Connected Cogeneration Project employing EFB fired boiler (10MW) Kina Biopower plant Project .Small Renewable Energy Power Programme (SREP) There are three 10MW biomass plant and 2MW landfill gas plant currently operational and export to the grid.Landfill Gas (LFG) Power Generation (2MW) .biomass based power plant utilizing EFB (10MW) TNB Jana landfill Biogas Project .Biomass-based power generation plant utilizing EFB fired boiler (10MW) Seguntor Bioenergy power plant project .

UNDP. GEF) – Targeting industrial energy consumers – Energy audit activities carried out in eight energy intensive industrial sectors (wood. glass. iron and steel. rubber. food.4 million (US$ 28. cement.7 million). • Malaysian Green Building Index (MAA /ACEM) • Malaysian Building Integrated Photovoltaic Technology Application Project (MBIPV) .1 million gigajoules (GJ) per year with an estimated capital expenditure of RM100. pulp and papers.Other Energy Efficiency Initiatives • Malaysian Industrial Energy Efficiency Improvement Project (GoM. ceramic) revealed potential energy savings amounting to 7.

Malaysia is now one of the key biodiesel producers in the world • • Endogenous R&D and technology developed by MPOB. the decision to concentrate on one feedstock shows a lack of foresight ? .000 metric tonne processing plan in Lahad Datu • The volatile price of palm oil has impeded the implementation of palm-based biodiesel. and further US$ 3. Be that as it may.US$ 3. government allocated US$ 16 million in lowinterest loans in 2004 . 92 biodiesel projects in Malaysia were approved.Biofuel Policy • National Biofuel Policy must come from biofuel by 2025. – During 2006 and 2007.3 million in federal grants . – From an economic viewpoint. eight being operational in 2008 • Lesson learned. but only 14 functional biodiesel plants have since been built. at least 5% of the national energy mix – In 2005.8 million from Petronas for demonstration projects. US$ 3. now exporting Financing – To support the biodiesel industry. Malaysia utilized less than 1% of its biomass resource potential for renewable energy.69 million for research and development in 2006 – Dubai Ventures’ plan to build the 500.

waste management. MSW and composting – Future potential – transport sector. biogas.Clean Development Mechanism (CDM) Prospect • Opportunities to develop new markets for innovative and environmentally-friendly technologies • Current CDM potential in Malaysia is associated with – biomass. landfill gas. oil and gas. agriculture sector • Over 18 million tonnes CERs/yr (Energy) and over 12 million tonnes CERs/yr (Composting) are anticipated by 2010 . hydro. biofuel.

K. .139 34. and a stringent verification process is in place for ongoing monitoring. Ireland Canada Switzerland Germany SEO Biomass Steam and Power Plant in Malaysia Replacement of Fossil Fuel by Palm Kernel Shell Biomass in the production of Portland Cement Total CER Issued as of Feb 2010 06 Oct 08 22 Dec 06 43.977 366. U.CERs Issued in Malaysia Title of Project Biomass Energy Plant-Lumut. or Certified Emission Reductions. Each CER represents the abatement of one tonne of carbon dioxide equivalent. & N.171 25.245 Other Parties Denmark Switzerland. are carbon credits generated by CDM projects which have completed the registration process. and CERs are only issues by the CDM Executive Board once estimated abatement volumes have been validated independently.260 Canada Germany France 708. Sahabat Empty Fruit Bunch Biomass Project LDEO Biomass Steam and Power Plant in Malaysia Date of Issuance 06 Jan 10 27 Aug 09 09 Oct 08 CERs Issued 34.028 NB: CERs.

CDM Projects in Asia and Estimated Revenue for Malaysia .

Greening of business .

Policy development in motion • Najib Administration: – Introduced the Green Technology portfolio into the Water/Energy function .KeTTHA – Formulated Green Technology Policy – Green Technology Financing Scheme – Rebranded PTM to Malaysian Green Technology Corporation • In the pipeline: – Efficient Management of Electrical Energy Regulation is to be introduced – Uniform Building By-Laws to be amended to incorporate EE features .

industrialization policy. agriculture? Sustainable Infrastructure Greening of business & industry Soft Energy Path Sustainable Consumption Green Economy Innovation Pillars of Green Economy .POINTS FOR DISCUSSION • • • What are other ‘Green Economy’ initiatives in Malaysia? Your impression of the ‘energy’ industry in Malaysia What can we learn from past policy goals in Malaysia – ICT.

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