Peckyean GAN

Econometric Study on Long-term Energy Strategy of Malaysia

Hideki HARADA, Akiyoshi OHASHI, ZhiDong LI

An integrated econometric model consists of a macroeconomic sub-model, an energy sub-model and an environment sub-model was developed and used to forecast Malaysia's energy demand and supply for 2000 to 2030. Two simulation cases - BAU case (no changes to present trend) and Renewable energy (RE) case (renewable energy development scenario) were performed. Simulation results of 2030 showed that under BAU case - 43.9% of electricity generated will be from coal-fired, CO2 emissions will be 7.5x larger than those in 2000. However, under RE case - a 15.8% contribution from RE-based electricity will reduce share of coal by 7.6 percentage point, natural gas by 5.3 percentage point and reduce total CO2 emissions by 15% in 2030. This suggests renewable energy development is advantageous to Malaysia. However, field study found that presently, renewable energy development is facing a number of critical obstacles - selling price and lack of government support. Implementation of pricing law, which has been proven to be most successful at promoting the growth of RE-based electricity is suggested in order to facilitate successful development of RE in Malaysia in the future.