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Energy Efficiency in Malaysia
Malaysia's manufacturing sector contributes one-third of the country's gross domestic product (GDP). However, it also contributes a quarter of the nation's total carbon dioxide emissions. Malaysia's energy intensity is considered high compared to most developed countries and is expected to increase from 5.14 megajoules per ringgit (MJ/RM) of GDP in 1996 to 5.70 MJ/RM in 2000. A study done by the United Nations Development Programme (UNDP) recently identified a few barriers faced by manufacturers from implementing energy efficiency programs in their factories. Among others, these are a lack of information on energy efficiency and energy conservation techniques; manufacturers’ preconceived ideas that consider investing in these techniques as non-productive; lack of support from financial institutions; current legislative framework is not supportive of the implementation of these techniques; lack of full-scale demonstration projects; and the country lacks qualified personnel who can undertake energy management activities.

The UNDP, through its Global Environment Facility (GEF), launched a project called Industrial Energy Efficiency Improvement last week. The project will build on partnership between Government of Malaysia (GOM) and private sector and through a US$20.79 million (RM79 million) grant; shared between UNDP (RM29mil), GOM (RM30mil); and the private sector (RM20mil).

This project is a four-year program with the objective of long-term reduction of greenhouse gas emissions in key sectors of the Malaysian economy. Beginning with the manufacturing sector, it aims to reduce carbon dioxide emissions from the sector’s energy consumption by 10% by 2004. Eight sub-sectors have been identified: cement, ceramics, food, glass, iron and steel, pulp and paper, rubber and wood.

The target of this project is to establish an institutional and technical foundation to continually achieve energy efficiency goals and corresponding reductions in greenhouse gas emissions. By 2004, information on energy efficiency and conservation techniques should be well documented, easily accessible, and widely disseminated. It is also envisaged that manufacturers and financial institutions will demonstrate greater interest in investing in techniques that have been demonstrated to be economically viable.

The project consists of eight components: (a) Energy-use benchmarking program: A database of the average amount of energy used by a particular manufacturing sector. By comparing itself with the “norm”, a particular factory will know if it is using too much energy. (b) Energy audit program: This program is expected to address the lack of awareness and knowledge about energy efficiency within the manufacturing sector. At the same time, it is also aimed at introducing consistency in energy audits, which are currently rather unsystematic. (c) Energy rating program: This is designed to provide information on energy-efficient equipment in order to encourage their usage, as well as to establish a recognized equipment testing facility. (d) Energy efficiency promotion program: The program will disseminate information on energy efficient practices in the sector and establish an association of energy specialists, consultants and equipment providers. (e) Energy service companies support program: The Malaysian Energy Center (MEC) will draft a framework for an energy service company industry in Malaysia. (f) Energy technology demonstration program: This program will set up demonstration projects. (g) Local energy-efficient equipment support program: This component will spur local manufacturers to improve the design of their products to be more energy-efficient. (h) Financial institutional participation: To equip bankers with the acumen to select viable proposals to implement energy efficiency and conservation techniques.

The execution body is MEC, a non-profit organization formed by GOM to promote energy efficiency in Malaysia. Among other government agencies involved in this project are Standards and Industrial Research Institute of Malaysia (SIRIM), the Forest Research Institute of Malaysia (FRIM), Palm Oil Research Institute of Malaysia (PORIM), universities, the Energy, Communications and Multimedia Ministry and its Department of Electricity and Gas Supply, and the Economic Planning Unit.

For further information on the Malaysian environmental market, please contact:

United States-Asia Environmental Partnership (US-AEP)
American Embassy
376 Jalan Tun Razak
50400 Kuala Lumpur

Tel: 6-03-248-5341 Fax: 6-03-248-4035
E-mail: usaep@po.jaring.my
Contact: Vivian How or Steve Knode

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