Friday, September 29

Sarawak a clear winner from NETP


Rafizi (middle) is seen during the launch of the NETR Part 1. — Bernama photo


AS Malaysia’s total final energy consumption is projected to almost double by 2050, current plans and policies for the energy sector such as the National Energy Transition Roadmap (NETR) are necessary to catch up this demand.

The NETR Part 1, which was launched on July 27 this year by Minister of Economy Rafizi Ramli, outlines 10 flagship catalyst projects and initiatives based on six energy transition levers.

The are energy efficiency (EE), renewable energy (RE), hydrogen, bioenergy, green mobility, and carbon capture, utilisation and storage (CCUS).

Sarawak stands to gain plenty from the recently launched NETR Part 1. Among its key points include hydrogen fuel which will be championed by SEDC Sarawak; and Petronas championing carbon capture, utilisation and storage (CCUS) projects for its Kasawari and Lang Lebah gas fields.

Researchers with Maybank Investment Bank Bhd (Maybank Research) noted that the NETR is a progression of the federal government’s efforts, and could potentially address the economics in relation to energy transition.

“The government has been busy with the energy sector, having addressed targeted subsidies; is working towards the enabling of renewable energy trading; and relaxing selected solar policy restrictions (high-voltage consumers are now eligible for solar, no capacity limit for residential installations),” it said in an analysis on the NETR.

“It is a progression of the government’s efforts, and could potentially address the economics in relation to energy transition. This, in turn, could crystalise large tangible projects that encapsulates the vision of Malaysia’s transition journey.”

The research house believed that the NETR was necessary for Malaysia to be a part of the global economy.

This comes as global capacity plant-up is already skewed towards renewables, but is concentrated in China, US and the EU.


Source: Ministry of Economy.


“Malaysia has the opportunity to take the lead with renewable transition in Asean. The Energy Commission aspires to be involved in the Asean Power Grid in the future.”

How is the revised 70 per cent RE target derived? Maybank Research noted that the overarching aspiration is to insulate Malaysia from future energy price shocks, given that Malaysia faces the possibility of having to import gas in the future.

“Malaysia’s relatively healthy reserve margin also allows a more aggressive pace of renewable transition.

“Overall, the 70 per cent target represents a sweet spot, which balances the practicalities of RE capacity addition with the use of gas as a transitionary fuel; and the required scale of the green economy to achieve tangible multiplier effects.

“Overall, the 70 per cent RE capacity represents a stretched target that sets Malaysia’s ambition high.”

Malaysia has experience in building up the total value chain of the liquefied natural gas (LNG) industry in the past. This experience can potentially be replicated in the hydrogen space, which is still at its nascent stage.

The government is contemplating facilitating and funding the development of hydrogen use cases in the future. Malaysia also has an advantage with carbon capture, utilisation and storage (CCUS).

Minister Rafizi foresees an inflexion point where CCUS will be a permanent feature in the global economy as countries strive towards meeting their emission targets. The government needs to introduce applicable policies and rules. On electric vehicles (EV), the government is committed to increasing charging infrastructure.

In Part 2, the six levers will be further supported by five enablers, namely governance; policy and regulation; finance and investment; human capital and capabilities; and technology and infrastructure.


Sarawak, with its vast hydropower resources, also has plans to produce up to 1.2 million tonnes of green and blue ammonia and 0.2 million tonnes of hydrogen, not only for export but to cater to planned domestic use in transport. — Bernama photo


Sarawak leads the race for hydrogen as next clean fuel

HYDROGEN is fast gaining pace as the next contender championing clean fuel against the likes of liquified natural gas (LNG).

Hydrogen fuel is a clean and versatile energy source, produced through a number of processes, including electrolysis, steam methane reforming, and biomass gasification.

These result in a fuel with a high energy content per unit of weight. One of the key applications is in fuel cell technology, where hydrogen undergoes a chemical reaction with oxygen to produce electricity, emitting only water vapor as a by-product.

This makes it an environmentally friendly option for electric vehicles. Hydrogen can also be utilised in industrial processes, as a feedstock for ammonia production, and as a source of clean energy for power generation and heating.

Hydrogen will play a big role in decarbonising the sector, affirms the International Renewable Energy Agency (Irena) in its Malaysia: Energy Transition Outlook 2023 report.

“Hydrogen will provide a complementary solution to Malaysia’s ambitious climate objective. Hydrogen will comprise up to five per cent of total final consumption (including non-energy use) in the 1.5-S by 2050, where it will play a role in decarbonising some industrial sub-sectors and meet a growing market for green hydrogen trade.

“IRENA’s World Energy Transitions Outlook 2022 envisions that global hydrogen demand in a 1.5°C scenario would be 600 million tonnes by 2050,” it stated

As more countries raise their ambitions to become climate neutral, IRENA said that green hydrogen (hydrogen produced from renewable energy) and synthetic fuels derived from green hydrogen can play a key role in the energy transition.

This application is especially critical in hard-to-decarbonise sectors such as steel, fertilisers, plastics production and the maritime shipping sector.

Several energy players in Malaysia have already committed to becoming hydrogen supply hubs to key demand countries in Asia, such as Japan and the Republic of Korea.

National energy oil and gas company, Petroliam Nasional Bhd (Petronas), plans to produce up to 50 000 tonnes of low-carbon hydrogen by 2027.

Sarawak, with its vast hydropower resources, also has plans to produce up to 1.2 million tonnes of green and blue ammonia and 0.2 million tonnes of hydrogen, not only for export but to cater to planned domestic use in transport.

Additionally, the government is developing a hydrogen economy roadmap to set the policy pathways for different industry players in the region.

For the oil and gas sector under NETR, emphasis will be given to hydrogen fuel, specifically on the production of green hydrogen.

Sarawak, under its Sarawak Economic Development Corporation (SEDC) will be implementing three integrated projects to produce green hydrogen and consequently transforming the state into a green hydrogen hub.

These projects involve the development of a green hydrogen production plant in Kuching by 2025 for domestic use, and two similar plants in Bintulu for exports.

MIDF Amanah Investment Bank Bhd (MIDF Research) opined this is possible, as Sarawak had, as recent as 2022, commercialise hydrogen fuel for its public transportation.

“We believe Sarawak has the capacity to pioneer in hydrogen fuel, given that in Kuching, six hydrogen fuel refuelling pumps had been installed under Petroleum Sarawak Bhd’s (PETROS) green initiative.”

“All in, we are positive with the government’s initiatives for an orderly energy transition for the nation through the launching of its NETR Part 1, from the oil and gas sector’s perspective.

“We are confident that Malaysia has the right tools, assets and skillset to pioneer hydrogen fuel and carbon capture and storage in the region.”


Under the NETR, two major CCUS projects are in the works. Petronas will be overlooking two major CCUS projects for its Kasawari and Lang Lebah fields, which are high-carbon dioxide-gas fields.


‘Focus on CCUS, but thread carefully’

IN the 1.5-S, industrial emissions will still account for 25 per cent of total energy emissions by 2050. Cutting out fossil fuels entirely is challenging, especially given the need to drive economic growth and national priorities related to the energy transition.

While emissions can be offset using Land Use, Land-Use Change and Forestry (LULUCF), carbon sequestration units could help capture process emissions in hard-to-decarbonize sectors such as cement, iron and steel.

According to IRENA, pilot projects could be deployed with the use of carbon capture and storage (CCS) to gradually become commercially available in the future.

As of early 2021, 24 commercial fossil-fuel-based CCS facilities were in operation globally, with an installed capacity able to capture around 0.04 gigatonnes (Gt) per year of energy- and process-related carbon dioxide emissions.

“Malaysia will need to learn from the successes and failures of CCS projects around the world,” IRENA said in the Energy Transition report.

“Planning resources adequately and enhancing institutional skills are crucial steps in the process, as well as coordination to avoid bottlenecks along the value chain.”

The agency said a legal and regulatory framework for storage facilities must be in place before planning a CCS facility.

Overall project execution for CCS usually takes up to four to five years with several steps, such as pre-feasibility and feasibility studies (one to two years), licensing approvals (such as technical and environmental) and construction (three to four years).

An example is the Greensand project in Denmark, which consists of three phases: appraisal, pilot (proof of concept) and full project execution. The appraisal phase took place in 2021, and the CCS facility is expected to be fully operational by 2025.

Global pipeline infrastructure to support long-term CCS deployment in the coming 30-40 years will need to be scaled up to 100 times from what is currently available.

A shared transport and storage network might improve the economics of CCS facilities by reducing operational costs through economies of scale while addressing cross-chain risks.

Alternative options to CCS and to carbon capture, utilisation and storage (CCUS) include other carbon dioxide removal technologies and measures. These include direct air capture, afforestation and reforestation, enhanced weathering and other measures.

“Whereas CCS and CCUS can be applied at the source of emissions, these other measures would need to be part of a larger carbon market allowing for carbon offsets and trading.”

Under the NETR, two major CCUS projects are in the works. Petronas will be overlooking two major CCUS projects for its Kasawari and Lang Lebah fields, which are high-carbon dioxide-gas fields.

The projects are expected to be in operation by CY26 and CY28 respectively.

MIDF Research believed that, given Petronas’ expertise in the upstream and its vast exploration assets, as well as the Ministry of Economy’s involvement in the regulation and policy framework for transboundary carbon movement, Malaysia could be a major player in the region for CCUS projects.

“We are also expecting that oil and gas service and equipment (OGSE) to benefit from the implementation of future CCUS in the construction of injection wells and liquified carbon dioxide transportation.”

CCUS had been designed to mitigate greenhouse gas emissions, particularly carbon dioxide, from oil and gas refining, industrial processes and power generation.

CCUS involves capturing carbon dioxide emissions, utilizing the gas for productive purposes, and safely storing the captured carbon dioxide underground to prevent it from entering the atmosphere.

CCUS is vital in assisting various sectors to reach net-zero carbon and carbon neutrality goals, as well as a bridge to compliment other renewable energy sources. However, CCUS is still considered a costly operation due to its technical complexity and less commercial value.

“Despite the small market products derived from CCUS, there is a high potential to incorporate CCUS in the production of blue hydrogen through steam methane reforming and biomass gasification,” MIDF Research said.

“We believe the synergy of both energy transition levers will make CCUS a high potential revenue stream for O&G major players and OGSE firms involved in the construction and operations of the CCUS facilities moving forward into the energy transition phase.

“We also believe that Malaysia has the potential to continue pioneering for CCUS, as it is reported that 46 tcf of potential CCS capacity in 16 depleted fields were discovered, which is more than ample for the nation’s upstream carbon dioxide emissions reduction goals.”



Despite focus on RE, investing in O&G still crucial

DESPITE these efforts, MIDF Research believed that investments in O&G was still crucial.

This comes as globally, the oil and gas sector had suffered divestments in favour of renewable energy and cleaner fuel.

“However, in relative to the speed of adoption of renewable energy, we believe that the pace of divestment from oil and gas maybe faster than required,” it said, adding that as of July 2023, approximately US$40.5 trillion had been divested from the sector since 2014.

“We believe hydrogen fuel and CCUS projects could assist in the reinvestment in the oil and gas sector to ensure a smooth and orderly energy transition, in line with the aspirations for net-zero carbon and carbon neutrality across various markets.

“With the available CCUS technology, along with the depleted gas reservoirs in our local front, we believe that these could help Malaysia to pioneer the utilisation of hydrogen fuel in industrials and power generation, beyond its current usage as transportation fuel.

“While the utilisation of hydrogen fuel is still in its early stage, we opine with given time for the rapid advancement of new technologies and the utilization of AI and digital tech in the infrastructure for the processing, storage, transportation and combustion of hydrogen, this energy source will be crucial in realizing the energy transition agenda in the near future.”

The Kasawari CCUS Project is a good example. As part of its decarbonisation solution, Petronas’ CCS involves the physical reduction of carbon dioxide by capturing the gas and reinjecting it into depleted oil and gas fields offshore.

According to Petronas, CCS is part of the net-zero carbon emission solution for industries that emit large amounts of carbon dioxide.

The industries to benefit from CCS would include, but not limited to: steel manufacturing, cement manufacturing, plantation, oil and gas refinery, petrochemical production, and power generation.

Production of clean energy sources such as biofuel and hydrogen fuel are also expected to benefit from CCUS.

“The Kasawari CCUS flow begins from the Kasawari gas field, located about 200km offshore from the Bintulu LNG Complex in Sarawak,” MIDF Research noted.

“Captured carbon dioxide will be gathered at the gathering terminal and transported via a 135km pipeline to the M1 storage field which was previously a depleted gas field.

“The first injection is expected to commence in June 2026 with an estimated emission reduction of 3.3 million tonnes of carbon dioxide emmited per year.

“The total injection capacity of M1 field is approximated at 1Tcf with the capability to reduce a total of 76 million trillion carbon dioxide emitted of emission reduction.”