EU official praises green energy push by Malaysia’s Sarawak
Bloc commits to mobilize $10.8bn for ASEAN sustainable projects Six major ports function as crucial transhipment hubs that play integral roles in the state’s supply chain by NURUL SUHAIDI KUCHING, Malaysia — Sarawak, a resource-rich state in Malaysia with an ambitioussustainable energy agenda, is drawing interest from the European Union, but the 27-nation group’s top official in the country says the bloc needs new cooperativemechanisms for its companies to take advantage of the opportunity. “We have seen the opportunities and the vision of the state, bringing in hydrogen,sustainable transition to green energy and energy transition,” Michalis Rokas, the EUambassador to Malaysia, said in a speech at the EU-Malaysia Business Day 2024 eventheld on Feb. 14 in Kuching, the capital of Sarawak, which is located on the island ofBorneo.Malaysia is the EU’s third largest trading partner in ASEAN, while the EU is the fourthlargest destination for Malaysian exports. The EU is also the second largest source offoreign direct investment for Malaysia at 25.2 billion euros in 2022. Still, Rokas acknowledged the limited presence of European businesses in Sarawak. Tobridge this gap, he proposed a “blending” model whereby European companies wouldtake the lead in strategic investments, while the EU would provide financial supportthrough grants, guarantees and concessional loans through the European InvestmentBank (EIB). This approach aims to de-risk projects and attract private capital,accelerating Sarawak’s green ambitions.Rokas also said the potential partnership aligns with the EU’s Indo-Pacific Strategy,which emphasizes fostering partnerships with regional countries on issues like climatechange and clean energy. Sarawak’s focus on developing hydrogen production,sustainable aviation fuel, and transitioning away from fossil fuels resonates with theEU’s own sustainability goals. The EIB has been active in Southeast Asia for over three decades, financing projects invarious sectors such as energy, transport, climate action and infrastructure. In 2022, itopened a regional representative office in Jakarta to further strengthen its engagementin Indonesia, Vietnam, Cambodia, Laos and the Philippines. Nikkei Asia understandsthat the bank has been attempting to operate in Malaysia since 2020. Its application ispending government approval for a framework agreement.Rokas also said during his speech that the EU and its 15 member states with a presencein Malaysia will be working on a plan to propose a Global Gateway flagship project inSarawak.Meanwhile, the state’s deputy premier Awang Tengah Ali Hassan welcomed thepotential partnership, highlighting the existing trade relationship between Sarawak andthe EU, which stood at 2.1 billion euros in 2022. He emphasized the state’s commitmentto renewable energy, with a target of generating at least 60% of its power from cleansources by 2030. Sarawak, abundant in oil, gas and timber, is the only Malaysian state with more than70% renewables in its energy mix, mainly from hydroelectric dams. It has threeoperational large-scale hydroelectric dams, with a fourth, Baleh, under construction.The total installed capacity of the operational large-scale hydroelectric dams in Sarawakis 3,452 megawatts. Once Baleh is completed, the total capacity will increase to 4,737MW.Last year, Sarawak announced plans to sell one gigawatt of renewable energy toSingapore via a 700km undersea cable by 2032.“We seek to establish a stronger connection between Sarawak and Europe,” Awang saidat the business event. “I hope this will serve as a venue to forming new networks andposing new paths which yield fruitful outcomes towards an inclusive economy.” Headded that Sarawak’s green push has led to collaborations with global players fromSouth Korea and Japan to develop the hydrogen industry in the state.Sarawak is already embarking on two major hydrogen production projects — withJapan’s Eneos and Sumitomo Corp. on one called H2ornbill, and South Korea’sSamsung Engineering, Posco and Lotte Chemical on another dubbed H2biscus — in theport town of Bintulu, where one of the world’s largest LNG complexes is located.The Sarawak state legislative assembly building and Sarawak River in Kuching, Malaysia. (Photo by Norman Goh)4/2/24, 2:01 PM EU official praises green energy push by Malaysia’s Sarawak – Nikkei Asiahttps://asia.nikkei.com/Business/Energy/EU-official-praises-green-energy-push-by-Malaysia-s-Sarawak 5/5Get our Asia daily briefing newslettersnewsletter@nikkeiasia.com RegisterThe two projects will have the potential to produce up to 238,000 tonnes of greenhydrogen annually, generating an estimated 2.4 billion ringgit to Sarawak’s grossdomestic product by 2030, according to Abang Johari, the state’s premier during hisannual new year address in January.Sarawak also boasts, according to the premier, ASEAN’s first integrated hydrogenproduction plant and refueling station, powering hydrogen buses in Kuching since 2018and a tram on a test basis beginning last year.Also, a third hyrdogen project is based in Rembus, near Kuching, for domestic use andis expected to be fully operational in 2025, according to state-linked company SEDCEnergy and the Sarawak Economic Planning Unit. On Monday, SEDC Energy signed anagreement with Gentari, a subsidiary Malaysia’s state energy conglomerate Petronas todevelop the Sarawak H2 Hub in Bintulu, according to a statement by Gentari.Total hydrogen industry investment in Sarawak is estimated to be worth at $4.2 billion,an SEDC Energy spokesperson told Nikkei Asia.Hydrogen produced in Sarawak is known as green hydrogen — produced via electrolysisand powered by renewable electricity from hydroelectric dams. Additionally, the state ispioneering the production of crude algae oil for sustainable aviation fuel usingmicroalgae.Timothy Ong, the chief executive of the newly established state investment promotionagency InvestSarawak said at a panel session that Sarawak is not only in competitionwith other regions of Malaysia, but with countries like Vietnam, Indonesia, Thailandand Singapore as well.“Although a lot of people come to Sarawak for renewable energy, I can comfortably tellyou today that we have more demand than available supply when it comes to renewableenergy,” Ong said. He added it is important for the state to understand that investmentbenefits must trickle down to the people of Sarawak and companies and not just remainin the hands of foreign or domestic investors.
