1.

5 Economic of Renewable Energy

Malaysia is with a plentiful and relatively cheap supply of conventional fossil energy
resources such as oil, gas, and coal as well as renewable energy sources such as hydropower,
biomass and solar. Past and current economic growth in the country have been primarily fueled by
fossil fuels. The energy intensity (energy use per unit GDP) has worsened over time, while the
electricity elasticity, i.e. use growth rate to GDP growth rate has been about 1.5 over several
decades. Malaysia’s demand for energy is relatively high in comparison with most developed
countries e Japan, Taiwan, USA, Indonesia, Thailand energy intensities were 0.11, 0.22, 0.28,
0.33, and 0.35 ktoe per US$ million, respectively (Shuit, Tan, Lee, & Kamaruddin, 2009).

There has been very little necessity to curb energy use in Malaysia in the past, or to be
concerned about energy use efficiency, as rapidly expanding use of energy was seen as a measure
of the pace of national industrial development. However, recently, the economic recovery upward
trend combined with recent strategies to minimize cost as much as possible has developed a
supportive environment to incorporate energy conservation and energy efficiency measures as part
of the nation’s ‘‘Vision 2020’’ industrialization objectives.

Over the last few decades, the Malaysian palm oil industry has grown to become a very
important agriculture-based industry, where the country is today the world’s leading producer and
exporter of palm oil. Indigenous to Africa, the oil palm has been domesticated from the wilderness
and transformed to become a plantation-based industry. During the late 1950s the expansion of the
industry started as part of government’s diversified cautious policy from rubber to oil palm and
also to raise the socio-economic status of the expanding population in the country(Saidur,
Abdelaziz, Demirbas, Hossain, & Mekhilef, 2011). Today, Malaysia is the world’s largest
producer and exporter of palm oil, replacing Nigeria as the chief producer since 1971. The palm
oil industry is an important contributor to the country’s GDP. Export earnings from palm oil, palm
kernel oil and its products in 1998 amounted to almost US$5.6 billion, equivalent to 5.6% of GDP.
The crop has also played a significant role in the socioeconomic development of rural areas by
providing employment and raising the income level.
 Palm oil industry in Malaysia has increased rapidly over the past 25 years towards the
development of an economy based on agriculture, which is Malaysia's today is the largest exporter
of palm oil products. Malaysia currently produces a vast range of biomass from palm oil, including
palm trunks; empty fruit bunches (EFB), fibers and shells (Kurnia, Jangam, Akhtar, Sasmito, &
Mujumdar, 2016). Energy from waste biomass specifically can be obtained by direct combustion
or by conversion of valuable and useful forms of energy. Typically, it is added as an update of
solids, liquids or gases, or products with a higher value for the chemical industry.

Renewable energy technologies are environment friendly and contribute effectively

towards sustainable development. Recognizing the importance of the energy availability and
stability to stimulate economic growth, the Malaysian government introduced the four-fuel
strategy namely petroleum, natural gas, hydropower and coal to reduce the over dependence upon
petroleum and to ensure reliability and security of supply. The success of the diversification policy
is reflected in the reduced dependence on petroleum. Petroleum dependence for the power
generation sector has been cut down from 98% in 1980 to 8% in 1999 (Reijnders & Huijbregts,
2008). Recently, the government has included renewable energy as the fifth fuel and thereby,
increased the role of renewable energy as an alternative to the other sources of energy.

Malaysia is blessed with a plentiful and relatively cheap supply of conventional fossil
energy resources such as oil, gas, and coal and so far need not to worry about its energy supply.
Owing to some large oil fields, the government subsidizes petrol with up to 50 cents per liter to
help the local industries flourish. Past and current economic growth in the country has been
primarily fueled by fossil fuels and little attention has been paid to other energy sources (Delina
& Janetos, 2017). However, like most industrial countries, Malaysia too faces the challenges of
opening up new sources of energy. Worldwide the supply of fossil fuel will, in not a long period
of time, run dry as is commonly acknowledged. Malaysia could very soon experience an energy
crisis after the long years of generous energy subsidies if the abundant use of its energy sources
continues. Therefore, it is unavoidable that Malaysia also seek renewable sources for future
electricity generation.
1. Delina, L., & Janetos, A. (2017). Cosmopolitan, dynamic, and contested energy futures:
navigating the pluralities and polarities in the energy systems of tomorrow. Energy Research
& Social Science.
2. Kurnia, J. C., Jangam, S. V, Akhtar, S., Sasmito, A. P., & Mujumdar, A. S. (2016). Advances
in biofuel production from oil palm and palm oil processing wastes&58; A review. Biofuel
Research Journal, 3(1), 332–346.
3. Reijnders, L., & Huijbregts, M. A. J. (2008). Palm oil and the emission of carbon-based
greenhouse gases. Journal of Cleaner Production, 16(4), 477–482.
4. Saidur, R., Abdelaziz, E. A., Demirbas, A., Hossain, M. S., & Mekhilef, S. (2011). A review
on biomass as a fuel for boilers. Renewable and Sustainable Energy Reviews, 15(5), 2262–
2289.
5. Shuit, S. H., Tan, K. T., Lee, K. T., & Kamaruddin, A. H. (2009). Oil palm biomass as a
sustainable energy source: A Malaysian case study. Energy, 34(9), 1225–1235.