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(…) The share of natural gas in the primary energy supply rose while that of crude oil dropped; in 2011, the primary energy supply mix (in toe terms) consisted of natural gas (45.1%), crude oil (31.1%), coal and coke (18.6%), petroleum products (2.8%), and hydropower (2.3%). (…)

(…) The policy envisages: rationalizing energy pricing gradually to match market prices; more strategic development of energy supply by diversifying energy resources (including renewable energy resources and nuclear energy); accelerating the implementation of energy efficiency initiatives; improving governance to support the transition to market pricing; and ensuring policy implementation based on an integrated, scheduled approach to achieve security of energy supply.(…)

Malaysia's depleted natural gas and oil reserves and increasing demand for energy, have shifted the focus on renewable energy from an "option" to an "immediate and high priority energy solution", although the Government has intended to expand into renewable energy sources since 2001. Nevertheless, the contribution of renewable energy to the national grid has so far been negligible. (…)

(…) Total energy output from PV installations is insignificant in terms of its contribution to Malaysia's energy mix at present. The bulk of biomass comes from palm oil plantations (kernels, biogas) and is currently being used as an alternative source of fuel in cement factories and as the main fuel source for a small number of biomass power plants. The burning of household rubbish to generate electricity has been a feature of the alternative-energy sector for a number of years, owing to the declining number of landfill sites; this source accounted for power generating capacity of 5.5 MW supplied to the national grid in 2009, and capacity is expected to increase gradually in 2013-20. At present there are no wind farms and no plans to harness this form of renewable energy on a large scale. The only nuclear reactor is a research reactor with a capacity of 1 MW that is owned and operated by a government body, the Malaysian Nuclear Agency. Despite safety concerns raised by the Fukushima disaster in Japan in March 2011, a nuclear power plant is to be built and to begin operations by 2025.

(…) Malaysia's 2009 Renewable Energy (RE) policy aims at: increasing RE contribution in the national power generation mix; facilitating the growth of the RE industry; ensuring reasonable RE generation costs; conserving the environment for future generations; and enhancing awareness of the role and importance of RE. This policy set a target for RE to attain an installed capacity of 985 MW (2,080 MW in 2020) covering 6% (11% in 2020) of the power mix by 2015. Relevant guidelines, standards, and laws were introduced to ensure the efficient use of energy, and to reduce greenhouse gas emissions. (…) Under the 2010 New Energy Policy Study, emphasis was to be placed on the use of renewable energy and increasing energy efficiency through the introduction of a feed-in tariff (FiT) for RE based power, and a Renewable Energy Fund, set in December 2011 and financed by 1% charge on all users, except for those consuming less than 300 kilowatt-hours (kWh) or RM 77.00 in a month, to encourage the implementation of renewable energy projects. (…) A 2011 Renewable Energy Act allows private producers of electricity generated using RE to feed power into the national grid, and establishes FiT rates for fixed periods. (…)

(…) A Sustainable Energy Development Authority (SEDA) was established in September 2011 to, inter alia, make recommendations on policies, laws, and actions, and to promote and implement RE and sustainable energy actions, including the FiT system.

(…) At end September 2013, SEDA had approved 2,589 RE projects representing a capacity of 520.48 MW to be delivered mainly by solar photovoltaic (PV) installations (40%), biomass (32%), small hydro (23%), and biogas (5%). (…) RE activities benefit from a sales tax exemption for purchases of locally made machinery, materials, and consumables. (…)

A 2009 Energy Efficiency Improvement Programme (MIEEEIP) run by the Government in cooperation with the United Nations Development Programme (UNDP) yielded encouraging results. It led to energy efficiency improvements of up to 28% in 48 factories (representing 7% of total energy usage in the industrial sector) through no-cost or low-cost measures. Various energy efficiency (EE) programmes and initiatives were undertaken, such as the Government leading by example initiatives (reduction of energy consumption), the Promotion of EE appliances, the Promotion of co generation, and the SAVE (Sustainability Achieved via Energy efficiency) Programme. Work for an Energy Efficiency and Conservation Bill was under way in mid-2013 and was unlikely to be passed in 2014 due to concerns that the law does not leave any gaps (e.g. transport sector). In May 3013, regulatory changes made under the Electricity Amendment Regulations 2013, to the Electricity Supply Act 1990, set minimum energy performance standards for efficient use of electricity by refrigerators, domestic fans, televisions, air conditioners, and incandescent lamps. A National Energy Efficiency Master Plan setting out a strategy for addressing energy security, global warming, and climate change issues was expected to be announced in 2013.

According to the 2010 New Energy Policy Study under the 10th Malaysia Plan 2011 2015 (section 2.3), energy supply would continue to be strengthened by creating a more competitive market and gradually reducing the energy subsidy. (…)

Energy subsidization, intended as a mechanism to keep energy affordable, remains a major and long standing fiscal, budget, developmental, environmental, and thereby political issue in Malaysia (sections 3.4.2.2, 3.4.4.2, 4.5.1, and 4.5.2). In addition to the opportunity cost of investing resource revenues in productive capital, subsidized prices of petrol, diesel, and natural gas play an important role in distorting resource allocation by encouraging inefficient energy consumption. (…) A May 2010 Subsidy Rationalization Programme (SRP), involving a phased five-year reduction of subsidies on gasoline, cooking gas, electricity, and road tolls, and projected to save a cumulative total of US$33 billion, achieved little as the Government "changed its focus to cost of living" issues in March 2012; it was reactivated in September 2013 (section 3.4.4.2).