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The Merdeka We Need...

As the nation enjoys a public holiday in celebration of our nation’s independence from British rule since 1957, we thought we’d provide you with some thoughts to ponder upon on a rather hot topic – Climate Change and the urgency of a different kind of independence, an independence from fossil fuels.

Why exactly do we need this independence, and how realistic is it to even think about?

We can start off by first understanding what fossil fuels are. Fossil fuels are derived from the fossilized remains of animals and plants that have been buried in our Earth’s crust for millions of years. These fossils have a high carbon content that is best kept away in the depths of the earths but due to our high energy demands to support our current way of living, they are drilled, mined and extracted out of the earth, as coal, crude oil and natural gas. These fossil fuels are then burned to generate electricity, make plastics and other materials like cement, releasing the carbon that would have otherwise been stored back into the environment. Releasing all these stored carbon into the atmosphere increases surface temperatures, causes sea-levels to rise, and a host of other ecological disasters that we’re already seeing in our own backyard today – increased frequency of flooding, longer droughts, heat waves, species extinctions and the list goes on.

And this list will keep going on and rapidly expanding if we don’t urgently re-look the way we source our energy. Fossil fuels such as coal and crude oil need to remain in the ground and the use of alternative, renewable sources of energy such as Solar, Hydro, Wind, Biomass, Geothermal, and Tidal energy needs to be increased exponentially.

So, what’s the hold up?

As can be seen in the chart below, Malaysia depends heavily on fossil fuels such as oil, gas (as of 2020, Malaysia is the worlds’ 4th largest natural gas exporter), and coal to meet its energy demands. Over the past 56 years our dependence on oil has reduced significantly whilst the dependence on coal has steadily increased to comprise 59% of our energy mix since 2021. Being the highest carbon emitter of all the fossil fuels and often called “dirty fuel”, this comes as a strange turn of events considering our government has pledged to reduce its economy-wide carbon intensity (against GDP) by 45% by 2030, compared to 2005 levels and committed to be a net-zero carbon nation by 2050.

Shouldn't we then be looking at moving away from coal instead of toward it?

Reason for increase in our dependence on coal is simple – environmental and health costs aside – it’s the cheapest option available and there is a strong political will to keep energy prices low and to continue the fuel subsidies that we’ve grown so used to. In addition to that, increasing the usage of coal will allow the nation to reduce its reliance on natural gas, allowing the export of natural gas for higher profits. While we may be able to increase our renewable energy supply significantly (the goal is to be equipped with 40 per cent renewable energy (RE) by the year 2035), our steady increase in coal reliance and inability to let go of fuel subsidies at a time when it is most crucial is worrisome.

A detailed 144-country study of the real cost (USD) of energy when transitioning to 100% renewable energy

The Stern Review, which is a review on the economics of climate change released in 2006 and subsequently revised in 2008, suggests that nations should invest at least 2% of GDP into efforts to curb climate change i.e achieving stabilization of greenhouse gasses between 500 to 550ppm CO2e in the atmosphere. In 2022, the CO2e in the atmosphere peaked at 421ppm (May) which is 50% higher than pre-industrial era and up until recently, none of the world major carbon emitting nations had pledged such a significant percentage of GDP into climate change efforts, despite having in place net zero emissions targets.

One country that has recently taken a major leap in the right direction, by committing to an economically and politically charged transition to clean energy and reduction in carbon emissions is the United States of America (USA). In introducing the Inflation Reduction Bill (IRB), the Biden administration has committed $369 billion (approx. 2% of the GDP of 2022) in spending on energy and climate change efforts. It is the largest investment in climate and energy in US history and aims to lower energy costs, increase clean energy production and reduce carbon emissions by 40% by 2030.

While many compromises had to be made along the way, from a climate change perspective, this bill is a huge step in a global transition away from fossil fuels and toward clean energy. The IRB, which was passed on August 12th 2022, has a large budget breakdown for clean energy related investments which are summarized as follows:

  • $10 billion investment tax credit to build clean technology manufacturing facilities, like facilities that make electric vehicles, wind turbines and solar panels.

  • $30 billion investment in the production tax credits to accelerate U.S. manufacturing of solar panels, wind turbines, batteries, and critical minerals processing

  • Up to $20 billion in loans to build new clean vehicle manufacturing facilities across the country (transportation is the largest greenhouse gas emitting industry in the US – 27% of total GHG emissions).

  • Tax credits for clean sources of electricity and energy storage and roughly $30 billion in targeted grant and loan programs for states and electric utilities to accelerate the transition to clean electricity.

  • Tax credits and grants for clean fuels and clean commercial vehicles to reduce emissions from all parts of the transportation sector.

  • Grants and tax credits to reduce emissions from industrial manufacturing processes, including almost $6 billion for a new Advanced Industrial Facilities Deployment Program to reduce emissions from the largest industrial emitters like chemical, steel and cement plants.

  • Over $9 billion for Federal procurement of American-made clean technologies to create a stable market for clean products, including $3 billion for the U.S. Postal Service to purchase zero-emission vehicles.

  • $27 billion clean energy technology accelerator to support deployment of technologies to reduce emissions, especially in disadvantaged communities

  • $1 billion for clean heavy-duty vehicles, like school and transit buses and garbage trucks.

Aside from the investments that will be put in place as outlined above, the White House Office of Management and Budget (OMB) also released an analysis that quantifies how the Inflation Reduction Act (IRB) will prevent social and economic damages which result from impacts of climate change. The analysis concluded that the IRB could cut the social costs of climate change by up to $1.9 trillion by 2050, a 5-times higher saving than the original investment.

While the Inflation Reduction Act doesn't specifically pave the path toward fossil fuel independence, it is a significant step in reducing our dependence and a huge reference point to other nations as it is a policy that is driven by economic logic, one that identifies the impending social and economic threat of climate change and aims to bring the nation to the forefront of clean energy production and generation.

Malaysia needs to join forces with the rest of World to take decisive action on climate change, as YAB Dato’ Sri Ismail Sabri Yaakob stated at the ISES 2022 conference held on August 29th 2022, "Our aspiration to be a carbon neutral nation by 2050 shows Malaysia's determination to join forces with the rest of the world to realize the goal of tackling climate change". The United Nations has called climate change an existential threat to the survival of the human species. It is clear that the defining struggle of our generation is to fully decarbonised our society to avoid catastrophic irreversible climate change. In other words, to achieve independence from fossil fuels.

And the good news is: This is also the cheapest way forward.

Happy Merdeka Day!

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