Shell launches pathway for Malaysia to achieve carbon-neutrality by 2065

The launch event was graced by Dato’ Sri Tuan Ibrahim Tuan Man, Minister of Environment and Water, and H.E. Aart Jacobi, Ambassador of The Netherlands to Malaysia. The event also featured a roundtable discussion held in collaboration with the Malaysian Dutch Business Council (MDBC), CEO Action Network, and Climate Governance Malaysia.

The Tree, The Sky, The Sun tells the story of how Malaysia could reach for the sky – carbon-neutral by 2065 – with its unique advantages of tree and sun. Shell’s story illustrates a technically possible yet challenging pathway for Malaysia to meet the goal of the Paris Agreement to keep the rise in global average temperature to well below 2°C above pre-industrial levels¹, with a stretch goal of 1.5°C.

Developed by Shell in consultation with key local stakeholders², Shell’s pathway³ was launched today at a virtual forum gathering more than 1500 participants and stakeholders from the government, private sector, media, academia, non-governmental organisations, and energy consumers. The launch also saw a roundtable discussion by the CEO Action Network, featuring energy leaders and representatives from Shell, The Ministry of Environment and Water, Climate Governance Malaysia, and Boston Consulting Group.

“It is exciting to see Malaysia having open and more transparent discussions on the true scale of the climate challenge and the actions needed for achieving carbon-neutrality. By publishing The Tree, The Sky, The Sun, Shell hopes to contribute to the national conversation about Malaysia’s energy transition and to the framing of the nation’s priorities in the run-up to COP26 and beyond. This is in line with the global ambition embodied in Shell’s Powering Progress strategy to become a net-zero emissions⁴ energy business by 2050,” said Ivan Tan, Chairman of Shell Malaysia.

“The Tree, The Sky, The Sun combines policymaking with science-based targets to help us all see the benefits and opportunities of a sustainable future more clearly. The support of everyone – from energy producers to energy consumers – will be critical for achieving the milestones described by Shell’s aspirational pathway. We hope today’s gathering will spur more informed conversations about how we can all contribute towards building a carbon-neutral energy system for Malaysia and the world”, said Marco Winter, Executive Director of MDBC.

The pathway described by The Tree, The Sky, The Sun highlights five critical “increase levers” that are likely to have the greatest influence on moderating carbon emissions in Malaysia. These levers are: 1) the increase in forest acreage and density; 2) the introduction and gradual increase in the carbon price; 3) the emphasis on energy efficiency; 4) the greater push for electrification; and 5) a more widespread use of renewables, especially solar energy.

Shell’s aspirational pathway reveals that the Malaysian energy system of 2065 will look significantly different from today. The economy-wide transformation required to achieve a carbon-neutral state will be underpinned by carbon pricing, or the external cost of carbon, which is phased in starting from 2026, coinciding with the start of the 13th Malaysia Plan (2026 – 2030). This drives reallocation of capital and resources toward low-carbon and energy efficient choices.

By 2065, renewable sources of energy will dominate a deeply electrified energy system. Solar has become the country’s single largest source of energy, coal has been phased out, while the remaining natural gas in the energy mix acts primarily as a means of supporting the use of renewable energy sources. Biofuel has displaced oil as the preferred liquid fuel for transportation and is used increasingly to meet the demand of difficult-to-electrify sectors such as aviation and shipping.

Gains in energy efficiency lead to a marginal increase in the country’s final energy demand, despite healthy economic growth during this period. Any remaining emissions from the energy system are removed by nature or technology – reforestation of an additional 5.8% of Malaysia’s land mass can capture up to 29 million tonnes of CO2 per year, effectively bringing forward Malaysia’s carbon-neutral date by 15 years to 2065.

Ultimately, the point at which Malaysia achieves carbon-neutrality depends on how aggressively these levers discussed are pursued in steering the economy towards a more sustainable post-pandemic recovery. Other pathways are possible and depend on societal and policy preferences, but a major shift in how society produces and consumes energy is required to limit the rise in global temperature and address the risks of climate change.

Crucially, it will take robust policy frameworks and more open public engagement to create societal support for action and enable the development of lower-carbon solutions and green technologies. Strong collaboration across government, business, and society will be crucial to make progress at the pace required for Malaysia’s energy system to be carbon-neutral by 2065.

To explore “The Tree, The Sky, The Sun: A Pathway towards Malaysia’s Carbon Neutral Future” in more detail, download the full story at www.shell.com.my/treeskysun.

NOTES TO EDITORS:

In 2021, Shell published Sky 1.5, which maps an extremely challenging pathway society would need to take to meet the stretched goal of the Paris Agreement – this pathway requires the entire world in aggregate to reach net-zero in CO2 emissions sometime before 2060. Different countries and sectors may move at different speeds, but all need to move as quickly as possible.

A reference scenario for Malaysia was first modelled back in 2019 based on Shell’s Sky scenario (2018) and by using Shell’s World Energy Model (WEM). This initial reference scenario established a baseline for Malaysia to achieve carbon-neutrality. Subsequently, through discussions and consultations with key local stakeholders, various parameters were adjusted and adapted to further suit local conditions for the final pathway described in The Tree, The Sky, The Sun.

Shell has used Scenarios for decades to think about the global energy transition and to explore the evolution of opportunities within it. Scenarios are possible stories of the future that provide useful lessons for the present. They are not predictions, nor Shell strategy or business plans, but stories that stretch creative thinking and planning for the future. Shell’s latest publication continues a tradition of sharing scenarios to further the discussion on society’s most critical long-term challenges.

“Carbon neutral” or “Net-Zero emissions” is the balance between anthropogenic emissions by sources and removals by sinks of greenhouse gases.

ADDITIONAL RESOURCES:

•  Summary and Infographic: The Tree, The Sky, The Sun (2021)
• Shell Energy Transformation Scenarios (2021)
• Shell Scenarios, Sky: Meeting the Goals of the Paris Agreement (2018)

ABOUT SHELL – www.shell.com

Shell is a global leader in power, energy, and gas technology and is working to meet increasing energy demand and supply challenges by delivering smarter products and cleaner energy, infrastructure, and by developing new energy sources while addressing the impact on the environment. Malaysia is one of Shell’s heartlands. The history of Royal Dutch Shell in Malaysia started about 130 years ago. Shell currently has a strong market presence in the upstream, gas-to-liquids, downstream and business operations sectors in Malaysia. The company is also driven towards contributing to the local talent pipeline, while playing its part in contributing towards the communities and the society through its various flagship social investment activities.

ENQUIRIES:

Sharmen Sekaran
Media Manager,
Shell Malaysia
Sharmen.Sekaran@Shell.com

Nimmi Kamal
Country Head of External Relations,
Shell Malaysia
Nimmi.Kamal@Shell.com

Cautionary Note

Scenarios describe possible future worlds to help stretch how we all think about and plan for the future – so we can make better decisions today. This scenario starts with data from Shell’s Sky scenario and uses additional data from Shell’s World Energy Model. We assumed the Malaysia energy system reaches net-zero emissions by 2065 and then worked back to see how this could occur. While there are other possible paths for Malaysia to achieve a net-zero emissions energy system, we believe this scenario is technically and economically possible. Nevertheless, it will be highly challenging and action must begin immediately. Our scenarios are not predictions, Shell strategy or business plans. Our scenarios present possible pathways for society to meet the goals of the Paris Agreement. Accordingly, when developing Shell’s strategy, our scenarios are one variable among many that we consider. Ultimately, whether society meets the goals of Paris, is not within Shell’s control. While we intend to travel this journey in step with society, only governments can create the framework for success.

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