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Transforming Sarawak into a green economy

Transforming Sarawak into a green economy

30 Mar 2023

IN its pivot towards being a green economy, Sarawak is ploughing more resources into the development of its renewable energy sector to achieve its goal of becoming a high-income economy by 2030.

Sarawak Premier Tan Sri Abang Johari Tun Openg has declared that the state must move away from its overdependence on oil and gas and look towards more sustainable sources of income.

Abang Johari believes a new revenue stream for the state can come from the export of methanol and hydrogen, as well as by engaging in carbon trading and other green solutions, to achieve an annual growth rate of 8% on average in the state’s GDP to reach its target of more than RM280 billion by 2030, from RM130 billion in 2021.

When fully operational, the methanol plant at the Sarawak Petrochemical Park will have the potential to contribute RM16 billion to RM20 billion to Sarawak’s annual gross domestic product.

In fact, Sarawak is already in talks with Singapore to export renewable energy. While the state has excess renewable energy, exports are currently capped at 1,000mw, mostly from its hydropower plants.

“If any investment is coming to Singapore — for instance, a data centre that needs much energy — we encourage them to come to Sarawak, based on the bilateral agreements,” Abang Johari tells The Edge.

He says that while the Energy Commission (EC) does not allow the export of renewable energy, Sarawak is focused on developing the sector to achieve its goals.

“We are not a member of the EC. We are independent of the EC, but we must inform the federal government. The thing is, we are already selling to Kalimantan, Indonesia. If we can sell to them, why can’t [we also sell to] Singapore, in the Asean spirit?”


Leveraging the competitive electricity tariffs and abundant hydropower in the state, which gives it an edge over other hydrogen producers in the region, Sarawak is not just working towards pole position in hydrogen production and export in Southeast Asia but also aims to become a global competitive hydrogen export hub, supported by the National Energy Policy 2022-2040.

In 2019, the first hydrogen-powered buses in Southeast Asia were introduced in Kuching. This proof-of-concept was backed by the launch of a hydrogen production plant and refuelling station, which produces 130kg of hydrogen per day. By 2030, the state aims to have 100 multi-fuel stations state-wide.

Foreign investors have shown interest in green hydrogen production, for example, the H2biscus Green Hydrogen project in Bintulu, which is a tie-up between South Korea-based Samsung Engineering, Lotte Chemical and POSCO with Sarawak Economic Development Corp (SEDC) unit SEDC Energy Sdn Bhd. Japan-based Sumitomo and ENEOS Corp are working with SEDC Energy on a hydrogen plant in Bintulu. (ENEOS also has a collaboration with Petronas Hydrogen Sdn Bhd in Kerteh, Terengganu.)

In Samalaju, Australia-based H2X Global, Thales New Energy and SEDC Energy are working together on a facility to produce and export green liquid hydrogen as well as ammonia.


With the Baleh dam, an enormous hydroelectric project slated to be operational in 2027, Sarawak will have more than 4,700mw of installed capacity from hydropower plants in production.

The state’s first hydroelectric plant (HEP) in Batang Ai (108mw) was commissioned in 1985, followed by Bakun HEP (2,400mw) in 2011 and Murum HEP (944mw) in 2014.

Notably, Sarawak has been exporting power to its neighbouring countries, starting from 2016 when it exported an average of 190mw to 200mw of power to Indonesian national utility Perusahaan Listrik Negara (PLN).

Abang Johari also mentioned plans for further interconnection projects (power exports) with neighbouring states and countries such as Sabah and Brunei, to advance the concept of the Asean Power Grid.

Earlier this year, Sarawak achieved another milestone in renewable energy after securing its first international hydropower project, the Mentarang Induk Hydropower Project (MIHEP) in North Kalimantan, Indonesia. The 1,375mw MIHEP is being developed by PT Kayan Hydropower Nusantara, a joint venture between Sarawak Energy Bhd and Indonesian companies.

Abang Johari has also hinted at the use of new technology — cascading dams — to create multiple dams that produce up to 100mw each.

Carbon trading

Perhaps one of Abang Johari’s proudest achievements in transforming the state’s economy is the fact that Sarawak is the first state to enact legislation for carbon and nature venture businesses. This was done to recognise the potential of carbon trading, both in voluntary and compliance markets, as a new source of revenue.

Recently, he began talks with the Singapore government even though Malaysia’s federal government had yet to implement its policies on carbon trading.

Notably, Sarawak hosted the first Asia Carbon Conference in Kuching on March 15, where the premier presented the first licence for carbon storage to Petroleum Sarawak Bhd (Petros).

This came three months after Petros partnered with South Korea-based Posco Group to explore carbon capture and storage (CCS) opportunities. Petros is also working with Petroliam Nasional Bhd (Petronas) to establish a road map for a CCS ecosystem.

Sarawak has awarded the first forest carbon study permit to SaraCarbon Sdn Bhd, a unit of the Samling Group, paving the way for a carbon study in its industrial tree plantation sector.

The amendments made to the Forests Ordinance and Land Code have enabled Sarawak to initiate activities that will reduce emissions of greenhouse gases to mitigate the effects of climate change.

The amendments also cover airspace and properties above the surface of land, as well as the seabed of the state’s continental shelf, to provide a legal framework for carbon capture, utilisation and storage (CCUS) activities.

Sarawak has an estimated 30 trillion cu m of carbon storage capacity in the seabed of its continental shelf and, according to the state government, based on one million hectares of high-yield and sustainable industrial forest plantation, its target for carbon trading potential is RM140 million to RM230 million by 2025.

To further enhance the carbon trading potential, Sarawak has outlined the forest carbon activities concept, which represents about 10% of the forestry sector under the state’s green economy initiatives. Overall, the forest carbon activities concept is aimed at moving the state away from decades of logging for merchantable timbers to preserving its trees and reaping the benefits of carbon trading.

Source: The Edge Markets