Incentivizing Net Zero in Malaysia

The transition to net zero is an economic opportunity of the 21st century according to an independent review led by Chris Skidmore in UK. The report estimates that the transition to net-zero emissions would bring about an economic transformation that would affect all countries and all sectors of the economy, either directly or indirectly. Skidmore summarised 7 points regarding Net Zero opportunities:

1.????Net zero is creating a new era of change and opportunity.

2.????The UK must act decisively to seize the economic opportunities and smooth the transition.

3.????The benefits of investing in net zero today outweigh the costs.

4.????Unlocking the ambition of places and communities will deliver the most successful version of net zero.

5.????Net zero can materially improve people’s lives – now and in 2050 – but work is needed to secure the benefits and minimise costs.

6.????Net zero by 2050 remains the right target for the UK: it is backed by the science, widely followed, and is creating real opportunity.

7.????Significant additional government action is required to ensure that the UK achieves net zero in the best way possible for the economy and the public.

Done right, Net Zero can reduce capital and operational cost compared to business-as-usual (BAU) approach. BAU in existing SME and building industry will replace the same for same when an equipment breaks down. A Net Zero future will push innovations to improve efficiencies from 1st principal basis, reducing load on processes, allowing smaller motors, heating, and cooling equipment to replace previously inefficient, oversized equipment. This strategy will reduce the cost of replacing broken down equipment while improving efficiency. Moreover, if it involves a fan or a pump, the efficiency gained is compounded by cubic factor, i.e., 50% reduction in flow rate, lead to 87.5% energy reduction in pumps and fans. This is how we can achieve 80% to 90% reduction in carbon emissions. In engineering, this is called the magic of affinity law.

Let me repeat this again, Net Zero done right, reduces both capital and operational cost. There are plenty of opportunities to fix previous inefficiencies, because in the past, the 1st priority for an engineer is to build things to work first, while efficiency was relegated to the bottom due to cheap and abundant energy.

UK has interviewed more than 1800 people and held more than 50 roundtable discussions, to conclude that Net Zero is the growth opportunity of the 21st century. We must join this race or risk being left behind as a mere spectator.

Growth opportunities arise from innovation in products and services to achieve Net Zero at a lower cost than BAU. In short, Net Zero make us more competitive not less. Innovations comes from us doing things differently, breaking barriers, and making changes. If nothing is done, nothing is achieved.

Therefore, I am championing for Malaysia to get into this race for Net Zero. Do not be a mere spectator. With this objective, I am proposing a National Think Tank on Net Zero. The nation smartest and brightness from different industries should be gathered to chart the roadmap to Net Zero in Malaysia.

There are abundant of synergies between industries that have not been captured yet. The waste from one process can be a resource for another. For example, 50% of our landfills are organic waste. Tons of organic waste is generated daily. Imagine if we can innovate the technical and business case, to turn all these organic waste into biogas and fertilizer. It has the potential to create a lot of jobs because organic waste is everywhere.

However, innovation will only come from hungry driven entrepreneurs. We need entrepreneurs to keep chipping off on a problem until it becomes a masterpiece. Innovation does not come in a flash. Most innovations come from grueling hard work of problem solving one issue after another. Thomas Edison famously said, he found 10,0000 ways that won’t work.

Therefore, we must create a fund or grant to encourage entrepreneurship on Net Zero. We must seek and fund high-quality proposals for Net Zero solutions. All proposals should be reviewed professionally by qualified engineer and accountant, who thoroughly understands fundamental of science, engineering, and having an eye to recognise a viable business case from a doomed one. We must go hunting for an Elon Musk of Malaysia.

With the right people on board, the National Think Tank can scope the opportunities and innovations that is required for Net Zero in Malaysia, and offer these opportunities out for budding entrepreneurs to capitalise on it.

According to the International Energy Agency (IEA), global energy investment is set to rise to USD 1.9 trillion in 2021. Net Zero will easily slash this by 25% – freeing up USD 0.5 trillion for investment in Net Zero annually worldwide. And when we get this done right, we will be burning significantly less of our money on oil and gas. These savings can be invested in our people, to wipe out poverty, to improve health and wellness, and to provide quality education to all. By the way, a trillion has lots and lots of zeros! There is a lot of money to be made.

Another task that the National Think Tank can work on, is to streamline government incentives to promote Net Zero in Malaysia. Incentives rarely works in the long term. It would give a kick start but dies down once the incentive is removed. Moreover, a long-term incentive is just another name for a subsidy. Once get hooked, we cannot live without it. Meanwhile, intrinsic motivation has a higher chance of achieving long-term success. The National Think Tank must carefully design an incentive system that drive intrinsic motivation for Net Zero, instead of just giving free money away. It will not be easy, but as long as we keep working on it, keep chipping obstacles away, we will get our masterpiece.

It is also necessary to implement carbon tax in Malaysia. The trading world will demand for it, and it does not make any sense to pay carbon tax to another country, just to be able to trade with them. Especially when we can tax it here and use the money to further our own Net Zero initiatives. The National Think Tank must work on a carbon tax solution that will not burden our B40. We must recognise that it is relatively tougher for B40 to upgrade to higher efficiency equipment, for them to reduce their carbon emissions. Better still, we can develop a mechanism where the carbon tax is used to help B40 join the Net Zero movement.

The National Think Tank must also ensure that the foundation of every Net Zero project is a viable business case. My experience has taught me that any Net Zero project without a viable business case will die a natural dead. However, we must evaluate such business case holistically. For example, it may not be financially feasible for an entrepreneur to set up an anaerobic digester to convert organic waste into biogas and fertilizer. However, due to the reduction in waste to landfills by 50%, local municipalities will gain huge savings from paying their existing waste contractors less. Therefore, it may be more feasible for a local municipality to invest in the anaerobic digesters. Then hand over the digester to an operator, who then makes a living from the generated biogas and fertilizer by keeping it running and maintaining it. Done well, Net Zero can grow our economy, create more jobs, eradicate poverty, providing a more equitable society, while mitigating climate change. ?

There are plenty more of such opportunities due to Net Zero. We must come together to rethink, how we can do things more efficiently than before. And we must be brave enough to remove our blinders of doing things the way we normally do, i.e., business-as-usual.

In short, the National Think Tank on Net Zero has plenty to do.

In summary, we must crush the perception that Net Zero as just another run of mill trendy slogan. We must also crush the notion that Net Zero is an expensive venture, just to make us spend unnecessarily to enrich white nations. Because the truth is Net Zero is an equal opportunity provider. May the best ideas, products, services, and solutions drive us to fix this world together.

We must not miss out on this opportunity of the 21st century. It will be damn stupid if we did.