A REVIEW OF BUILDING ENERGY EFFICIENCY DEVELOPMENT IN

Transcription

1 A REVIEW OF BUILDING ENERGY EFFICIENCY DEVELOPMENT IN MALAYSIA By: Lee Siew Eang January 2015

2 1.0 An Overview The 2009 United Nation Environment Programme s (UNEP) Report on Building and Climate Change: Summary for Decision Makers [1] has highlighted six key messages and 4 priorities for COP 15 held in 2009 in Copenhagen. They are: 1. The building sector has the most potential for delivering significant and cost- effective GHG emission reductions. 2. Countries will not meet emission reduction targets without supporting energy efficiency gains in the building sector. 3. Proven policies, technologies and knowledge already exist to deliver deep cuts in building related GHG emissions. 4. The building industry is committed to action and in many countries is already playing a leading role. 5. Significant co- benefits including employment will be created by policies that encourage energy efficient and low- emission building activity. 6. Failure to encourage energy- efficiency and low- carbon when building new or retrofitting will lock countries into the disadvantages of poor performing buildings for decades. The four priorities are: a. Prioritise the building sector as key to meeting national emission reduction targets. b. Supporting energy efficiency and GHG emission reduction programmes in the building sector must be recognised as a NAMA (Nationally Appropriate Mitigating Actions). c. CDM must be reformed to support investment in energy efficient building programmes in developing countries. d. Develop baselines for building- related GHG emissions using a consistent international approach to performance monitoring and reporting. This summary clearly demonstrates the importance of the building energy efficiency sector in advancing a country s national strategy in meeting emission reduction and energy efficiency targets. Owing to the high replicability of energy efficient technologies in building, the building energy efficiency sector is often viewed as the low hanging fruit with high investment return. Malaysia is located between 2 and 7 degrees north of the Equator, at the center of Southeast Asia. It has a typical tropical climatic condition. With an area of approximately 330,300 square km, Malaysia comprises of two regions. West Malaysia is named Peninsular Malaysia and covers the southern half of the Malay Peninsula. While East Malaysia consists of Sarawak and Sabah states situated in the northern part of the Kalimantan Island sharing border with Indonesia. The population of Malaysia in 2010 is about 28.3 million. About 70-80% of her population lives in the more densely populated West Malaysia. More than half of the population lives in urban areas. The capital city, Kuala Lumpur, is the densest part of Malaysia with a population density of 2

3 5760 people/km 2 as of In contrast, the state with the lowest population density is Sarawak, with only 20 people/km 2. Malaysia s building energy sector is relatively small consuming 19% of the final energy compared to the industry sector, which consumed 30% of the total final energy, while the transportation sector consumed 40%. These three major sectors consumed 89% of her total final energy. Figure 1 below shows the annual final energy consumption of the various sectors in Malaysia [2]. Figure 1 also shows Malaysia s primary energy mix. Natural gas (47%), crude oil (29%) and coal and coke (19%) are the three main sources of supply. On the demand side, it is projected to grow at 3.6% per annum average over a period of 21 years from 2009 to 2030, where under the business as usual scenario, final energy used in Malaysia would double from 2000PJ in 2009 to 4030PJ in Under this scenario, Malaysia will become a net energy importer in However, if new energy sources are found including the use of clean/renewable energy, and that energy efficiency initiatives to reduce final energy consumption have been successful, then Malaysia would become a net energy importer in 2021 [2]. Figure 1: Energy demand and supply pattern of Malaysia in The various sources of primary energy that go into the generation of electricity in Malaysia and the electricity consumption pattern among the various sectors of the economy are as given in Figures 2 and 3 respectively [3]. Figure 3 shows that the main sources of primary energy are natural gas (54%) and coal (37%), hydroelectric power contributes 7%. While there is a significant 7% from the renewable hydropower source, fossil fuels remain the large proportion of energy supply in Malaysia. On the consumption end, one can see that building sector, combination of the residential and the commercial sector, consumes 54.7% of the total electricity generated. The industry sector consumes 44.9% of the total electricity generated. A significant portion of electricity consumed in industry is also spent in the operation of industrial premises such as the 3

4 offices and production building. Hence, buildings consume well over 55% of the electricity generated. Figure 2: Sources of primary energy in electricity generation in Malaysia. Figure 3: Electricity consumption among the different sectors of Malaysia s economy. Hence, building energy efficiency programme must form a major and important part of a national energy efficiency framework. Reduction in electricity demand in building has far reaching implications in the saving of primary energy and impact on national energy security. Savings on the demand side will reduce the energy losses due to distribution and transmission of power, losses in power generation plants, and the energy use associated with extraction and transportation of fuels. In energy terms, saving one unit of electrical energy on the demand side will save 3-4 units of primary fuels. 2.0 BUILDING ENERGY EFFICIENCY PERFORMANCE Building energy efficiency development among the ASEAN nations was informal and undertaken in small scale before the year It was in year 2000 that ASEAN, under the auspices of the 4

5 Energy Efficiency and Conservation Sub- sector Network (EE&C- SSN) and with the sponsorship of Japan, that ASEAN organized its first Energy Efficient Building Competition and Awards, held in Singapore in July This has given an impetus for ASEAN governments to put focus on energy efficient building as part of their effort to participate in the competition as well as achieving wider national objectives in energy conservation. Energy efficient buildings were celebrated once a year at the ASEAN Energy Ministers Meeting held among the ASEAN members in rotation. According to the Malaysia National Energy Efficiency Action Plan 2014 [4], in the past 10 years, a number of energy efficiency initiatives had been undertaken by the Malaysian Government. Several of these initiatives were sponsored by the United Nations Development Programme (UNDP), Japan External Trade Organisation (JETRO), Energy Conservation Centre of Japan (ECCJ), and the Danish International Development Agency (DANIDA). These initiatives have led to capacity building in various aspects of energy efficiency in the country [. It has also increased the awareness on energy efficiency among stakeholders. The initiatives have also paved the way for the enactment and formulation of energy efficiency regulations. These initiatives include: 1) Malaysian Green Technology Corporation, formerly Malaysian Energy Centre (Pusat Tenaga Malaysia). A number of projects have been implemented in the areas of energy efficiency and renewable energy. Some of the most significant are: a. Integrated Resource Planning was a 4- year DANIDA funded project aimed at providing capacity building on methodologies for effective energy planning and forecasting, taking both supply and demand side initiatives into account. b. Green Energy Office (GEO) Building the building where the present Greentech Malaysia is located is a demonstration building that had been designed with low energy features. The energy consumption of the building was designed to be 50kWh/m2 significantly lower than the average of 200 kwh/m 2 of typical office buildings. Furthermore, installation of photovoltaic systems brings the net electricity consumption down to about 35kWh/m 2. 2) Centre for Education and Training in Energy Efficiency and Renewable Energy (CETREE) is a centre located at the University of Science, Penang. Initially, CETREE s was assisted by DANIDA. CETREE s focus is to increase energy efficiency and renewable energy awareness among students at all levels. The Centre has developed curricula for primary and secondary schools with respect to energy efficiency, and assisted universities in incorporating energy efficiency in their teaching programmes. It organises events for schools including the use of exhibition busses to visit schools all over Peninsular Malaysia. The centre s operation and development expenses were funded by the Ministry of Energy, Green Technologies and Water (MEGTW) of Malaysia. 3) Fiscal Incentives for Energy Efficiency was introduced under the government financial budget in The aim is to promote energy efficiency projects and equipment by providing tax incentives. The tax incentives are in the form of waiver of import duty and sales tax on energy efficient equipment and accelerated capital allowances or pioneer status for investment in energy efficient technologies and projects. These incentives were 5

6 enhanced over the years. 4) The Green Technology Finance Scheme (GTFS) was launched in January 2010, with a fund of RM 1.5 Billion to support investments in green technology projects, which, among others, include energy efficiency. The fund provides a 2% subsidy to the interest rates offered by commercial banks and a credit guarantee support for the loan capital. Under the 2013 budget, the Government increased the amount of interest subsidy by RM2.0 billion, making the total amount of green financing made available by the Government to RM3.5 billion. Many of these programmes continue to operate today, including financial incentive for green building technology for Green Building Labeling programmes operated by the Malaysia Green Building Confederation and the GreenRE assessment operated by the Real Estate and Housing Developers Association (REHDA) Malaysia. Besides Government s initiatives, a major international collaboration programme that remains active today is the Building Sector Energy Efficiency Project (BSEEP). This project involves international collaborations between the Global Environment Facility (GEF) through its agency- UNDP and the Publiic Works Department (JKR) of Malaysia. It aims to Promote Energy Efficiency in Residential and Commercial Buildings in Malaysia. The commencement and completion dates are January 2010 and March 2015 respectively. Hence, this project shall complete in a couple of months time. The project scope covers five major areas. They are: a. Institutional Capacity Development b. Policy Development and Regulatory Frameworks c. EE Financing Capacity Improvement d. Information and Awareness Enhancement e. Building EE Demonstrations The project total funding budget is US$30.25mil. This includes a cash grant of US$5.50mil from UNDP and US$24.75mil co- financing from the public and private sectors of Malaysia. The largest scope concerned is (e) comprising Energy Efficient Building Demonstration Projects. Under this scope, the private and public co- financing ratios are as given in table 1 below. Co- financing amount from Malaysia: (total to 93% of total project cost) No. Sector Type of Contributing Contributions Value (US$) Percentage (%) 1 Government Cash 15,947,222 65% 2 In- kind 3,458,104 14% 3 Private Sector Cash 4,930,556 2% 4 In- kind 300,000 1% Total: 24,635, % Table 1: Co- financing components from Malaysia under the BSEEP. 6

7 The Component (e): Building Energy Efficiency Demonstrations under the BSEEP, comprises of activities that will address the barriers related to the lack of technical expertise in energy efficient building architectural design and in the application of energy efficient technologies, such as: Limited experience with regards to the technical, economic and environmental aspects of energy efficient technology evaluations; and, Limited experience in incorporating measures and technologies to increase the energy efficiency in new and existing buildings. The documentation and integration know- how. The approach to remove such barriers is through demonstrations of the application and impacts of pertinent building energy efficient technologies. The expected outcomes of the demonstrations are: i. Improved confidence in the feasibility, performance, energy, environmental and economic benefits of EE building technology applications; ii. iii. Improved local technical and managerial capacity to design, manage and maintain energy conserving operations of buildings; and, Replication of demonstration projects. The outcomes are: o o o Demonstration of EE buildings and EE buildings technology applications; Demonstration project implementation; and, Follow up capacity development for the local building industry. For the demonstration projects, five sub- activities are carried out as follows: Conduct of detailed feasibility analyses, costing and engineering designs of selected demonstrations that were identified during the project design; Conduct of specific activities to ensure effective demonstration project implementations; Establishment of baseline data for each demonstration project; Design, installation, operation, monitoring and evaluation of the demonstration projects; and, Conduct seminar- workshops for the promotion, dissemination and presentation of results for the demonstration projects and the relevant application of energy efficient building technologies and practices. The BEESP programme has ambitious targets. Table 2 shows the expected outcomes in terms of real reduction in building energy use index (kwh/m2- yr) by the year In a short spans of 5 years, the project host, the Public Works Department (JKR) aims to reduce the Building Energy Use Index (BEI) by approximately 30%. This is expected to result in an overall building sector BEI of kwh/m 2 - yr, average over all commercial buildings in both public and private sectors in Malaysia. The baseline BEI at the commencement of the programme in 2009 is 215 kwh/m 2 - yr. The actual incremental development of energy efficient building over this five- year programme is 19% as at it commencement an 11% of energy efficient buildings are deemed to have existed. 7

8 Table 2: The baseline scenario and enhanced performance expected from the BSEEP programme in Malaysia for commercial buildings. From the report made by JKR [5], it was stated that an average commercial building in Malaysia has an average BEI of 205 kwh/m 2 - yr, and has a gross floor area of about 30,000m 2. An energy efficient building is defined as one with BEI of 136kW/m2/year and below. This means that for an average commercial building in Malaysia, a 34% improvement in energy efficiency is required before it can be considered an energy efficient building. The expected growth rate in terms of expansion of real estate building stock is 6.4% based on the total building stock of million square metres in An annual growth of 6.4% represents an addition of 2.42 mil m2 of built space per annum; averaging over 30,000m2, this means an addition of at least 80 new commercial buildings annually. This is perhaps a conservative estimate considering a country of the size of Malaysia. The three recently completed commercial buildings with high energy performance demonstration building are as shown in Figure 4 [7]. Figure 4: Three high energy performance buildings completed recently in Malaysia [7]. 8

9 Among the commercial buildings, the major energy consuming systems are the airconditioning (57%), lighting (19%), vertical transportation and pumps (18%) and others (6%). The low hanging fruits are within the airconditioning and the lighting systems, as together they consume about 75 to 80% of the total energy use depending on the performance of these two systems. Based on a survey of residential building users, the key components that consume electricity or energy are plotted as shown in Figure 5 [6]. Energy ConsumpUon (% of total consumpuon) 100% Energy ConsumpUon PaVerns in ResidenUal Homes 80% 60% 40% 20% 0% Malaysia Indonesia Singapore Figure 5: Energy consuming appliances in residential homes (2013) [6]. Others TV Electric Stove Washing Machine LighUng Cooling Refrigerator The results of Figure 5 show that the three main appliances, the refrigerator, the cooling appliances and lighting consume a significant portion of the total energy. They are 58%, 51% and 39% respectively for Malaysia, Singapore and Indonesia respectively. Hence, the energy efficiency performance of these appliances, their usage and the demand on their services are major influencing factors in achieving energy use reduction in residential homes in South East Asia. In the case of refrigerators, their energy performance is of utmost importance as these appliances are usually turned on continuously and hence the single most important controlling factor is the designed performance of the refrigerator. Of course, usage is another factor but it is significantly less important. It is also interesting to note that a large portion of energy consumed is classified as others. This could be the use of computers, water heaters and other kitchen appliances. It was also observed that the total amount of energy consumed in residential building increased with income, but not in direct relationship. 3.0 Energy Services Sector and Its Development The Malaysia Association of Energy Services Companies (MAESCO) was formed in September Its formation was motivated mainly by the Malaysian Industrial Energy Efficiency Improvement Project (MIEEIP) initiated in The participation of ESCOs was viewed as important. Currently, it has a membership of 60. From it website, one can see that it hosts the Certified Energy Manager Training programme and that it has held this programme for 20 times. Among its various functions and objectives, the MAESCO stated that its intention is to partner with the Government to ensure that only genuine companies with the capacity to effectively provide credible services would be allowed to participate in the Association. This shows that the 9

10 MAESCO understand that only with credible members can it flourish and serve the industry s objective well. Hence the initial phase of ESCOs development in Malaysia was centered at industry energy efficiency. The success of the initiatives under the MIEEIP programme has however been quite limited. Weaknesses concerning inadequacy to address the project implementation phase have been identified as one of the causes of failure. Moreover the MIEEIP programme did not allow ESCOs to gain a wide consensus due to the fact that many involved were equipment suppliers who presented themselves as ESCOs. The poorly implemented or failed projects (Akker, 2008) [8] have resulted in potential clients from the industry sector holding back their projects. According to the ESCO Market Report for Non- European Countries 2013 [9], a new strategy is currently adopted by Malaysian government to develop its ESCO services in the public sector. The Malaysian government intends to take the lead and play an exemplary role in the field of energy efficiency projects implementation under an ESCO scheme. The final objective is to implement ESCO projects by stipulating Energy Performance Contracts (EPCs) with shared savings in at least 25 Malaysian Ministries' headquarters. This objective will be achieved by defining benchmarks and key performance indicators for the buildings of each Ministry; by defining suitable public tender procedures and by setting up a registration and accreditation scheme for participating ESCOs. The participation of local financial institutions will be supported and assisted by the Ministry of Energy, Green Technology and Water and by the Ministry of Finance. The Energy Commission of Malaysia will be in charge of the ESCO registration and accreditation system, and also of the promotion of the initiative. Together with the Public Works Department of Malaysia which will be responsible for measurement and verification of the final energy performances achieved by the various Ministries' buildings. Each of the Ministries involved will be supposed to reduce its annual consumption by about 2%. The initiative reported shows that ESCOs and the ESCO market development have a high priority in the energy efficiency policy agenda of Malaysia. However it has to be pointed out that the energy saving targets established for Ministries' buildings do not seem very high and shared saving arrangements may run into many complexities. For example, for some of the buildings, EPCs might not be the best contractual arrangement to implement the simple or small energy efficiency improvement projects economically. Also, the decision of focusing on EPCs with shared savings appear quite questionable if financing institutions willing to finance these ESCOs projects are not identified beforehand. It is therefore critical that the Government s good intention is carefully considered and planned to ensure that the desired outcomes are achieved. Recent policy and private sector development in Malaysia has directly and indirectly improved the market conditions for the ESCOs within the building sector. Regulation on Efficient Management of Electrical Energy, enforced in 2008 under the amendments to the Uniform Building by Laws (UBBL), has been implemented under the Electricity Supply Act. This regulation requires that installations consuming more than 3 GWh per semester (six consecutive months) must appoint an energy manager responsible for monitoring electricity consumption, proposing energy efficiency improvement actions and assessing the effectiveness of the actions implemented. 10

11 The introduction of the Green Building Index Malaysia (GBI Malaysia) by the Malaysia Green Building Confederation (MGBC) has also generated demand for energy services in the design and retrofit of new and existing buildings. In general, among the ASEAN member nations, the ESCO sector in Malaysia is considered more advanced in terms of size, number, and the support it has gained from the government. The many programmes that have been implemented and being planned are significant factors contributing to a relatively positive environment for the ESCOs. The fact that Malaysia may become a net energy importer by the year 2019, and the concerted Government actions to remove fuel subsidies and implement energy efficiency and management programme to bridge this turning point in Malaysia s energy scenario, is an opportunity for the ESCOs sector in Malaysia. 4.0 Energy Policies, Regulations and Programmes From the beginning of the millennium, the Government of Malaysia has been proactive in developing its policy instruments towards energy efficiency. The Kyoto Protocol and the associated Clean Development Mechanism (CDM) also led to many energy cooperation programmes in Malaysia. This resulted in several major programme being implemented in the period between 2007 and In the earlier part, attention was focused more on the industry energy efficiency development and the development of alternative and clean sources of energy. The key policies governing energy efficiency and conservation in Malaysia are as shown in Figure 6. These policies comprehensively regulate the exploration and development of energy sources and their usage for all sectors [2]. Figure 6: Key policies governing energy efficiency and conservation in Malaysia [2]. Among these policies, the significant recent policies aiming to improve energy efficient in buildings including the Regulation on Efficient Management of Electrical Energy, enforced in

12 under the amendments to the Uniform Building by Laws (UBBL). This regulation requires all buildings or facilities consuming 3 GWh or more of electricity to notify the authority of the appointment of an electrical energy manager. The electrical energy manager will develop energy management policies for the facility, undertake energy audit, implement energy efficiency improving measures, monitor and report the performance of these measures, and keep records of all relevant data for periodical reporting. This policy comes into effect on the 5 th December In 2009, the ISO Standard 5001:2009 on Energy Management Systems was launched. The standard provides guidelines and framework for the development of energy management systems. Training programme and certification systems are being developed and implemented. SEDA Malaysia, Sustainable Energy Development Authority is a statutory body created under the Sustainable Energy Development Authority Act The key role of SEDA is to administer and manage the implementation of the feed- in- tariff mechanism which is mandated under the Renewable Energy Act RM40million was disbursed to SEDA for the implementation of the Sustainability Achieve Via Energy Efficiency (SAVE) Programme. The SAVE Program was launched, on 7 th July 2011, as an initiative to stimulate sales of energy- efficient appliances by providing rebates for consumers [10]. This programme is designed for both domestic appliances and major building components such as the chiller plant. New and future policies on the drawing board include [10]: a. Energy Efficiency and Conservation Act expected to be enforced by 2014 b. A 10- year National Energy Efficiency Master Plan (NEEMP) which is currently in its final stage of preparation [4]. c. Intensify EE initiatives in industrial, transport and commercial sectors and in government buildings The National Energy Efficiency Master Plan is in its final stage of preparation, it comprises of five major thrusts [4]: Thrust 1: Thrust 2: Thrust 3: Establish an overall long- term national plan for energy efficiency. This plan will create the road map for energy efficiency for the next 10 years. This will allow a coordinated effort to improve energy efficiency in all segments of society and ensure a continuous implementation of initiatives. The plan will be named as The Malaysia Energy Efficiency Action Plan; Strengthen Implementation Capacity to Promote Energy Efficiency. A dedicated project team needs to be established in MEGTW to implement the plan. Oversee the initiatives to be undertaken and track the progress; Create adequate and sustainable funding mechanism for energy efficiency. Although energy efficiency is a viable option in the longer term, there is a need to ensure that 12

13 funding is available for the promotion and implementation of energy efficiency initiatives as well as for funding the project team to administer the Plan. The necessary funding is envisaged to be used for kick starting e.g. through incentive rebates, the implementation of energy efficiency initiatives and mitigating the economic barriers to a wide spread uptake of energy efficiency; Thrust 4: Thrust 5: Implement Energy Efficiency Programmes. The core of this national action plan is the implementation of specific energy efficiency programmes that will reduce the energy consumption by the target consumers. Therefore, the Plan comprises a catalogues of programmes which are to be pursued during the Plan period; and Enable commercial finance institutions to support energy efficiency. As it is intended to ensure that energy efficiency is a way of life for the society, it is important that the consumers have access to finance to choose and invest in energy efficient technologies and projects. Therefore, the finance institutions are envisaged to play a major role in accepting and providing finance to energy efficient technologies and energy efficiency improvement projects. The strategic actions under the Malaysia Energy Efficiency Action Plan are: Action 1: Establish a Malaysia Energy Efficiency Action Plan Project Team; Action 2: Funding for energy efficiency; Action 3: Government led initiatives; Action 4: Capacity Building; and Action 5: Research, development and innovation. The effective and efficient implementation of the Malaysia Energy Efficiency Action Plan s (MEEAP) programmes requires an average estimated government budget allocation of RM 104 million annually. This budget will cover the cost to administer and incentivize the Malaysia Energy Efficiency Action Plan s programmes. The public expenditure on the entire Malaysia Energy Efficiency Action Plan, total of RM 1,040 million, will be leveraged by the private sector investments. A total of RM 9,518 million private sector investments will be induced over the plan. From this investment amount, the largest share will be spent on the adaptation of energy- efficient technologies. The MEEAP contains 17 specific energy efficiency programmes covering three sectors to be implemented over a 10 years period. The programmes can be grouped into 5 key initiatives related to the design of the programmes. They are: Initiative 1: Initiative 2: Initiative 3: Initiative 4: Initiative 5: Rating and labelling of appliances; Minimum Energy Performance Standards (MEPS); Energy Audits and Management in Buildings and Industries; Targeted Kick Start Promotion Bonus and support programmes. Energy Efficient Building Design. The Green Building Index, although a scheme developed and implemented by NGO in the private 13

14 sector, the government does make provision for tax incentive for building obtaining the Green Building Index certification. Owners of buildings awarded the GBI certificate, are eligible for tax exemption equivalent to 100% of the additional capital expenditure incurred to obtain the GBI certificate. The exemption is allowed to set- off against 100% of the statutory income for each year of assessment. The incentive is applicable for new buildings and upgrading of existing buildings. The incentive is given only for the first GBI certificate issued in respect of the building. This incentive is effective for buildings awarded with GBI certificates from 24 October 2009 until 31 December Buyers of buildings and residential properties awarded GBI certificate bought from real property developers are eligible for stamp duty exemption on instruments of transfer of ownership of such buildings. The amount of stamp duty exemption is on the additional cost incurred to obtain the GBI certificate. The incentive is given only once to the first owner of the building. This incentive is effective for sales and purchase agreement executed from 24 October 2009 until 31 December Another potentially interesting financing mechanism in place in Malaysia is the Green Technology Financing Scheme (GTFS). It consists in subsidies on loans' interests and guarantees on loans for the purchasing of green technologies. Any product, equipment or system generally minimizing environment degradation, or reducing greenhouse gas emissions, or promoting a healthy environment for all forms of life, or conserving the use of energy and natural resources, or promoting the use of renewable energy sources is eligible to these soft loans. A fund of about USD 0.6 billion has been made available to finance this initiative until December Subsidies amount to 2% of loans interests and guarantees offered correspond to 60% of the risks associated to the loans. This Section shows the comprehensive and wide ranging policy instruments in place in Malaysia to promote, incentivize, facilitate and develop the energy efficiency sector of Malaysia. In view of the coverage of the various incentive schemes, it is useful for the beneficiaries to understand and apply for the most effective and beneficial scheme to optimize the outcomes for the project. This is where the ESCOs can play an effective role to understand and advise client on the right scheme to use. 5.0 Barriers to Building Energy Efficiency Development From the KeTTHA Report on National Energy Efficiency Action Plan (Final Draft) [4], lessons learned from the past experiences have given the understanding on the main barriers that impeded the progress and success of past energy efficiency improvement efforts in Malaysia. These barriers may be classified as follows: Low energy prices; Lack of finance for energy efficiency; Lack of overall national plan for Energy Efficiency; Lack of champion to drive Energy Efficiency; and 14

15 Lack of consistency in embarking on energy efficiency. Shari et al (2012)[11] in her study examining the stakeholders barriers in Malaysia has identified the following barriers: i. Sustainability measure was not required by the client ii. iii. iv. Lack of political will, legislation and enforcement during implementation Project team members lacked technical understanding Sustainability measure was not considered by project team members v. Sustainability measures cost too much vi. Other barriers, namely: Sustainability measure was not practiced by tenant (6%) due to wrong attitude and the lack of awareness in conserving energy and water, and reducing waste. Sustainability materials, products or systems were not available in the area (4%) or mostly imported hence, very expensive. Stakeholder lacked information to achieve sustainable measure (4%); hence, a safe solution was normally opted for, explaining why many sustainability objectives simply fell by the wayside. Where information was available, it had not been successfully integrated and effectively disseminated and promoted. The failure of service fee structures (which based on overall construction cost instead of performance) to reflect long- term savings (2%). These offered little incentive for building professionals to pursue higher performance standards or reward for their moderation and/or innovation in building or system designs. The two sets of barriers identified above cover two areas of concern. The barrier identified by KeTTHA concern the macro level considerations at the national or sectorial level. These reveal the systemic problems or missing critical elements in the successful implementation of energy efficient technologies and/or services. In Shari s study, the views were that of the end users, the design team, and the small and medium size developers. It can be seen that their perspectives and concerns are very different, but real. This shows that the issue of removal of barriers must be implemented at multi- tier level to resolve all relevant issues. 6.0 Stakeholders At the global level, the various stake holders and their relationships with Energy Efficient Building development is as shown in Figure 7 below. From the study conducted, it can be seen that the Malaysian effort in building energy efficiency development focus very much in developing capacity and capabilities with the public sector institutions, the ESCOs and complementary standards institutions and laboratories. The policy instruments do not have clear strategies, targets and deliverables with respect to the consultants within the industry, the universities and the bankers. From the perspective of the public sector, the key agencies involved in the promotion of energy 15

16 efficiency in Malaysia are the Energy Unit of the Economic Planning Unit (EPU) in the Prime Minister s Office, the Ministry of Energy, Green Technology and Water (MEGTW) and the Energy Commission (EC). The role of MEGTW is to formulate and implement energy efficiency policy, in coordination with the EPU. The EPU s main role is to allocate sufficient resources for the implementation of energy efficiency programmes. The EC, established under the Energy Commission Act 2001, is the regulatory agency for the electricity and the gas supply industry at the reticulation stage. The Commission s main tasks are to regulate the electricity and gas supply industry at the reticulation stage from the technical, safety and economic aspects. EC also advises the Energy, Green Technology and Water Minister on all matters related to electricity and tariffs including energy efficiency promotion. These are generic, expert departments with respect to energy safety, engineering and technologies. Agency like the JKR (Public Works Department) is playing comparatively a minor role. This may be a weakness in the implementation programme. The JKR may be in closer touch with the built environment industry and understand the functioning mechanisms and integration needs of the construction industry better. They may be the department who would be more suitable to work with the built environment industry to promote and deliver energy efficiency for building. These are issues worth considering. Policy Makers Consultants Financiers Codes and Regulations Incentive & Awareness New Buildings Existing Buildings Investment EPC Finance & Model Users Building Energy Efficiency Development Facility Managers Services Development Audits & EPC Training New Technology & Tools Standards & Tests Labeling & Certification ESCOs R&D/Academics Standards Institutes Figure 7: The relevant stakeholder groups in the development of energy efficiency globally. 7.0 Conclusions Malaysia is experiencing a very high economic development with a consequent marked increase in the amount of energy and natural resources consumed. So far the government has supported this trend by subsidizing energy prices and by introducing financial measures that could contribute to enhance the productivity of the country. Due to this situation Malaysia, as other countries of South East Asia, will soon become a net energy importer. The government seems 16

17 determined to face this turning point by accelerating the liberalization of energy markets while promoting policy measures that should make the economy of the country more energy efficient. The review has shown that programmes and plans are present to create a potential energy efficiency improvement market with a volume near to USD 400 million per annum (Leaver, 2013) [14]. This gives a generally positive outlook to Malaysia s strategies and actions towards the development of the building energy efficiency sector. However, the possibility that this potential can actually be achieved and exploited will depend on a combination of factors. Whilst the expected increase in the energy prices will create favourable conditions for ESCOs' activities, the reliability of these market actors and the willingness of energy end- users and financial institutes to enter this market will depend primarily on the creation of competences and expertise on ESCO business within companies and on the establishment of the necessary instruments needed to support its development (e.g. energy performance contract models, standard procedures for energy saving measurement and verification, financing mechanisms, etc.). The competency of the public sector agencies in understanding the market s needs and mechanisms, identification of priorities and setting targets, management and direction of resources, and the gathering of feedback and prompt adjustment of targets and directions are critical success factors in implementing programmes. REFERENCES: 1. United Nation Environment Programme: Buildings and Climate Change- Summary for Decision Makers, Paris France, Energy Policy Unit (Malaysia): The New Energy Policy 2012; Conference on National Energy Security 2012; 28 February 2012, Kuala Lumpur, Nasrudin Abd Rahim, Md. Hasanuzzaman, Md. Hasanuzzaman: Energy Situation in Malaysia: Present and Its Future; Sustainable Energy and Environment Forum; Malaysia Ministry of Energy, Green Technologies and Water: KeTTHA Report- National Energy Efficiency Action Plan (Draft Final Report January 2014), January 2014 Malaysia. 5. Global Environment Facility (GEF): Letter to the Council- Low Carbon Building Programme; Malaysia Building Sector Energy Efficiency Project; 30 November 2009, Washington, USA. 6. M. Aoshima: Research on Residential Energy Consumption in ASEAN; April 2013 Conference on Energy Efficiency for Sustainable Living; The Institute of Energy Economics, Japan

18 7. Ministry of Energy, Green Technologies and Water: Energy Efficiency in Malaysia; conference on energy efficiency and sustainable living; 25 April 2013, Kuala Lumpur, Malaysia Jan van den Akker: Final Evaluation Report- Malaysian Industrial Energy Efficiency Improvement project (MIEEIP), Malaysia, January Joint Research Centre, Institute for Energy and Transport: ESCO Market Report for Non- European Countries 2013, Report EUR EN, European Union Ahmad Zairin Ismail: Energy Efficiency and Energy Management Initiatives in Malaysia; International GreenTech and Eco- products Exhibition and Conference Malaysia; October 2012, Kuala Lumpur, Malaysia. 11. Shari, Z.A, Soebarto, V.Ib: Delivering Sustainable Building Strategies in Malaysia: Stakeholders Barriers and Aspirations; ALAM CIPTA, Intl. Journal of Sustainable Tropical Design Research and Practice, Vol.5 (2), pp.3-12; December 2012, Malaysia. 12. Leaver, L.: Decomposition of ESCO market potential- A look at energy expenses and Market Opportunities. Presentation held at APEC Cooperative Energy Efficiency Design for Sustainability (CEEDS) workshop on the promotion of ESCOs, Taipei, 26 th March