Malaysia takes a significant step towards its net zero goals: Dewan Rakyat passes Energy Efficiency and Conservation Bill 2023

29 November 2023

On 11 October 2023, the Dewan Rakyat passed the Energy Efficiency and Conservation Bill 2023 (“EECA”). This significant legislation represents a key component of the National Energy Transition Roadmap and aims to promote demand-side energy management by overseeing conservation and efficient consumption of energy.

Malaysia has pledged to achieve net zero greenhouse gas (“GHG”) emissions by 2050. Developments in this regard have predominantly centred on supply-side energy management, with particular emphasis on energy generation through renewable sources. With the introduction of the EECA, Malaysia aims to promote demand-side energy management by regulating efficient and effective use of energy. The EECA seeks to regulate energy consumption in three areas, namely large energy consumers within the industrial and commercial sectors, office buildings, and energy-using products.

This Alert sets out the key provisions of the EECA.

Key points

  • Companies with an energy consumption of exceeding 21,600 gigajoules are required to implement energy-saving measures and are subject to periodic energy audits.
  • Office buildings exceeding 8,000sqm must ensure energy intensity performance conform to prescribed energy efficiency ratings.
  • Energy-using products must adhere to energy performance standards to obtain the requisite energy efficiency certificates and labels before they can be manufactured or distributed.
  • The Energy Commission is granted wide investigative and enforcement powers to ensure compliance with EECA provisions.

Large energy consumers

The Minister of Natural Resources, Environment and Climate Change (“Minister”) has indicated that companies with an annual energy consumption exceeding 21,600 gigajoules (“GJ”) will be classified as “energy consumers” under the EECA. They are required to adhere to the following compliance stipulations:

  • Appoint an energy manager to manage its energy efficiency and conservation. An energy manager must be registered with the Energy Commission (“EC”) and possess the requisite training and certifications as prescribed by the EC;
  • Develop and implement an energy management system in accordance with EC guidelines. The energy management system must include an energy policy, energy objectives, and the processes and procedures to achieve the energy objectives.
  • Submit an energy efficiency and conservation report to the EC. The report includes a description of the energy management system implemented, details on the total amount and purpose of the energy consumed, and proposed measures for improving energy efficiency and conservation; and
  • Allow periodic energy audits by an EC registered energy auditor for the purposes of submitting an energy audit report to the EC. Notably, if the EC is satisfied that the energy consumer has significantly improved its energy efficiency after the first energy audit, the company may be exempted from subsequent audits.

Office buildings

The Minister has also stated that office buildings exceeding 8,000sqm will be covered by the ECCA. Owners of these buildings must adhere to the following requirements:

  • Obtain an energy intensity label from the EC for display in a conspicuous part of the building. The label serves as an indicator of the energy efficiency of the office building.
  • Ensure that the energy intensity performance of its buildings comply with the energy efficiency ratings prescribed by the EC. Failure to meet these ratings will result in the EC compelling building owners to:
  • appoint an energy auditor to conduct an energy audit on the building and submit the report to the EC; and
  • develop and implement an energy efficiency improvement plan for the building, subject to EC approval.

Energy-using products

Energy-using products are also subject to the EECA. An “energy-using product” is defined as any equipment, device, appliance or article which uses energy or energy resources. Products falling within this definition are subject to the following requirements:

  • Energy-using products will now require a certificate of energy efficiency and an energy efficiency rating label issued by the EC before they can be distributed, sold or advertised.
  • Products must conform to EC guidelines and meet minimum energy performance standards before receiving the requisite certificates and labels. These will need to be renewed annually.
  • Manufacturers or importers must be registered with the EC before engaging in the manufacturing or importing of energy-using products.

EC investigative and enforcement powers

The EC is granted extensive investigative and enforcement powers for the execution of its duties under the EECA, including:

  • conducting reviews or audits on any relevant person or company to ensure compliance with EECA provisions;
  • requesting information from, or the attendance of, any person or company whom the EC reasonably believes possesses relevant information pertaining to the EECA;
  • accessing the records of any person or company by way of written notice;
  • entering any non-residential premises to inspect, gather or verify information found within the premises; and
  • conducting searches and seizures with a warrant or, if tampering of evidence is reasonably suspected, without a warrant.

Comment

The Bill is now under consideration in the Dewan Negara, where amendments to the Bill may be proposed, or the Bill may be passed without amendments. If it is passed in its current form, and receives Royal Assent from the Yang di-Pertuan Agong, the EECA is projected to result in energy savings of 2,017 million GJ once enforced, equivalent to approximately RM100 billion, as well as reduce carbon emissions by nearly 200,000 kilotons. This represents a significant step forward in Malaysia’s efforts to address climate change and promote environmental sustainability, and serves to further the nation’s commitment to achieving net zero GHG emissions by 2050.

Further information

This article has been prepared with the assistance of Associate Goh Chan Yit.