Why we need RE

1. The twin factors of increased price of oil commodities and concerns on the impact of fossil fuels on carbon emissions resulting in global warming and climate change has generated a whole new industry of alternative energy and renewable fuels.
2. Admittedly, this new ’gold rush’ has resulted in some early technological successes – biofuels, solar, among others – and carries with it the promise of more game-changing innovations that the world should be braced themselves for.
3. A presentation yesterday from MBC indicated- corroborated by a piece of data I obtained while looking at Codexis – that the US-produced biofuels sector was worth USD40b alone in 2007 – with a CAGR of about 30% between 2004-2007. By extension, if it could sustain a similar growth rate, it will double its revenues in about 2 years time.
4. While the size of the US market means that any production can just about be consumed fully in the US, to the detriment of non-US oil-exporting companies, including countries, a corollary concern would be how nationally we can emulate the growth of the industry domestically.
5. Why should we have this? One, is the energy security argument. Once Petronas’ E&P dries up, government will have a significant shortfall in revenue, but more importantly, gas supplies currently 17% of Malaysia’s installed capacity fuel mix, 25% or 4.8 GW if we include conventional distillate thermals. Depletion would effectively render reversion to a dependence on either coal or hydro. With hydropower plant construction on its last dregs, that leaves coal as the only viable alternative, unless we begin energizing an RE sector and really make good its promise of the fifth fuel.
6. Secondly, it’s about utilising abundance of biomass feedstock. A simple calculation showed we do not adequately address the issue of 14mtons of EFBs in our palm oil estates yearly based on current 2007 yields – this alone could potentially fire 700MW or 5% of peak demand in current terms. We are not even talking of forest residues, easily worth about double the amount, lest we anger conservationists and environmentalists, though in my personal opinion there are ways to mitigate this issue, and nature does have a way of overcoming adversity once we put in place a controlled manageable protocol of sustainability in place. Let the experience of harvesting the marshes and wetlands of Kuala Sepetang be a guide.
7. Thirdly, Malaysian economy requires a shift in focus towards broadening its knowledge-centric economic sectors from a commodity-resource focus- beginning with tin, then rubber, then oil & gas and palm oil, although no doubt the focus away from agriculture to manufacturing has been instrumental in maintaining our growth rates- as it had been in the first 50 years and more of its independence. This requires a focus in services and technology sectors, and it had not been easy to emulate the experiences of our Northeast Asian economies of Japan, Korea and to a certain extent, China. The technology portion for Malaysia is admittedly, weak. Fundamental technical work, engineering and construction work can very much be classified under the 3d careers – dirty, dangerous and difficult – and without foreign labour – Indonesian and Bangladeshis for the legwork, and Korean, Japanese and European for the professional work – there could not be the pride of all Malaysians like KLCC. Local work can be classified as shoddy, evidenced by MRR2 fiasco, leaking roofs, landslides, Highland towers and more than our fair share of embarrassing construction blunders. Though there is greater focus in high-end technology sectors as in biotech, it remains financially driven, through investments by venture capitals, rather than fundamental research and development work underpinning an expanding human capital for its growth. The RE sector represents the prospect of expanding our participation in “real” work in developing this sector and creating “value networks” as a means of deepening our knowledge and research resources.