Set up climate change council, Asean urged

Current global sustainability standards determined by developed countries, says EIC director

KUALA LUMPUR: Asean countries could consider setting up an Asean council to discuss and establish regional standards to combat climate change, said Energy Industries Council (EIC) regional director Azman Nasir (pic).

He reasoned that the current global sustainability or climate change-related standards are determined by developed countries, which does not fully take into account the challenges of developing countries in the Asean region.

“We need that collaboration and unity. At the moment, every country has its own pathways. Therefore, every country has different scale and pace. It’s better if we can go under one body like (Conference of the Parties) COP just for Asean member countries where we can discuss on climate change,” he told SunBiz.

On the challenges of transition to renewable energy, he pointed out that generally the profit margins for traditional energy or fossil fuel projects were higher at 15% to 20% compared to renewable energy projects at around 5%.

“(Its not specific to Malaysia) but generally the same globally is where profit margins lower renewables are definitely lower (profit margins) than oil and gas.

He noted that the challenges faced by traditional energy players were lower profit margins as well as less projects if they were to change to renewable energy (RE) products.

Azman pointed out that those companies would have to take in more RE projects just to reach the profit margins for one traditional energy project.

In addition, he pointed out that RE projects would need to be conducted in a large scale in order to generate higher profit margin and for cost-efficiency.

“RE projects are not that many yet, thus it will take some time … the solution is to increase scale,” he added.

In terms of financing, he said the oil and gas companies are facing problems to receive funding worse than before as banks are favouring RE projects.

“But for the companies that are going for RE projects ... the projects are not available. Hence, they are caught in between.

“To get financing for oil and gas projects which have been done for years, is now difficult than before.

“Banks prefer RE projects but where are the projects? And the profit margin is lower. How do players get help if it is unavailable?”

He pointed out that the government should address these issues first before setting up ambitious plans to reach Net Zero target.

While sustainability goals are important, it is more imperative for the government to solve current issues faced by industry players.

In a recent study published by EIC, Global Net Zero Jeopardy Report, it said 61% of respondents stressed the need for more investments and incentives to launch net zero projects, highlighting the high costs of green transitions and the importance of ensuring profitability for sustainability.

Meanwhile, 45% pointed to unclear and inconsistent government policies as hurdles, calling for stronger and more supportive regulations, along with international cooperation, to promote a cohesive approach to sustainability.

Regarding capacity, 22% emphasised supply chain and infrastructural limitations, highlighting the disparity between current capabilities and the necessities for a complete transition to net zero.

Survey findings indicated 87% of respondents attributing the failure to meet net zero targets primarily to governments, stressing the need for policy and regulatory reforms to address climate change.

Industry, recognised as a pivotal player in innovation and emissions reduction, is considered the second most responsible.