Sarawak's hydropower is an essential source of renewable and sustainable energy in Malaysia. Photo credit: Courtesy of Sarawak Energy
State-owned utility company Sarawak Energy Bhd. will explore the potential of issuing hydropower renewable energy certificates that will be traded on Malaysia's carbon exchange market.
A renewable energy certificate or REC is a type of energy attribute certificate that is issued when a 1 megawatt-hour (MWh) of electricity is produced and delivered to the power grid from renewable sources. It is used to track renewable electricity generation and consumption, and it also enables end-users to claim reductions in carbon emissions.
Sarawak Energy signed a pact to work with Bursa Carbon Exchange (BCX), Hydropower Sustainability Alliance, and I-REC Standard Foundation on offering the certificates on BCX. Sarawak Energy is expected to facilitate access to end-users across the country under the deal, which also entails ensuring there are standardized guidelines for trading the certificates.
BCX is a voluntary carbon market exchange and is wholly owned by Bursa Malaysia Bhd., the Southeast Asian country’s stock exchange. Hydropower Sustainability Alliance is an independent and multi-stakeholder standard-setting body that governs the Hydropower Sustainability Standard certification system that advances demonstrable sustainability in the hydropower sector and is the only global certification scheme for operators to accredit their projects as certified sustainable. The I-REC Standard is a nonprofit based in the Netherlands that provides a robust standard for developing attribute tracking systems for renewable energy.
Bursa Malaysia plans to offer the certificates on BCX in 2024, in support of Malaysia’s net-zero greenhouse gas emissions target by as early as 2050, and in line with the country’s National Energy Transition Roadmap.
The deal was signed at the sidelines of the COP28 climate change conference in Dubai.
“Given the increasing awareness and commitment to sustainability among corporates in Southeast Asia, REC plays a key role in ensuring a credible mechanism for tracking renewable energy (RE) consumption and supporting the global transition toward a low-carbon economy," said Sarawak Energy Group Chief Executive Officer Datuk Haji Sharbini Suhaili in a news release.
He said that since Sarawak Energy launched renewable energy certificates in 2019, it has supported various players from different industries in their sustainability journey. "Today’s signing empowers all stakeholders by promoting awareness of renewable energy and sustainability, while reinforcing Sarawak’s hydropower as an essential source of renewable and sustainable energy in Malaysia.”
The deal covers the following four areas:
- To explore potential supply of RECs from Sarawak Energy;
- To facilitate cross-border RECs trading and international attribute tracking standards for RECs, using the I-REC platform;
- To raise awareness through joint knowledge building sessions on sustainability certification, such as the Hydropower Sustainability Standard and understanding credible renewable energy claims; and
- To help promote the use of sustainability certifications in conjunction with RECs, such as by layering the Hydropower Sustainability Standard onto the I-REC’s International Attribute Tracking Standard, to help end-users identify and purchase premium hydropower certificates from BCX.
Bursa Malaysia Chief Executive Officer Datuk Muhamad Umar Swift said, “By adding RECs to our existing portfolio of high-quality carbon credits, we aim to provide more options and flexibility for our customers to access and trade environmental products.”
BCX is planning to offer RECs from projects complying with the I-REC Standard, he said. “This MOC [memorandum of collaboration] demonstrates our commitment to collaborate with international and domestic partners to advance climate action and support the transition to net zero.”
Under the deal, Hydropower Sustainability Alliance will improve the selection process of end-users by making it easier to credibly select RECs from sustainable hydro generation assets. Hydropower Sustainability Alliance Executive Director Joao Costa said the partnership underscores the vital role of collaborations between industry, civil society, and financiers in championing sustainable practices and advancing renewable energy. “By exploring the potential integration of sustainability certifications onto Sarawak Energy’s RECs that will be part of the product offering on BCX, we aim to contribute to a global movement for a more resilient future. We are not only excited to be part of this impactful venture at COP28 but also see it as a model to be replicated globally, showcasing the potential of cooperative efforts to address socio-environmental challenges and create a more sustainable world."
I-REC Standard Foundation Director of Global Partnerships and Asia–Pacific Roble P. Velasco-Rosenheim said, “This collaboration is a perfect example of how countries, companies, and the nonprofit community can come together to support the procurement of high-quality clean electricity products, in line with both national and international ambition. We are confident that BCX will provide significant value to the wider Malaysian market by facilitating transactions.”
The ASEAN Centre for Energy is currently studying the market potential of renewable energy certificates in increasing clean energy investments in the four BIMP-EAGA countries. The study will also assess the countries’ readiness to support the growth of local and regional REC trading.
The findings of the 2-year project, which is backed by the BIMP-EAGA-ROK Cooperation Fund (BKCF), are expected to help the countries transition to clean energy and advance climate commitments under the Paris Agreement.