“Observations in RE in light of focus on carbon management and energy transition across many countries.” August 19, 2025
Good morning.
Having been involved in the Renewable Energy sector for the past seven years — including five years with TNB — I felt it would be timely to share a few observations, particularly in light of the growing focus on carbon management and energy transition across many countries.
Today, power generation and transportation together account for more than 70% of global greenhouse gas emissions. The accelerated shift towards electric transportation is clearly a positive development, but it is important to note that this transition merely shifts the emissions source from the roads to the grid — albeit with improved energy efficiency. As such, decarbonising the electricity grid becomes even more critical.
With recent announcements on the introduction of a carbon tax in Malaysia, I believe it is important for SMEs to understand the most cost-effective pathway to manage their carbon journey and avoid unnecessary expenditure.0
To do this, companies should adopt a phased emissions-hierarchy approach:
1. Start with Scope 1 Emission Reductions
These are direct emissions from sources under the company’s operational control (e.g., fuel combustion, onsite generators). Immediate steps should be taken to reduce these emissions through improved operational efficiency or fuel switching.
2. Address Scope 2 Emissions
Once material progress has been made on Scope 1, attention should turn to Scope 2 emissions from purchased electricity, heat or steam. At this stage, companies should prioritise the use of Renewable Energy Certificates (RECs) to source low-carbon electricity. This can be done either via:
Bundled RECs: through physical power purchase agreements with renewable energy suppliers; or
Unbundled RECs: via certificate-only transactions.
Use of SELCO RECs (i.e., RECs linked to solar rooftop self-consumption systems) should be encouraged as they provide a higher level of transparency and traceability in reporting, thereby improving the credibility of the company’s Scope 2 claims.
It is worth noting that the Science Based Targets initiative (SBTi) explicitly prefers the use of RECs over carbon credits. This is because RECs directly support the decarbonisation of the grid and enable companies to reduce their own electricity-related emissions. Carbon credits, on the other hand, are viewed as last-resort instruments, suitable only for neutralising residual emissions after all possible internal abatement measures — including renewable electricity procurement — have been exhausted.
3. Use Carbon Credits Only for Residual Emissions
Only once substantial reductions have been achieved across Scope 1 and Scope 2, and RECs have been fully leveraged, should companies begin to consider carbon offset mechanisms, such as the purchase of carbon credits, to address unavoidable residual emissions.
Towards climate neutrality and sustainability leadership
Antonio A. Ver, November 3, 2022, Revised October 3, 2023,Fort Bonifacio, Metro Manila, Philippines.
“Wind power, nuclear power, hydro power, ocean power, solar power, and geothermal are the energy sources with the lowest life-cycle emissions, which include deployment and operations.” (Wikipedia).
Situationer:
The Independent Electricity Market Operator of the Philippines (IEMOP) on October 18, 2022, reported the average electricity market price in September for Luzon and Visayas at Php12 per kilowatt hour (kWh) as compared to the previous month’s Php7.26/kWh.
After accounting for all bilateral and spot market transactions, the effective settlement price for September stood at Php9.16/kWh, the highest for the year.
During an online briefing, officials said average demand rose by 1.47 percent or 154 megawatts (MW) to 10,639 MW, while average supply was reduced by 4.73 percent or 675 MW to 13,599MW due to generator outages. (October 24, 2022).
In September, the National Grid Corporation of the Philippines declared the Luzon grid under red alert status due to major generation inadequacy. A total of 3,401MW were on unplanned outage, and three generating units had a total deration of 226MW. Derated plants are those that are not operating at full capacity.
Thus, total generation from diesel plants accounted for 220 gigawatt hours (GWh), or 2.9 percent of the generation mix, compared to the production of 93 GWh last August.
For coal power plants, the contribution for September was 4,434 GWh (57.6 percent), natural gas at 1,407 GWh (18.3 percent), geothermal at 772 GWh (10 percent), hydro plants at 582 GWh (7.6 percent), variable renewable energy resources (solar and wind) at 172 GWh (2.8 percent), biomass plants at 67 GWh (0.9 percent), and battery energy storage systems at 2 GWh (0.03 percent).” (Energy News, October 24, 2022).
In sum, 60% coal is bad for the environment. Despite the promotion of coal as “fuel of choice” and Clean Coal Technologies (CCT) to support medium to heavy industries, economic growth has been sluggish. Worse, the “Philippines power sector is already at full market price with no subsidies.”
Where do we go?
We aggressively push renewables, mainly solar and tidal power. More than engineering and environment, within business paradigms and models, innovation and technologies must be percolated through incubation where the modus vivendi is building an overarch. This has been my mantra since the late 80’s.
Natural gas takes over. However, combustion needs to be mitigated. Can we build 1,800 MW of CCGT baseload power plants from 2022 to 2037? What are the objectives for FSRU and fuel distribution?
How about investing globally?
A very large regional power player “is modifying its current policy to invest only with very large investment funds or large utilities.”
Energies Global Finance positions a Wealth Management Fund to co-invest in the United Kingdom and EU.
We will go to the Gulf Cooperation Council. We will plant a seed in the United Arab Emirates, the fastest growing RE economy in the Gulf.
The rudiments of the strategy are anchored on creativity in finance and behavioural economics. Permitting and compliance must be sifted. We must know how monies work. We must anticipate how people act and decide on spending.
Malaysian Tariff in ASEAN Context and Investment Atmosphere