The National Energy Transition Roadmap (NETR)

For most of the last century, Malaysia’s economic story ran on hydrocarbons — oil under the seabed, gas piped to power stations, and coal shipped in to keep the grid running cheaply. The National Energy Transition Roadmap (NETR) is the plan to rewrite that story before 2050, and it comes with hard numbers, named projects, and a trillion-ringgit price tag.

Launched by the Ministry of Economy in two parts in 2023, the NETR is the closest thing Malaysia has to a single blueprint for decarbonising its energy system while keeping the lights on and the economy growing. This guide walks through what the roadmap actually contains: its six levers, its ten flagship projects, the renewable and coal-phase-out targets, and the money and mechanisms meant to make it happen.

Why did Malaysia create the NETR?

Malaysia committed to reaching net-zero greenhouse-gas emissions as early as 2050. The problem is that a net-zero pledge is a destination, not a route. Power stations, industrial plants and vehicle fleets are long-lived assets; changing them requires decades of coordinated investment, policy and infrastructure decisions made in the right order.

The NETR exists to turn the 2050 pledge into an operational plan. It sets interim targets, names the technologies Malaysia will lean on, identifies concrete projects that can move first, and — crucially — puts numbers against the investment and jobs the transition should generate. It sits alongside the broader National Energy Policy 2022-2040 and Malaysia’s climate commitments as the delivery engine for the country’s energy transition.

The roadmap was published in two parts:

• Part 1 (July 2023) introduced the ten flagship catalyst projects and the six transition levers.
• Part 2 (August 2023) set out the target energy mix, the greenhouse-gas emissions reduction pathway, and the detailed targets and initiatives.

What are the six energy transition levers?

The NETR is organised around six “levers” — the technology and demand pathways Malaysia will pull to cut emissions. These are the structural backbone of the whole roadmap.

Lever	What it covers
Energy efficiency (EE)	Cutting energy demand in buildings, industry and appliances
Renewable energy (RE)	Scaling solar, hydro and other renewable generation
Hydrogen	Producing and using green and low-carbon hydrogen
Bioenergy	Turning biomass and biogas (including palm-oil residues) into energy
Green mobility	Electrifying transport and building EV infrastructure
Carbon capture, utilisation and storage (CCUS)	Capturing CO2 from industry and storing it underground

The six levers are underpinned by five enablers that make delivery possible: financing and investment; policy and regulation; human capital and capabilities; technology and infrastructure; and governance. The enablers matter because a solar target is meaningless without a grid to carry the power, tariffs that make projects bankable, and a workforce trained to build them.

What are the ten flagship catalyst projects?

Rather than leave the levers as abstractions, the NETR identifies ten flagship catalyst projects — early, high-visibility initiatives meant to prove the model and pull in private capital. Collectively, the flagship projects are expected to attract more than RM25 billion in investment, create around 23,000 jobs, and reduce greenhouse-gas emissions by more than 10,000 Gg CO2-equivalent per year. (These are the roadmap’s forward-looking projections for the ten flagship projects, not yet-realised outcomes.)

#	Flagship project	Lever
1	Efficient Switch	Energy efficiency
2	Renewable Energy Zone (RE Zone)	Renewable energy
3	Energy Storage	Renewable energy
4	Energy Secure	Renewable energy
5	Green Hydrogen	Hydrogen
6	Hydrogen for Power	Hydrogen
7	Biomass Demand Creation	Bioenergy
8	Future Mobility	Green mobility
9	Future Fuel	Green mobility
10	CCS for Industry	CCUS

These projects are championed by a mix of government-linked companies and private players. Tenaga Nasional Berhad (TNB) anchors several of the electricity-sector projects, PETRONAS leads on hydrogen and carbon capture (largely through its clean-energy arm Gentari), and state investment vehicles participate in the renewable energy zone and hybrid solar work.

How ambitious are the renewable energy targets?

The headline metric of the NETR is renewable energy’s share of installed capacity. The roadmap sets a steep, escalating trajectory.

Milestone year	Renewable energy share of installed capacity
2025	31%
2035	40%
2050	70%

Reaching 70% by 2050 is a genuinely large shift for a grid historically built on coal and gas. Solar is expected to do most of the heavy lifting, with gas serving as the transition fuel that provides firm, dispatchable power as coal is retired and while storage and grid flexibility scale up.

As of late 2025, renewables accounted for roughly 30% of the mix — close to the 31% year-end target — and the government has signalled an intermediate ambition of lifting the renewable share to around 35% by 2030.

What happens to coal?

Coal is the emissions problem the NETR has to solve. Malaysia’s plan is a managed retirement rather than an overnight switch-off:

• Roughly half of Malaysia’s coal-fired power plants are to be retired by 2035.
• All coal-fired power is to be phased out by 2044.

Natural gas is explicitly cast as the bridge. It emits far less than coal and can be dispatched on demand, so it fills the reliability gap while solar capacity and energy storage are built out. That is also why gas remains a meaningful part of the 2050 generation picture even as the renewable share climbs to 70%.

How is the transition being financed?

Money is the make-or-break enabler. The government estimates that Malaysia’s energy transition will require RM1.2-1.3 trillion of investment by 2050 — a figure far too large for the public purse alone. The NETR’s financing strategy is therefore built around using limited public money to unlock much larger private flows.

A RM2 billion seed fund — the NETF. The government seeded the effort with a RM2 billion National Energy Transition Facility (NETF), announced by Prime Minister Anwar Ibrahim alongside NETR Part 2 on 29 August 2023. The facility uses catalytic blended finance to fund “marginally bankable” energy-transition projects — those that are strategically important but yield below-market returns, such as green hydrogen, EV charging infrastructure and carbon capture. The idea is to de-risk first movers so commercial capital follows.

Green tax incentives. Malaysia’s Green Investment Tax Allowance (GITA) and Green Income Tax Exemption (GITE) remain the core fiscal tools for companies undertaking qualifying green activities. Effective 1 January 2024, businesses may submit GITA Project (business-purpose) and GITE Solar Leasing applications to MIDA until 31 December 2026, while GITA Asset applications for own consumption go to MGTC over the same window. The qualifying activities for GITA Project were expanded to cover three new green-technology areas — green hydrogen, electric-vehicle charging stations and wind energy. Budget 2026 introduced no extension beyond 31 December 2026, so investors should still confirm the current criteria with MIDA before modelling returns.

Cross-border energy sales (ENEGEM). On 15 April 2024, the Ministry of Energy Transition and Water Transformation launched the Energy Exchange Malaysia (ENEGEM) — the country’s first cross-border platform for selling renewable electricity to neighbouring ASEAN markets through a bidding mechanism. Its pilot auction offered 100 MW of renewable energy to Singapore, creating a new export revenue stream and price signal for Malaysian renewables.

Taken together, the government projects the transition could add around RM220 billion to GDP by 2050 and create roughly 310,000 green jobs.

What do the flagship projects look like on the ground?

The abstractions become clearer when you look at the projects already moving.

Hybrid Hydro-Floating Solar (HHFS), Terengganu. On 12 July 2025, TNB, PETRONAS and Terengganu Inc launched a Hybrid Hydro Floating Solar and Green Hydrogen Hub at the Sultan Mahmud hydroelectric station in Kenyir. The concept floats solar panels on existing hydro-dam reservoirs, pairing intermittent solar with dispatchable hydro on infrastructure that already exists. The green hydrogen hub in the Kenyir-Kertih corridor is designed to produce hydrogen and downstream derivatives such as green methanol and ammonia.

TNB’s renewable build-out. TNB has committed to some 3,000 MW of renewable energy by 2040 under its NETR flagship projects — around 2,500 MW from hybrid hydro-floating solar across its dam reservoirs and a further 500 MW from five large-scale solar projects of 100 MW each. This is the electricity-sector engine of the renewable target.

CCS for Industry. PETRONAS leads carbon capture and storage projects that inject CO2 from high-carbon gas fields back underground, targeting hard-to-abate emissions from industry and gas processing. CCUS is one of the most contested levers — critics argue it can prolong fossil-fuel use — but the NETR treats it as necessary for emissions that cannot be eliminated by efficiency or renewables alone.

How much progress has the NETR made?

The roadmap is past the announcement stage. By late 2025, the government reported:

• Around 5.5 GW of new renewable capacity approved since the NETR’s launch, worth roughly RM20 billion.
• At least RM25 billion in investment attracted since launch, per the government’s late-2025 update. This is the same RM25 billion committed to Phase 1’s ten flagship projects, now reported as realised — not a second, additional sum.
• Procurement of about 4,000 MW of large-scale solar underway.
• Enabling legislation enacted, including the Energy Efficiency and Conservation Act 2023 and the Carbon Capture, Utilization and Storage Act 2025 (Act 870) — passed by both Houses of Parliament, given Royal Assent on 22 July 2025 and gazetted on 1 August 2025, applying to Peninsular Malaysia and the Federal Territory of Labuan (excluding Sabah and Sarawak).

These are early but real markers. The harder years are ahead: the jump from 40% renewables in 2035 to 70% in 2050 requires grid, storage and financing at a scale Malaysia has never attempted.

How should a business or investor read the NETR?

If you are deciding whether and how to engage, the roadmap points to a few practical questions.

1. Which lever does your activity map to? Solar developers, storage providers, hydrogen producers, EV players, biomass suppliers and CCUS specialists each sit under a specific lever with its own targets and incentives. Start there.
2. Are you eligible for green incentives? GITA/GITE can materially change project economics — check the current qualifying criteria and application windows with MIDA before modelling returns.
3. Is the project commercially bankable yet? If returns are below market today, the RM2 billion seed fund and blended-finance structures may be the difference between a project happening and not.
4. Where is the demand? ENEGEM’s cross-border sales and corporate renewable procurement create offtake beyond the domestic single-buyer model. Offtake certainty drives financing.
5. What is the coal-retirement timeline in your region? The 2035 half-retirement and 2044 full-phase-out schedule reshapes the generation landscape and creates both stranded-asset risk and replacement-capacity opportunity.

Common misconceptions about the NETR

• “The NETR is just a solar plan.” Solar is the biggest single piece, but the roadmap deliberately spans six levers — including demand-side efficiency, hydrogen, bioenergy, transport and carbon capture. Treating it as a solar-only programme misses most of the opportunity.
• “Coal is being switched off immediately.” It is not. Coal power is scheduled to be halved by 2035 and phased out by 2044, with gas as the bridge. The transition is managed over two decades.
• “70% renewables means 70% of energy today.” The 70% target is for installed capacity by 2050, not current generation. As of late 2025 the renewable share was around 30%.
• “The government is paying for it.” Public money — including the RM2 billion seed fund — is designed to catalyse, not cover, the RM1.2-1.3 trillion needed. The vast majority is expected from private capital.
• “CCUS is uncontroversial.” It is one of the most debated levers, with critics questioning whether it enables continued fossil-fuel production. The NETR includes it as a tool for hard-to-abate emissions, not as a substitute for cutting them.

What’s next

The NETR has moved from blueprint to build-out, but the defining tests are still ahead. Watch three things. First, whether the renewable trajectory holds — hitting 40% by 2035 is the credibility checkpoint for the 70% goal. Second, whether financing scales beyond flagship projects into the mass of mid-sized developments that actually move the numbers; the seed fund, green tax incentives and cross-border sales via ENEGEM are the mechanisms to watch. Third, whether the enabling infrastructure — grid upgrades, energy storage and a trained workforce — keeps pace with generation, because Malaysia’s ability to absorb variable solar depends on grid flexibility as much as on panels.

For the most current targets, incentive criteria and project approvals, consult the primary sources: the Ministry of Economy’s published NETR documents, MIDA for investment incentives, the Energy Commission for grid and licensing rules, and the annual progress statements from the Ministry of Energy Transition and Water Transformation.