Malaysia is continuously encouraging the development of renewable energy in the economy through policy and various strategies. The Five-Fuel Policy has made renewable energy one of the components in the fuel mix for power generation after oil, coal, gas, and hydro. The Small Renewable Energy Power Program was launched, encouraging production of renewable energy by small power generators and allowing the sale of generated electricity to utilities. The Ninth Malaysia Plan specified a target for electricity grid-connected renewable energy generation—300 MW in Peninsular Malaysia and 50 MW in Sabah.The Tenth Malaysia Plan 2011-2015 emphasises on green technology including short term goals vested in National Green Technology Policy and new renewable energy act and feed-in tariff mechanism to be launched. It details on the strategy to restructure the energy subsidies the country has been providing on natural gas and electricity used by the industry sector as well as the discounted energy pricing mechanism for selected industrial users. The 10th MP also includes a plan to improve public transport into an energy efficiency transport mode to ease the traffic congestions and to address the high usage of private cars for passenger transport which is making the country’s level of energy use by the transport sector higher than the world average. In the 10th MP, the new energy target to achieve is of 985 MW by 2015 contributing to 5.5% of Malaysia’s total electricity generation mix. In order to achieve its target, the National Renewable Energy Policy 2010 has been launched. Malaysia’s energy sector is guided by the National Energy Policy, formulated in 1979. It has the following objectives:ensuring the provision of adequate, secure and cost-effective energy supplies by developing indigenous energy resources, both non-renewable and renewable,using least-cost options,diversifying supply sources;promoting the efficient utilisation of energy and the elimination of wasteful and non-productive patterns of energy consumption; andensuring that factors pertaining to environmental protection are taken into consideration in the production and use of energy.The National Depletion Policy was formulated in 1980 to prolong and preserve the economy’s energy resources, particularly oil and gas resources. Under this policy, total annual production of crude oil should not exceed 3% of oil originally in place, which currently limits oil production to around 680 thousand barrels per day (bbl/D). In 1981, the Four-Fuel Policy was introduced to reduce the economy’s over-dependence on oil and to aim for an optimal fuel mix of oil, gas, hydro-electric and coal for use in electricity generation. As a result, oil’s domination of the generation fuel mix has been significantly reduced and replaced with gas and coal. In 2002, the Four-Fuel Policy was expanded to incorporate renewable energy as the fifth fuel after oil, gas, coal and hydro-electric.National Bio-fuel Policy 2006 is launched in support of the Fifth Fuel Policy and it is aimed to reduce the country’s dependency on depleting fossil fuels, and promoting the demand for palm oil as a source of RE. Five key thrusts include: transport, industry, technologies, export and cleaner environment. The government is formulating various strategies to promote RE, including an action plan to assist RE project developers, especially Small Renewable Energy Plan (SREP) projects. SREP was launched in the 8th Malaysia Plan in 2001 and designated as sub-10 MW and within grid-connection distance. The plan included:in the short term (up to 2010), a review of the obstacles faced by prospective RE developers. Measures to remove the obstacles and to stimulate the RE program, particularly the SREP, will be proposed;a review of the Renewable Energy Power Purchase Agreement (REPPA) to recommend how the terms and conditions can be simplified and differentiating between larger projects and smaller and rural projects;in the longer term (beyond 2010), new targets for RE utilisation by the type of RE source and by region;economic support through fiscal and financial incentives improvement.SREP was targeted to contribute 5% (600MW) of the country’s electricity demand by 2005 but despite various fiscal incentives, only 2 plants of 12 MW total capacity have been commissioned. Major challenges have been securing project funding and fuel supply security issues. A new SREP target of 350 MW of electricity generation from RE such as biomass, biogas, municipal waste, solar and mini-hydro as alternatives to fossil fuel was set in the 9th Malaysia Plan. Though it gained momentum with concerns about increasing oil prices, higher feed-in tariff and Clean development Mechanism (CDM), RE contribution towards the country’s total energy mix through grid-connected power generation from SREP only achieved 56.7 MW by the end of the 9th MP.To enhance Malaysia’s EE, the Efficient Management of Electrical Energy Regulations 2008 was gazetted on 15th December 2008. The regulations required users with a total electricity consumption of 3 million kWh or more over six consecutive months to appoint electrical energy managers, and to implement efficient electrical energy management.Renewable Energy Fund under Feed-in Tariff (Fit) collects 1% of bills from consumers who utilise electricity more than the set minimum point; and the collected fund will then be used to equalise the price between non-renewable and renewable sources of energy.Renewable Energy Business Fund (REBF)’s objective is to mainly for BioGen implementation programmes to support the financial need for Full Scale Model Biomass Power Project. The REBF is expected to act as a successful model in financing RE Project in Malaysia in order to give better perspective to other developers ad financial institutions towards developing and financing the same mechanism of RE project in the country.In August 2009, the Malaysian Government launched the National Green Technology Policy. One objective of the policy is to provide a path towards sustainable development. The policy is built on four pillars: energy -seek to attain energy independence and promote efficient use; environment- conserve and minimise the impact on the environment; economy -enhance economic development through the use of technology; and society- improve the quality of life for all.The policy covers four key areas: Energy. Application of green technology in power generation and in energy supply-side management including cogeneration by the industrial and commercial sectors, in all energy-use sectors, and in demand-side management. Buildings. Adoption of green technology in the construction, management, maintenance and demolition of buildings. Water and waste management. Use of green technology in the management and use of water resources, wastewater treatment, solid waste and sanitary landfill. Transport. Incorporation of green technology in transportation infrastructure and vehicles, in particular biofuels and public road transport.To promote the development of green technology activities, the Malaysian Government has established a MYR 1.5 billion fund. The fund will provide soft loans to companies that supply and use green technology.To expand the use of green technology, including energy-efficient technology, in buildings, the government launched the Green Building Index (GBI) on 21st May 2009. In line with this effort, the government is providing the following incentives: Building owners obtaining GBI certificates from 24th October 2009 until 31st December 2014 are given income tax exemption equivalent to the additional capital expenditure in obtaining such certificates, Buyers purchasing buildings with GBI certificates from developers are given stamp duty exemption on the instruments of transfer of ownership. The exemption amount is equivalent to the additional cost incurred in obtaining the GBI certificates. This exemption is given to buyers who execute sales and purchase agreements from 24th October 2009 until 31st December 2014.Renewable Energy and Energy Efficiency Scheme offers wide range of financing facilities for RE and EE projects especially on biomass, biodiesel, mini-hydro, solar, MSW and energy efficiency.The Ministry of Energy, Green Technology and Water introduced the Renewable Energy Policy and Action Plan in 2010 to overcome the main hurdles to renewable energy development in Malaysia, such as market failure, policy inconsistencies, mixed signals to investors and the lack of a robust and long term orientation. The policy seeks to enhance the use of indigenous renewable energy sources to contribute in electricity supply security and independence, increase the share of renewable energy in the national electricity mix, support the expansion of a local renewable energy manufacturing sector, ensure reasonable renewable energy generation costs and protect the environment. In order to reach these objectives the Action Plan shall provide for the introduction of a feed-in tariff, implement fiscal incentives and measures to reduce the transaction cost of financing, attract skilled workers in the sector and initiate a long term research and development programme. It also established generation targets to 2050 when renewable energy should make 24% of the total energy mix, from 1% in 2011 and 9% in 2020, therefore avoiding 30,503,589 tonnes of CO2 emissions.In April 2011, Malaysia launched a Renewable Energy Feed-in Tariff system and annual installed capacity caps to 2030. Electricity consumers pay an additional fee on their electricity bills to distribution licensees, the FIT-ALL. Licensees are then required to allocate 1% of their total revenue to the Renewable Energy Fund administered by SEDA Malaysia and dedicated to financing the FIT. About 56% of the utility customers who consume less than 200 kWh/month will be exempted from contributing to the RE Fund. To benefit from tariffs, renewable developers need to conclude a RE Power Purchase Agreement with Distribution Levels (eg. TNB, SESB, tec, public power utilities). Households already falling under the Small Renewable Energy Programme (SREP) can convert previous support into a Feed-in tariff.FITs are ranging over a 21 year period for PV and mini hydro and 16 year period for biomass and biogas. In April 2010, RE Act and Act for Fit Implementing Agency has been approved by the Cabinet.Sustainability Achieved Via Energy efficiency rebate programme (SAVE) was introduced in 2011: rebated are given to encourage the purchase of energy efficient equipments to initiate market development of energy efficient appliances. The anticipated savings from SAVE is 127.3 GWh.UNDP-GEF Biomass Power Generation and Demonstration (BioGen) Project was launched in 2002 to demonstrate biomass and biogas grid-connected power generation projects. With this project, 13 MW (export 10 MW) and 500 kW power plants will be grid-connected in July 2009; and ~447 MW off-grid electricity is produced by private palm oil millers.UNDP-GEF Malaysia Building Integrated Photovoltaic (MBIPV) Project was implemented between 2005 and 2010 to reduce unit cost of solar PV technology by 20% and increase capacity by 330% via PV application in buildings. With this project, ~0.4 MW of cumulative grid-connected PV installations are carried out, and PV system unit cost has dropped by 16% on average.Other energy efficiency programmes are: Energy Efficiency Showcase Models; Auditing and Retrofitting Existing Buildings into Energy Efficiency Building, Green Building Certification (Green Building Index, GRI), Electrical Equipments Labelling Programme, introduced in 2005, and Energy Efficiency Campaign, including the compilation of handbook on energy efficiency practice in the household in 2008.The Energy Efficiency and Conservation (EE&C) goals submitted to the 5th East Asia Summit Energy Ministers Meeting, held on 20 September 2011 in Brunel Darussalam, state that Malaysia uses Final Energy Demand as the EE Indicator, and aims at 8.6% reduction from business as usual by 2020.