A Major Step Towards Energy Sustainability: Energy Efficiency and Conservation Bill 2023

 

Introduction 

The Energy Efficiency and Conservation Bill 2023 (the “Bill”) was passed by the Dewan Negara (Senate) on 4^th April 2024, and will now be presented for Royal Assent by the Yang di-Pertuan Agong. The Bill will come into force on a date appointed by the Minister of Energy Transition and Water Transformation by notification in the Gazette. 

The Bill is a comprehensive framework that seeks to address the issue of energy waste and inefficiency by implementing a range of measures and guidelines. Essentially, the Bill aims to promote and encourage energy efficiency and conservation practices across various sectors.

The Bill aligns with the energy transition drive toward reaching net zero greenhouse gas (GHG) emissions from energy-related sectors by 2050. It serves as a key component of the National Energy Transition Roadmap, striving to realise 21% and 22% energy savings by 2040 and 2050, respectively, as compared to a business-as-usual scenario. Additionally, the Bill seeks to bolster sustainable development efforts, which is consistent with the green economic development agenda outlined in the 12^th Malaysia Plan.

This article highlights the key provisions of the Bill and its impact on the green real estate industry in Malaysia once enacted.

 

Application

The Act, once it comes into force, shall apply to:

1. Any energy consumer whose energy consumption for a period of twelve consecutive months equals to or exceeds the energy consumption threshold as may be prescribed;

2. Any building described in the Third Schedule (i.e. office buildings); and

3. Any energy-using product as specified in the guidelines. 

The Energy Commission (the “Commission”) is granted wide investigative and enforcement powers to ensure compliance with the Bill’s provisions. The “energy consumer” and “building” to which this Bill applies will also be determined by the Commission in accordance with Section 3 of the Bill. If the person is determined as an energy consumer, the Commission will issue a notice to the person notifying that he is an energy consumer to whom this Bill applies. Similarly, in relation to ascertained buildings, the Commission will issue a written notice to the “person in charge of a building”, i.e. the owner or any other person having the charge, management or control of a building notifying of the same. 

Whilst “energy-using product” is defined as “any equipment, device, appliance or article which uses energy or energy resources”, there is currently no comprehensive list of products that fall under this categorisation. 

 

Duties of an Energy Consumer

Part III of the Bill sets out the duties of an energy consumer. “Energy consumer” is defined as a person who, for the purpose of carrying out his activity, business or trade, is supplied with energy or energy resources and consumes the energy or energy resources supplied.

 

Energy Manager

Energy consumers must appoint a registered energy manager within the period and in such a manner as may be prescribed. The duties of the energy manager are set out below: –

1. Collect and analyse the data on energy consumption by the energy consumer;

2. Ensure that the energy consumer implements the energy management system;

3. Monitor the implementation of the energy management system by the energy consumer;

4. Prepare the energy efficiency and conservation report for the energy consumer;

5. Ensure the accuracy of information provided in the energy efficiency and conservation report;

6. Advise the energy consumer on any other energy saving measures and monitor their implementation; and

7. Carry out such other duties as determined by the Commission.

 

Energy Management System

Under Section 6 of the Bill, energy consumers are required to develop and implement an energy management system in accordance with the guidelines within the prescribed time frame. Failure to develop and implement the system may result in a fine not exceeding RM50,000 or a fine of RM20,000. 

 

Energy Efficiency and Conservation Report

Section 7 of the Bill provides that a registered energy manager appointed by an energy consumer must prepare an energy efficiency and conservation report and the same must be submitted by the energy consumer to the Commission within a prescribed time frame. The report must include details such as the description of the energy management system, total amount and purpose of energy consumption and energy resources by energy consumers, proposed measures for improving energy efficiency and conservation, details of any other energy efficiency and conservation measures, and any other information required by the Commission as may be specified in the guidelines.

Section 7 imposes personal liability to a registered energy manager, whereby failure to prepare the energy efficiency and conservation report in accordance with Section 7(1) of the Bill may result in a fine not exceeding RM20,000. Failure to submit the report by the energy consumer to the Commission may also result in a fine not exceeding RM50,000. 

 

Energy Audit and Reporting

Section 8 obligates energy consumers to undergo regular energy audits for their activities, business, or trade. Failure to do so may result in a fine not exceeding RM50,000. 

Pursuant to Section 9, these energy audits must be performed by registered energy auditors. The energy consumer shall then submit the audit reports to the Commission within a prescribed timeframe. 

Additionally, the Bill includes provisions allowing energy consumers to apply to the Commission for exemptions from future energy audit requirements. However, it is important to emphasise that the energy consumer must have already submitted their first energy audit report, and the Commission is satisfied that they have implemented significant energy efficiency and conservation measures in their operations to qualify for such exemptions.

 

Duties of Persons in Charge of Office Buildings

Part IV of the Bill imposes a responsibility on a person in charge of a building to carry out the following: –

 

Energy Intensity Label

A person in charge of a building is required to apply to the Commission for the issuance of an energy intensity label and to display this label at a conspicuous part of the building. An energy intensity label serves as an indicator of a building’s energy performance or efficiency. Building Energy Intensity is a benchmarking tool to monitor building energy performance by indicating the intensity of energy consumed per square metre of building space. Labelling not only helps building occupants make more 

informed choices about their energy usage, but also creates healthy competition among building owners to improve energy use. The energy intensity labels are subject to a validity period, requiring building owners to reapply for them upon expiration.

Failure to display the energy intensity label issued may result in a fine not exceeding RM50,000.

 

Energy Intensity Rating

Pursuant to Section 13 of the Bill, it is the duty of a person in charge of a building to ensure its energy intensity performance complies with the energy efficiency rating prescribed for the building.

Where the building’s energy intensity performance does not comply with the prescribed energy efficiency rating, the Commission will issue a written notice of non-compliance to the person in charge of the building. In this case, the person in charge must ensure that an energy audit is conducted, after which the energy audit report and an energy efficiency improvement plan must be submitted to the Commission. Failing to submit the energy audit report may attract a fine not exceeding RM50,000.

 

Energy-Using Products

Section 17(1) of the Bill provides that no person shall sell, offer to sell, display, advertise or lease any energy-using product unless such product is affixed with an energy efficiency rating label. Non-compliance with the provision will render such a person liable to a fine not exceeding RM50,000.

Manufacturers and importers of energy-using products are also required to be registered with the Commission and to obtain a certificate of energy efficiency before distributing any energy-using product. Any manufacturer or importer who contravenes the provision will be liable to a fine not exceeding RM50,000 or to imprisonment for a term not exceeding 2 years or both.

 

Effect of the Bill on the Green Real Estate Sector

Green building focuses on increasing the efficiency of resource use – energy, water, and materials – while reducing the building’s impact on human health and the environment during its life cycle. 

The Bill marks a significant step towards promoting energy efficiency in green buildings by mandating larger commercial and industrial electricity and gas consumers to undergo energy audits. This prioritises increasing resource efficiency while minimising environmental impact and promoting human health throughout a building’s life cycle.

The Bill has provided clarity on top of other existing policies, such as the National Green Technology Plan (2009) and the Green Technology Master Plan (GTMP) (2017-2030). With the enactment of the Bill, the number of Green Buildings in Malaysia will increase, in line with the GTMP’s goal of achieving 1,750 Green Buildings by 2030.

 

Conclusion

Malaysia’s Energy Efficiency and Conservation Bill of 2023 represents a crucial step towards promoting sustainability and responsible energy use nationwide. Its implications for green real estate emphasise the importance of energy-efficient building design, renewable energy integration, and resource conservation in creating environmentally responsible and economically viable developments. By setting clear standards and promoting energy efficiency measures, the Bill plays a vital role in fostering a greener and more sustainable future for the nation.