The availability of renewable energy is Sarawak’s core value proposition, which underpins every sector it is pursuing from hydrogen and carbon capture, utilisation and storage (CCUS) to advanced manufacturing, says Timothy Ong, CEO of Invest Sarawak Sdn Bhd. The agency serves as a one-stop centre for the facilitation and coordination of all investment and trade matters in the state.

Sarawak has a high renewable energy share in power generation, with hydropower accounting for more than 70% of the electricity mix. The bulk of the generation capacity comes from renewable energy produced by hydroelectric dams such as Bakun (2,400MW), Murum (944MW) and the upcoming Baleh (1,285MW).

This renewable energy share is complemented by initiatives such as the 50MW floating solar farm in Batang Ai and battery energy storage systems like the 60MWh facility in Sejingkat, Kuching.

Sarawak Premier Tan Sri Abang Johari Tun Openg said the state aimed to generate up to 15GW of renewable energy by 2035.

“Of course, we are moving and we are looking at hydrogen as a means of creating new automotive energy, and we also have other projects on things like green methanol [as well as] sustainable aviation fuels. We’re trying all possible paths, but [in] all of it, the underpinning factor is always renewable energy,” says Ong.

Sarawak’s priority is to continuously drive down the cost of renewable energy and keep it within a competitive range, he adds.

As semiconductor and other advanced manufacturing sectors increasingly prioritise green production, Sarawak’s combination of strong upstream capabilities and access to cost-effective renewable energy positions the state as an attractive investment destination.

“We will control and we will do what we can do best, which is to provide cost-effective as well as stable and consistent green energy to be able to make the best case of any case that we can make out of hydrogen, or any other projects for that matter,” says Ong.

Ultimately, Sarawak is seeking to attract green manufacturing and other low-carbon industries to the state, which hinges on the availability of sufficient, cost-effective renewable energy, he says. “If you have the energy systems decarbonised, you have moved a very, very big step across bringing your sectors and investments that are coming into Sarawak,” he adds.

Invest Sarawak has seen a surge in proposals from companies looking to develop renewable energy projects to support grid expansion and Sarawak’s long-term energy ambitions. “They’re talking about interest in projects regarding floating solar projects, hydro projects, cascading dams and pairing that up with things such as battery storage systems,” says Ong.

The two areas in which Sarawak has made significant progress, compared with other states, are hydrogen and carbon capture, utilisation and storage (CCUS). In fact, it was the first state to test hydrogen-based transport and the first to export hydrogen to Singapore this year.

Additionally, Sarawak Energy Bhd has commissioned Southeast Asia’s first integrated hydrogen production plant, with a capacity of 130kg per day that aims to support fuel-cell vehicles and demonstrate the potential of hydrogen in the local energy mix.

SEDC Energy, a subsidiary of the Sarawak Economic Development Corporation, in collaboration with Petroliam Nasional Bhd’s (PETRONAS) subsidiary Lestari H2GaaS Sdn Bhd, launched the Sarawak Electrolyser Assembly and Distribution Facility in Demak Laut Industrial Park last year. This allows the state to produce electrolysers, thus lowering the cost.

So far, Sarawak has signed memoranda of understanding (MoU) with several Japanese firms such as Sumitomo and Eneos to develop its green hydrogen industry and for export. The collaboration with Eneos, called the H2ornbill Project, will see hydrogen converted into liquid to be shipped to Japan.

It also has MoUs with a few South Korean companies, such as Samsung Engineering, Lotte Chemical and Posco Holdings, to develop a green hydrogen and ammonia plant in Bintulu, dubbed the Sarawak H2biscus Project.

The H2biscus and H2ornbill projects, which are currently in their front-end engineering design phases, are expected to be completed by the end of this year, said Sarawak Premier Tan Sri Abang Johari Tun Openg.

Hydrogen offers a decarbonisation pathway for hard-to-abate sectors, and is becoming more commercially viable as production technologies such as electrolysis improve rapidly.

Green hydrogen is produced by the splitting of a water molecule using renewable energy, and is seen as a better solution than blue or grey hydrogen, produced by natural gas using steam reforming.

Arina Kok, partner and Asia-Pacific climate change advisory leader at Ernst and Young Consulting Sdn Bhd, says translating this potential into a competitive hydrogen industry will hinge on a few critical enablers. These include access to reliable, low-cost renewable energy, where Sarawak’s hydropower offers a clear advantage, alongside integrated infrastructure for production, storage and export, with the planned Kuching Hydrogen Hub expected to play a central role.

The challenge now lies in implementation, with delivery hinging on sustainable financing, technology scaling, talent development and community engagement.

CCUS works best when aligned with storage and industrial activities

CCUS represents another core decarbonisation pathway for the state. Sarawak’s long history as an oil and gas producer has given it detailed geological data and existing pipeline and subsurface infrastructure, making it well positioned to be a regional CCUS hub.

Sarawak aims to establish four carbon storage sites by 2030, while Petroleum Sarawak Bhd is developing two CCUS hubs to provide shared infrastructure and support large-scale deployment across the state.

Malaysia’s first carbon capture project is located in Sarawak. The Kasawari carbon capture and storage (CCS) project is poised to be one of the world’s largest offshore CCS developments and is undertaken by PETRONAS. The tentative date for the first carbon dioxide injections in the national oil company’s CCUS projects for hard-to-abate industries is towards the end of 2029 or early 2030, according to news reports.

In Sarawak, carbon storage and CCS projects are governed by the Land (Carbon Storage) Rules 2022.

To become a regional CCUS hub, robust measurement, monitoring and verification (MMV) systems are critical to ensure storage integrity, manage leakage risks and build investor and public confidence, says Kok. “Sarawak will need to mandate transparent MMV protocols, publish monitoring data publicly where feasible and use real-time telemetry to reassure stakeholders.”

The state could also adopt cluster-based models by co-locating emitters, pipelines, transport and storage hubs, she adds.

Sarawak’s frameworks — the Sarawak Sustainability Blueprint 2030, Sarawak Energy Transition Policy, Sarawak Hydrogen Economy Roadmap as well as the Net Zero and Carbon Plan — set the direction for the state’s sustainability and decarbonisation transition. However, gaps remain.

For instance, the state has yet to publicly articulate a single carbon budget or explicit emissions trajectory that aligns these frameworks with global 1.5°C to 2°C pathways, says Yong Leong Kong, a lecturer in the faculty of engineering and science at Curtin University Malaysia.

He adds that the state’s legal framework allows the use of forest carbon and nature-based solutions, but clear, quantified and risk-adjusted targets for how much these sinks are expected to contribute are still emerging.

Sarawak’s 2050 net zero ambitions will depend on how effectively these plans are integrated into a single systems framework, says Florianna Lendai, head of research for energy and sustainability at the Institute of Sustainable and Renewable Energy. She says integration begins with a unified model that shares carbon budgets, milestones and data standards across the frameworks. This means energy, land use, waste, transport, industry and community development must interact coherently rather than operate in isolation.

“A centralised data platform combining emissions, land use, biodiversity and socioeconomic indicators would create a shared evidence base for all sectors. Interagency governance and technical collaboration among government, academia, industry and civil society are also essential,” says Florianna.

“Equally important is human capital through education, skills and community participation, to ensure that scientific planning is matched by societal readiness.”

Meanwhile, the key progress markers to watch over the next 12 to 18 months to demonstrate the transition from planning to implementation include the commissioning of the Batu Kawa hydrogen refuelling station and related depot infrastructure; early development work and site identification for the Blueleaf-Chemsain 3GW renewable energy pipeline; as well as initial job creation across hydrogen, renewables and carbon removal activities, says Arina Kok, partner and Asia-Pacific climate change advisory leader at Ernst and Young Consulting Sdn Bhd.

The Batu Kawa hydrogen facility refers to Sarawak’s first hydrogen refuelling station and depot owned by SEDC Energy. Blueleaf Energy and Chemsain Sustainability have signed a memorandum of understanding to explore development of up to 3GW of solar photovoltaic and battery energy storage system projects in Sarawak.

“These milestones and markers will be critical in demonstrating that Sarawak is not only planning but delivering on its sustainability commitments, driving clean energy, low-carbon transport and carbon removal in a way that supports both economic growth and environmental resilience,” says Kok.