KUALA LUMPUR (Sept 29): Bank Negara Malaysia (BNM) is considering allowing financial institutions more room to take on higher risks responsibly as part of efforts to support the energy transition, governor Datuk Seri Abdul Rasheed Ghaffour said.

He said the central bank is reviewing how regulations could be better calibrated to support the transition, including by giving financial institutions greater flexibility to take on higher risks within an acceptable risk appetite.

“We are considering room to play for financial institutions to take higher risk, of course, responsibly. With this risk appropriately understood, priced and managed within an acceptable risk appetite,” he said in special remarks at the JC3 Journey to Zero Conference 2026 on Tuesday.

Abdul Rasheed said BNM is committed to facilitating the pipeline of green energy projects while exploring regulatory and supervisory adjustments to support such efforts.

He said that while capital is available, the key challenge is financial intermediation, particularly channelling funds into viable, scalable green projects.

Many high-impact projects, especially at an early stage, struggle to secure financing because of perceived commercial unviability despite being technically feasible, he said.

Citing small-scale renewable energy initiatives as an example, he said projects that appeared marginal individually could become viable when replicated at scale, underscoring the need for early engagement, better structuring and risk-sharing mechanisms.

On the broader energy transition, Abdul Rasheed said Malaysia is making progress, with renewable energy accounting for 31% of installed capacity in 2025, up from 25% in 2023.

However, rising electricity demand driven by artificial intelligence and the rapid expansion of data centres would pose new challenges, with data centres projected to account for nearly one-third of electricity consumption by 2035, he said.

“Hence, Malaysia must ensure that the growth of its digital economy is supported by energy that is reliable, affordable and increasingly clean,” he said.

The governor also called for a shift from post-disaster recovery financing towards proactive investment in climate resilience.

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