In October 2024, Prime Minister Dato’ Seri Anwar Ibrahim tabled the Malaysia MADANI Budget 2025 in Parliament – the nation’s largest ever budget at RM421 billion. As the world shifts to sustainable practices, the budget underscores Malaysia’s strong commitment to sustainability, paving the way for a greener, more resilient economy.
As we commence the new year and head further into 2025, the initiatives outlined in the Budget are expected to promote cleaner technologies and support reduced environmental impacts, thereby positioning Malaysia as a leader in the region’s energy transition. This article summarises the key measures that will set the stage for transformative changes in the year ahead and beyond.
Green infrastructure for a successful transition
The decarbonisation of infrastructure will play a vital role in enabling Malaysia’s transition to net-zero. What’s more, it needs to be done before demand for clean energy materialises. Without timely development, the deployment of renewables and electrification efforts may be delayed, leading to increased CO2 emissions and higher costs for energy consumers.
Recognising this need, Budget 2025 has earmarked significant initiatives and investments to boost Malaysia’s green infrastructure. Indeed, the National Energy Transition Facilitation Roadmap (NETR) saw its allocated funds raised from RM100 million in 2024 to RM300 million as a critical measure to stimulate the implementation of high-impact projects.
Projects under the NETR have now entered the implementation phase, including the Kenyir Hybrid Hydro-Floating Solar Farm project with a generation capacity of 1,000 megawatts (MW). Half of that capacity will be dedicated to the first green hydrogen hub in Terengganu through a collaboration between PETRONAS and Tenaga Nasional Berhad (TNB).
Meanwhile, the government will soon open up bids for Malaysia’s fifth Large-Scale Solar (LSS) programme, also under the NETR, with a total quota of 2,000 MW. From this total, developers can bid for up to 500MW through a competitive process which ensures transparency and fairness in selection.
Spurring energy efficiency and behavioural change
Beyond transitioning to centralised renewable energy sources like solar farms, another key pillar in the reduction of carbon emissions is distributed renewable energy generation, most notably rooftop solar. Reducing the amount of energy used by Malaysian homes, coupled with solar, will drastically reduce emissions produced by households.
As such, Budget 2025 saw the extension of the Net Energy Metering (NEM) programme until June 30, 2025 to encourage fellow energy prosumers among Malaysians to install solar PV systems on the roofs of their premises. This includes an additional quota of 50MW for domestic users and 300MW for commercial and industrial users.
To go further, the government has also announced the provision of e-rebates worth RM70 million by the Nikmat Untuk Rakyat PETRA (NUR@PETRA) programme. The rebates are aimed to encourage both domestic as well as commercial and industrial users to purchase for energy-efficient electrical applicances.
Additionally, the government also plans to introduce innovative public projects such as the installation of solar panels on walkways and parking lots in Putrajaya. Meanwhile government-linked companies like TNB will also be rolling out new skill training initiatives to prepare the future workforce for the evolving energy landscape.
Conserving biodiversity and our natural environment
Climate change is a major driver of biodiversity loss and as a result, they are inherently linked. And with current forecasts and predictions far surpassing the 1.5°C threshold, climate change effects on people, wildlife, and ecosystems will be even more severe, with more extreme weather events, habitat loss, and higher rates of species extinction.
Which is why the government’s commitment to sustainability in Budget 2025 goes beyond energy transition and climate mitigation alone. The Ecological Fiscal Transfer (EFT) fund is set to increase to RM250 million, up from RM200 million, supporting state-level efforts to protect our natural forests and wildlife.
A total of RM80mil is allocated for the Biodiversity Protection and Patrolling Programme (BP3) and Smart Patrol in the Permanent Reserved Forest (PRF) in the Central Forest Spine (CFS), that will benefit community rangers including Veterans of Malaysian Armed Forces and Royal Malaysia Police, Orang Asli as well as Sabah and Sarawak community rangers.
What’s more, RM3 billion has been earmarked for 12 flood mitigation projects, alongside RM600 million allocated to the National Disaster Management Agency to enhance preparations for flood disasters. Over RM250 million has also been set aside for repairing hazardous slopes across the country.
A stepping stone towards a sustainable future
Budget 2025 is more than a fiscal plan—it’s a strategic stepping stone toward realising the aspirations of the 13th Malaysia Plan
Budget 2025 is more than a fiscal plan—it’s a strategic stepping stone toward realising the aspirations of the 13th Malaysia Plan. By prioritising green growth, it sets the foundation for a low-carbon and resource-efficient economy, balancing environmental protection with sustainable economic development and growth.
These efforts will not only attract green investments but also position the country as a key player in global climate action while strengthening its leadership in ASEAN’s sustainability agenda. Moreover, transparent reporting on key indicators like RE adoption, emissions reduction, and biodiversity preservation will ensure momentum toward net-zero.
Nonetheless, achieving these ambitions requires collective action from the government, private sector, and citizens. Everyone has a role to play in driving Malaysia toward a greener, more sustainable future.