Malaysia’s hydrogen economy: A grand vision, a harder truth — Ahmad Ibrahim

Released: Thursday, 29 Oct 2026 9:47 AM MYT

OCTOBER 29– According to a current journal paper, the case for Malaysian hydrogen rests on strong principles. The NETR and the Hydrogen Roadmap, both released in 2023, determine hydrogen as a crucial decarbonisation lever. The nation’s solar resource capacity and year-round irradiance supports foreseeable eco-friendly generation. In the eastern state of Sarawak, hydropower can offer a low-carbon base for electrolysis that many emerging hydrogen areas do not have. The current launch of the Malaysia Clean Hydrogen Project under the Global Clean Hydrogen Programme, performed by UNIDO with NanoMalaysia Berhad, signals that global organizations see sufficient pledge to purchase policy and technical capacity-building over a five-year horizon.

Capacity is not production. Malaysia presently produces approximately 0.6 million tonnes of hydrogen every year, mainly “grey” hydrogen stemmed from steam methane reforming for fertilizer, petrochemical, and electronic devices producing. The roadmap target of 16 million tonnes by 2030 sits an order of magnitude beyond existing output, and no plant presently produces hydrogen particularly for energy applications. This is not a small space; it is a gorge.

The economics describe why. Electrical energy represents 60 to 70 percent of the levelised expense of hydrogen, with electrolysers including another 20 percent. In Peninsular Malaysia, eco-friendly capability stays inadequate for massive electrolysis, and grid wheeling charges even more wear down task economics. Solar contributes simply over 1 percent of nationwide electrical power generation regardless of the nation’s plentiful resource, a utilisation space that shows land restraints, grid combination difficulties, and sluggish implementation. One modelling research study discovered that in Sabah– the state with the very best solar resource and land schedule– the levelised expense of hydrogen might fall from US$ 5.81 (RM23.63) to US$ 2.52 per kg with lowered electrolyser expenses, however that stays above the limit for business practicality without policy assistance.

A different analysis recognized the “financial investment passage” for hydrogen tasks at expenses listed below US$ 3.5 per kg integrated with carbon taxes above US$ 40 per tone– a zone that present conditions do not yet reach.

Sarawak uses a partial counterpoint. With hydropower as its foundation, the state has actually moved even more than any other Malaysian area: hydrogen refuelling stations, fuel cell buses, and revealed production targets of around 10 kilotonnes each year for domestic movement and pilot exports to Japan and South Korea. Sarawak is an exception, and its hydropower benefit is not replicable in the peninsula, where most commercial need and population live.

The literature indicate 2 underutilised domestic paths. Malaysia produces millions of tonnes oil palm biomass waste every year, which might be transformed to hydrogen through gasification or supercritical water gasification. This uses a near-term, waste-to-value path that leverages an existing market instead of waiting on electrolyser expense curves to fall. Second, seawater electrolysis provides a tactically engaging choice for a maritime country: indirect seawater electrolysis is currently highly fully grown and would include less than US$ 0.1 per kg to the levelised expense while co-producing safe and clean water. Direct seawater electrolysis stays at lower preparedness.

The policy action has actually been coordination-heavy however market-light. NanoMalaysia has actually progressed into the federal government’s de facto hydrogen organizer, assembling a market alliance to arrange a fragmented economic sector. The Global Clean Hydrogen Programme will reinforce requirements, technical competence, and financial investment preparation. Market gamers explain a sector “pressed into presence rather than pulled forward by natural market need”. The federal government’s method of co-financing “catalytic users” to confirm industrial usage cases is an affordable demand-side intervention, however it stays little in scale.

A carbon tax, now postponed, on metals, steel, and energy markets might alter the calculus by making green hydrogen more competitive with grey options. The real-options modelling recommends that policy clearness around carbon rates can set off capital release far earlier than conventional net-present-value analysis would anticipate. A carbon tax alone will not construct electrolysers or pipelines; it needs to be combined with cost-side reforms and facilities sequencing.

The tactical threat is not that Malaysia stops working to end up being a hydrogen exporter. That aspiration might be early. The genuine threat is that the nation invests a years structure pilot jobs and roadmaps while its commercial hydrogen need– presently satisfied by grey production– continues to secure carbon-intensive facilities that will be pricey to retrofit. The window for transforming existing ammonia and petrochemical centers to green or blue hydrogen is open now, with policy assistance and worldwide environment financing. Waiting for ideal economics suggests waiting for rivals to record the market.

Malaysia’s hydrogen future will not be won in Putrajaya or Kuching alone. It will be won in Sipitang’s ammonia plants, Bintulu’s commercial clusters, and the palm oil mills of Johor– where hydrogen can end up being a useful input instead of a policy goal. The roadmaps are sound. The research study is clear. The missing out on component is seriousness.

* The author is connected with the Tan Sri Omar Centre for STI Policy Studies at UCSI University and is an Adjunct Professor at the Ungku Aziz Centre for Development Studies, Universiti Malaya. He can be reached at.

** This is the individual viewpoint of the author or publication and does not always represent the views of Malay Mail