BNM exploring regulatory changes to boost energy transition financing

Malaysia's central bank, Bank Negara Malaysia (BNM), is considering regulatory changes to enable financial institutions to take higher risks in supporting the country's energy transition. Governor Abdul Rasheed Ghaffour stated that high-impact clean energy projects may face difficulties in obtaining financing if they appear commercially unviable or unattractive.

With over 120 palm oil plantations in Sabah, methane conversion projects could potentially generate hundreds of megawatts of clean energy, serving as a replicable model. The Climate Finance Innovation Lab, launched by J3 in June 2025, has received applications for more than RM5 billion in financing for 45 projects. Rasheed called on funders to engage early to identify financial gaps and structure risk-sharing solutions.

Currently, renewable energy accounts for 31% of Malaysia's installed capacity, up from 25% in 2023, placing the country on track to meet the interim target of the National Energy Transition Roadmap. However, as data centers are projected to consume nearly a third of electricity by 2035, the nation must ensure the digital economy is powered by reliable, affordable, and increasingly clean energy.