BNM exploring regulatory changes to boost energy transition financing

Bank Negara Malaysia (BNM) Governor Abdul Rasheed Ghaffour is exploring regulatory changes to better support financial institutions in taking higher risks as part of Malaysia's energy transition. In discussions at the Joint Committee on Climate Change’s (J3) Journey to Zero 2026 conference, Rasheed highlighted the challenge of channeling capital into credible and investable high-impact clean energy projects.

He cited an example from Sabah, where a town relies on an 800kW diesel generator despite the nearby palm oil industry emitting enough methane to power it. Rasheed suggested that methane conversion projects could serve as a scalable model, potentially adding hundreds of megawatts of clean energy in Sabah. The Climate Finance Innovation Lab, launched by J3 in June 2025, has received over 45 project applications seeking more than RM5 billion in financing.

Rasheed urged funders to engage early, identify financial gaps, and structure risk-sharing solutions. Currently, renewable energy accounts for 31% of Malaysia's installed capacity, with data centers projected to consume nearly a third of electricity by 2035. Rasheed emphasized the need to ensure a reliable, affordable, and increasingly clean energy supply to support digital economy growth.