But this growth comes at a cost. Industrial activities remain major contributors to greenhouse gas emissions, accelerating climate change.

For Malaysia, the stakes are high. Rising sea levels, intensifying heatwaves and frequent flooding are already impacting the nation.

In 2025 alone, Malaysia faced severe heat waves with temperatures climbing above 40°C and multiple flooding events across Johor, Sabah and Sarawak, underscoring the nation’s growing climate risks.

Bob Ward, policy and communications director at the London School of Economics’ Grantham Research Institute on Climate Change and the Environment, said Malaysians must accept that everyone is vulnerable to climate change.

“Everybody is responsible for tackling climate change. We are already seeing the growing impacts of climate change, driven primarily by greenhouse gas emissions,” Ward said in an interview with FMT.

He said these effects will only begin to ease once the world reaches net-zero emissions, making the shift to clean energy and lower carbon output essential for every country.

“We need to accelerate the shift to clean alternatives and move away from fossil fuels as quickly as we can because we cannot afford the cost of not doing so,” he said.

Sustainability is also becoming crucial for Malaysia’s economic competitiveness, as global demand for low-carbon goods and green regulations like carbon taxes continues to rise. Falling behind could mean trade barriers, reduced market access and missed opportunities.

Decarbonising industrial parks crucial

To address this, the National Energy Transition Roadmap (NETR) was introduced in 2023, outlining Malaysia’s strategy to achieve net-zero emissions and a low-carbon energy system by 2050, including a goal to increase renewable energy generation to 70%.

A key target of the NETR focuses on reducing emissions and improving energy efficiency within the industrial and commercial sectors.

Because industrial parks cluster high-emitting activities, decarbonising them offers the fastest and most impactful route to lowering national emissions.

Leading these efforts is UEM Lestra Bhd, a wholly-owned subsidiary of UEM Group Berhad, supported by its subsidiary, NUR Power Sdn Bhd, as they work to integrate renewable energy solutions into Malaysia’s industrial zones.

UEM Lestra has allocated around RM1.5 billion to decarbonise industrial parks and has even spearheaded the development of a one-gigawatt hybrid solar power plant project in Segamat, Johor.

It is also partnering with Saudi Arabia’s ACWA Power on feasibility studies and renewable-powered independent water and power plant (IWPP) facilities, including solar-powered desalination backed by battery storage.

UEM Lestra’s subsidiary, Cenergi SEA Berhad, is also developing a bio-compressed natural gas plant in Sabah that will convert palm oil mill effluent into clean, compressed biomethane for industrial use.

UEM Lestra’s managing director, Harman Faiz Habib Muhamad, highlighted the strategic importance of acquiring a majority stake in NUR Power, the energy provider for Kulim Hi-Tech Park (KHTP) in Kedah, one of Malaysia’s biggest industrial parks.

As KHTP moves towards becoming a smart, green industrial park, it is emerging as a key hub for clean energy. Plans now include a solar plant of up to 500MWac, developed jointly by UEM Lestra and NUR Power.

“With this acquisition, we see a lot more opportunities to go into other industrial parks beyond KHTP. We’re talking to a few industrial parks already and trying to bring green electrons to them,” he said.

As the exclusive power supplier to KHTP, NUR Power is investing in district cooling systems, battery storage solutions, and load demand response technologies to help tenants meet carbon credit requirements and sustainability goals.

Ward said Malaysia should place a larger emphasis on lower-cost renewables such as solar, which remain underutilised in Malaysia despite being the cheapest source of electricity globally.

A catalyst for change

As Malaysia shifts from a low-cost, low-wage economy to a higher-value, greener model, KHTP represents an early step in the country’s efforts to reduce emissions, support green employment, and promote more sustainable growth.

Harman pointed out that Malaysia’s growing green economy would create multiplier effects, including high-quality jobs and a stronger middle class.

This is echoed by the World Economic Forum, which reports that the green transition could create nearly 10 million new jobs by 2030 and drive major shifts in workforce skills.

“If you want to build up a strong economy, we have to bring in value and increase it. Job creation, especially high-quality jobs, would lead to a better middle class, which will help the economy as a whole,” Harman said.

Ward also noted that Malaysia has significant untapped potential, particularly given the increasingly low cost of renewable energy.

“It would benefit Malaysia’s economy through lower energy costs for businesses and households, and greater energy security, as the electricity would be generated domestically rather than relying on imports,” he said.

Challenges in transition

Despite the progress, Malaysia’s journey towards energy transition faces significant challenges, particularly the financial burden of upgrading infrastructure and adopting advanced technologies.

Ward said Malaysia needs to take a bolder approach in transitioning away from fossil fuels.

“The NETR is a very ambitious strategy in reaching net zero emissions by 2050, but Malaysia needs to be bold and invest very strongly in transitioning away from fossil fuels,” he said.

As Malaysia’s environmental health and economic future depend on expanding renewable energy across its industrial sector, decarbonisation is no longer optional but vital for maintaining global competitiveness.