Malaysian Firms Must Prepare for Stricter Compliance Under New Energy Efficiency Act

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Kuala Lumpur—Malaysian companies are being urged to prepare for stricter energy compliance regulations following the approval of the Energy Efficiency and Conservation Act 2024 (EECA). According to Zaini Abdul Wahab, president of the Malaysian Association of Registered Electrical Energy Managers, the legislation expands upon existing energy laws and is expected to present significant challenges, particularly for local businesses.

The EECA aims to regulate energy consumption and promote sustainability across various sectors through comprehensive guidelines and mandatory practices. Although the official enforcement date has not been announced, experts warn that preparation is crucial to avoid penalties.

High Bar for Compliance

Under the new law, companies will face enhanced requirements, including mandatory energy audits every five years and the inclusion of thermal energy—such as fuel, gas, and chilled water—alongside electricity. Firms must also establish robust energy management systems, including creating an energy policy, forming energy management committees, and setting clear targets guided by standards such as ISO 50001.

Zaini estimates that approximately 3,000 companies will be impacted by the EECA, compared to the 1,800 currently under existing laws. However, only 25%-30% of these businesses are expected to be ready when enforcement begins.

“Many companies are accustomed to meeting minimum requirements to avoid trouble with authorities, but the EECA demands much more,” Zaini said. “Even large government-linked companies (GLCs) are often unprepared, despite having sustainability programmes.”

Struggles for Local Companies

While multinational corporations (MNCs) are generally well-prepared due to corporate mandates from regions like the U.S., EU, and Japan, local companies may struggle to adapt. Malaysia currently has only 50-60 firms certified under ISO 50001, compared to over 400 in Thailand, underscoring the readiness gap.

“Most ISO-certified companies in Malaysia are multinationals that comply due to global corporate mandates rather than local initiatives,” Zaini said, highlighting the need for local firms to step up.

Consequences of Non-Compliance

Failing to comply with the EECA could result in severe repercussions, including reputational damage, loss of market access, and reduced business opportunities—especially for companies that export to markets requiring carbon footprint data, such as Europe.

Roadmap for Compliance

The EECA sets out a detailed framework to guide businesses in achieving compliance:

• Mandatory Energy Audits: Every five years to ensure energy efficiency across operations.
• Comprehensive Energy Management Systems: Companies must implement structured policies and committees to drive energy conservation.
• Thermal Energy Inclusion: Expanding beyond electricity to include fuels and cooling systems in energy audits.

Zaini stressed the importance of skilled energy managers in ensuring compliance. “If a company hires an energy manager who lacks the skills to develop an effective energy management system, compliance won’t be achieved,” he noted.

Enforcement and Support

The Energy Commission will play a critical role in enforcing the EECA, with clearer guidelines now in place for energy managers and auditors. These measures aim to make compliance more achievable for businesses while simplifying enforcement.

Zaini is optimistic that the compliance rate could reach 50% within three years of enforcement. “It takes time for companies to align with new laws, but achieving 50% compliance would be a significant milestone,” he said.

With the EECA poised to reshape energy management in Malaysia, Zaini urged companies to act quickly. “The sooner businesses begin aligning their operations with the EECA’s requirements, the smoother the transition will be,” he concluded.

This transformative legislation is expected to push Malaysia toward its sustainability goals, while ensuring businesses remain competitive in an increasingly eco-conscious global market.