2027 Budget green investments must deliver real emissions reductions, says Tuan Ibrahim

KOTA BARU: The government must ensure that green investments under the 2027 Budget deliver measurable emissions reductions without compromising the country's electricity and water supplies.

Pas deputy president Datuk Seri Tuan Ibrahim Tuan Man said investments in renewable energy, data centres and hydrogen must be assessed based on their actual environmental impact, costs and benefits to the country.

The former environment and water minister welcomed the budget's energy transition commitments, including the RM1 billion KWAP Climate Fund and the extension of green tax incentives until 2030.

However, he said corporate investments, investment funds and tax incentives were different instruments and should not be presented as a single amount of government cash expenditure.

"The key question is accountability. How much will emissions be reduced, what will it cost, and who will bear the risk if the targets are not achieved?" he said.

Tuan Ibrahim said the issue was increasingly important as Malaysia expanded its data centre industry, which required electricity for computing and cooling, while water consumption depended on the design of the cooling systems.

He said digital investments must be assessed against the capacity of electricity and water supplies, rather than solely on their investment value.

The government should clarify how much of the grid investment would support renewable energy and how much would cater to additional demand, he added.

"If clean energy supply increases but demand grows faster, announcements of green capacity alone do not answer the question of carbon reduction," he said.

Tuan Ibrahim said Malaysia's data centre guidelines already incorporated energy, water and carbon efficiency measurements.

However, he cautioned that greater efficiency per unit of operation did not necessarily translate into lower overall resource consumption as facilities expanded.

He said performance should therefore be measured through both operational efficiency and actual total consumption.

The government should also disclose the impact of data centre clusters on local water supplies and clarify who would finance upgrades to treatment plants, pipelines and the electricity grid.

Tuan Ibrahim said the needs of households, the agriculture sector and small businesses must be protected. Recycled water should also be prioritised where suitable to reduce reliance on treated water for cooling.

On hydrogen, he said public support for the technology should be subject to the same scrutiny, particularly regarding its commercial viability and actual emissions reductions.

He noted that hydrogen had been included in the pre-Budget 2027 statement on the country's energy transition agenda.

However, he said the International Energy Agency had identified cost gaps and a lack of firm offtake agreements as key challenges facing low-emissions hydrogen.

Before expanding public support, the government should clarify who would purchase the hydrogen, the selling price, how emissions throughout the production and delivery chain would be calculated, and who would bear the losses if the market failed to develop.

Tuan Ibrahim also called on the government to assess the opportunity cost of using clean electricity for hydrogen production, data centres or decarbonising existing industries.

He proposed that every budget include a climate impact statement outlining sector-specific emissions reduction targets, support costs, resource consumption and annual progress.