Highlights of the Energy Efficiency and Conservation Bill 2023

30 October 2023

The Energy Efficiency and Conservation Bill 2023 was passed by the Dewan Rakyat on 11 October 2023. It will be tabled before the Dewan Negara and if passed, will be presented for Royal Assent and be gazetted into law. Thereafter, the Bill will come into operation on a date to be appointed by the Minister of Natural Resources, Environment and Climate Change by notification in the Gazette.

This article provides an outline of the requirements that will be introduced under the Bill, which for the purposes of this article will be referred to as “the Act”.

Purpose

The Act seeks, among others, to regulate the efficient consumption of energy and conservation of energy with the aim to improve and increase energy efficiency and to avoid waste of energy,

For the purposes of the Act, “energy efficiency” means the efficiency in consumption of energy or energy resources which results in increase in the net benefit per unit of energy; “energy” refers to the energy specified in the Second Schedule, namely electricity, chilled water, steam and hot water; and “energy resources” refers to the 23 types of resources specified in the First Schedule, including coal, various forms of coke, peat, liquified natural gas, natural gas, butane, propane, ethane, methane, solar photovoltaic, solar thermal, biogas, biodiesel, charcoal, empty fruit bunch, mesocarp fibre and palm kernel shell.

The Regulatory Authority

The Energy Commission¹ (“the Commission”) is the regulatory authority under the Act. The Commission’s powers under the Act include developing and implementing policies and initiatives relating to energy efficiency, and setting targets and ensuring compliance therewith to improve energy efficiency and conservation.

Application

The Act will apply to:

any energy consumer² whose energy consumption for a period of 12 consecutive months equals to or exceeds the prescribed energy consumption threshold;
any building as described in the Third Schedule, namely office building; and
any energy-using product³ as specified in the guidelines (“energy-using product”).

Based on information or evidence available and in accordance with guidelines, the Commission will ascertain whether a person is an energy consumer or a building is a building, as the case may be, to which the Act applies.

When the Commission has determined that a person is an energy consumer, or a building is one to which the Act applies, the Commission will notify the person that he is an energy consumer, or the person in charge of a building⁴ that the building is one to which the Act applies, as the case may be. For the purposes of this article: (a) an “energy consumer” is an energy consumer to whom the Commission has determined that the Act applies (“energy consumer”); and (b) a “person in charge of a building” is the owner of a building or any other person having the charge, management or control of a building to which the Commission has determined that the Act applies (“person in charge of a building”).

Duties of energy consumer

Appointment and duties of a registered energy manager

An energy consumer is required to appoint a registered energy manager⁵ within the prescribed period (“registered energy manager”).

The duties of an energy manager include the following:

to collect and analyse the data on energy of and energy consumption by, the energy consumer;
to ensure that the energy consumer implements the energy management system⁶;
to monitor the implementation of the energy management system by the energy consumer;
to prepare the energy efficiency and conservation report for the energy consumer and to ensure the accuracy of information contained in such report;
to advise the energy consumer on any other energy saving measures which may be implemented by the energy consumer and to monitor the implementation of such measures.

Energy management system

To ensure energy efficiency in carrying out his activity, business or trade, an energy consumer is required to develop and implement an energy management system in accordance with the guidelines within the prescribed period.

Energy efficiency and conservation report

A registered energy manager appointed by an energy consumer is required to prepare an energy efficiency and conservation report containing the information set out in section 7(1) of the Act and to submit such report to the Commission within the prescribed period.

Energy audit

An energy consumer is required from time to time to appoint a registered energy auditor⁷ to conduct an energy audit⁸ in respect of his activity, business or trade according to the guidelines and to prepare an energy audit report which is to be submitted to the Commission within the prescribed period.

The Commission may reject an energy audit report which has not been prepared in accordance with the guidelines or the contents of which are insufficient, and direct the energy consumer to rectify the report within a period and in such manner as determined by the Commission. If the energy consumer fails to rectify the energy audit report as directed by the Commission, the Commission may further direct the energy consumer to submit a new energy audit report within a period determined by the Commission.

The Commission may, upon application by an energy consumer who has submitted his first energy audit report, exempt the energy consumer from submitting subsequent energy audit reports if the energy consumer is able to satisfy the Commission that he has implemented significant energy efficiency and conservation measures that have resulted in improvement in energy efficiency in carrying out his activity, business or trade.

Duties of person in charge of a building

Energy intensity label

A person in charge of a building shall, within the prescribed period, apply to the Commission for an energy intensity label⁹ in respect of the building. Such application may be approved or rejected by the Commission.

The energy intensity label will be valid for such period as may be prescribed and shall at all times be displayed in a conspicuous part of the building.

Energy intensity performance

A person in charge of a building shall ensure that the energy intensity¹⁰ performance of the building complies with the energy efficiency rating¹¹ as may be prescribed.

Where the Commission finds that the energy intensity performance of a building does not comply with its energy efficiency rating, the Commission shall issue a notice of non-compliance to the said person in charge, whereupon the latter shall cause an energy audit to be conducted by a registered energy auditor to improve the energy intensity performance of the building so as to comply with the energy efficiency rating.

Energy audit report in respect of a building

An energy audit report in respect of a building shall be conducted in accordance with the guidelines and be submitted by the person in charge of a building together with an energy efficiency improvement plan within one year from the date of the notice of non-compliance issued to the person in charge as aforesaid.

Upon receipt of an energy audit report in respect of a building, the Commission may request the person in charge of a building to provide additional information, particulars or documents relating to the energy audit report, and may refuse the energy audit report if the person fails to the comply with the request.

The Commission may reject an energy audit report which has not been prepared in accordance with the guidelines or the contents of which are insufficient, and direct the person in charge of a building to rectify the report within a period and in such manner as determined by the Commission. If the person in charge of a building fails to rectify the energy audit report as directed by the Commission, the Commission may further direct the said person in charge to submit a new energy audit report within a period determined by the Commission.

Energy efficiency improvement plan

The energy efficiency improvement plan to be submitted together with the energy audit report shall be prepared in such manner as determined by the Commission.

The Commission may approve or refuse the energy efficiency improvement plan. If the Commission approves the energy efficiency improvement plan, the person in charge of a building shall implement the energy efficiency improvement plan. If the Commission refuses the energy efficiency improvement plan, it shall direct the said person in charge to revise the improvement plan within the period and in the manner as determined by the Commission. If the person in charge of a building fails to rectify the improvement plan as directed by the Commission, the Commission may further direct the said person in charge to submit a new energy efficiency improvement plan within a period determined by the Commission.

Energy-using product

Sale and distribution of energy-using product

The Act prohibits any person from selling, offering to sell, displaying, advertising or leasing any energy-using product unless the product is affixed with an energy efficiency rating label issued under the Act.¹² In addition, a manufacturer or an importer is prohibited from distributing any energy-using product unless the manufacturer or importer is registered with the Commission under section 19 and a certificate of energy efficiency¹³ has been issued by the Commission in respect of the energy-using product under section 21 of the Act.

Registration of manufacturer or importer

The provisions on the registration of a manufacturer or importer of an energy-using product, the validity period of the certificate of registration and the grounds for cancellation of the certificate are set out in sections 19 and 20 of the Act.

Application for certificate of energy efficiency

The provisions relating to the application for a certificate of energy efficiency in respect of an energy-using product, the validity period and the procedure for renewal of such certificate and the grounds for cancellation of the certificate of energy efficiency are set out in sections 21 to 23 of the Act.

Registration of energy manager and energy auditor

A person is required to be registered as a registered energy manager and to hold a practising certificate issued under the Act before he can carry out any functions or duties of a registered energy manager under the Act. Similarly, a person must be registered as a registered energy auditor and hold a practising certificate issued under the Act before he can conduct an energy audit.

The application and registration requirements, including the qualifications for a registered energy manager and registered energy auditor, as well as the application for a practising certificate and the renewal thereof and for the cancellation of the registration of a registered energy manager or registered energy auditor are set out in sections 25 to 30 of the Act.

Registration of training institution

Any training institution that intends to conduct a training course for any person intending to be a registered energy manager or to provide a continuous development programme for a registered energy manager is required to be registered and to hold a practising certificate under the Act.

The qualification requirements, application procedures for registration as a registered training institution, the application procedures for a practising certificate and the renewal of such certificate and the grounds for cancellation of registration of a registered training institution are set out in sections 31 to 36 of the Act.

Enforcement powers

The Act confers wide powers of enforcement on the Commission, including the right to (a) conduct a review or audit on an energy consumer, person in charge of a building as well as a manufacturer, importer, energy manager, energy auditor or training institution who has been registered under the Act; (b) require foregoing persons/ entities and any other person to provide information or documents as the Commission may require; (c) enter onto premises, with or in exceptional cases, without warrant, to search for and seize any evidence or thing relating to the commission or possible commission of an offence under the Act; and (d) take samples.

Subject to the due diligence defence, the Act makes a director, compliance officer, partner, manager, secretary or other similar officer liable for an offence committed by a body corporate, partnership, firm, society or other body of persons. A person is also made liable for acts, omissions, neglect or default by: (a) that person’s employee acting in the course of employment; (b) that person’s agent acting on his behalf; or (c) the employee of that person’s agent acting in the course of his employment by the person’s agent or otherwise on behalf of the agent acting on behalf of the person. Tipping off is also made an offence under the Act.

Comments

When the Act comes into operation, it will extend conservation and efficiency measures beyond electricity consumption to other sources of energy prescribed in the Second Schedule to the Act, namely chilled water, steam and hot water. At the same time, the Electricity Supply Act 1990 will be amended to remove provisions relating to the efficient use of electricity so that all matters relating to this subject will be provided for in the Act.¹⁴

It is to be noted that petroleum and diesel have been omitted from the energy sources listed in the First and Second Schedule to the Act and therefore fall outside the ambit of the Act.

The Act will provide a framework to regulate consumption and increase efficiency in the use of energy and energy resources. However, the extent of the measures outlined in the Act will only be known when the regulations and guidelines are issued by the Commission.

Article by Joey Tiw (Senior Associate) and Faith Chan (Associate) of the Corporate Practice of Skrine.

¹ The Energy Commission is a body corporate established under the Energy Commission Act 2001.

² The Act defines an “energy consumer” as a person who, for the purpose of carrying out his activity, business or trade, is supplied with energy or energy resources and consumes the energy or energy resources supplied.

³ An “energy-using product” refers to any equipment, device, appliance or article which uses energy or energy resources.

⁴ The Act defines a “person in charge of a building” as the owner of a building or any other person having the charge, management or control of a building.

⁵ A “registered energy manager” is an energy manager (i.e. a person who manages energy efficiency and conservation for an energy consumer) who is registered and holds a practising certificate under the Act.

⁶ An “energy management system” is a set of interrelated or interacting elements to establish an energy policy and energy objectives, and the processes and procedures to achieve the energy objectives.

⁷ A “registered energy auditor” is an energy auditor (i.e. a person who conducts energy audit) who is registered and holds a practising certificate under the Act.

⁸ An “energy audit” refers to a systematic and objective assessment of the energy needs, consumption and efficiency.

⁹ An “energy intensity label” refers to an energy intensity label issued pursuant to section 10 of the Act.

¹⁰ The expression “energy intensity” means the indicator of energy efficiency.

¹¹ The expression “energy efficiency rating” means the energy efficiency rating for a building indicated through a star rating system.

¹² The energy efficiency rating label in respect of an energy-using product is to be issued under section 21(5) of the Act upon a certificate of energy efficiency being issued under section 21(4) of the Act in respect of the said product.

¹³ A “certificate of energy efficiency” is a certificate of energy efficiency issued in respect of a class of energy-using product.

¹⁴ The amendments will be effected under the Electricity Supply (Amendment) Act 2023, in respect of which the Parliamentary Bill has been passed by the Dewan Rakyat on 11 October 2023.

This alert contains general information only. It does not constitute legal advice nor an expression of legal opinion and should not be relied upon as such. For further information, kindly contact skrine@skrine.com.

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Highlights of the Energy Efficiency and Conservation Bill 2023