Carbon Credits, Clean Energy, Energy Efficiency, Malaysia, Renewable Energy

Malaysian Government Provides Incentives for Energy Efficiency

September 17, 2007 (Bernama) — Construction group Putrajaya Perdana Bhd (PPB) sees more projects as building owners take advantage of the Budget 2008 tax incentives for “green” investments.It said the tax allowances unveiled in the budget would further attract building owners to move towards “green” buildings, representing more projects for the group.

To encourage companies to invest in greenhouse gases (GHG) emission reduction projects, income derived from trading certified emission reductions (CERs) certificates will have tax exemption, effective from assessment year 2008 until 2010 under Budget 2008.

In a statement today, PPB said the group has the potential to enjoy increased revenue and earnings from the construction of energy-efficient buildings (EEBs), which helped consumers save on energy costs.

EEBs or “green” buildings are efficient in their use of energy, water and materials, reducing the impact of the building on human health and the environment. This is made possible due to their design, construction, operation, maintenance and removal.

“Green” buildings save energy costs to mitigate the effect of escalating energy prices, such as oil and gas and electricity.

For example, total energy consumption of each Low Energy Office (LEO) averages about 2,218MWh p.a. (RM0.44m p.a.) as compared to more conventional building which consumes an average of 5,290MWh p.a. (RM1.04m p.a.) translating into energy cost saving of about RM0.6m p.a.

“This lowers the operating costs of the building and realise real, economic savings for owners of these buildings,” PPB said.

PPB is the market leader in the construction of EEBs in Malaysia. Among its notable completed EEBs are the Energy, Water and Communication Ministry building worth RM115 million and the Zero Energy Office (ZEO) for Pusat Tenaga Malaysia worth RM16.1 million.

These projects helped to position PPB as a leader in the growing sector of “green” buildings, the group said.

It added that the tax breaks would benefit PPB as energy conservation projects involved capital expenditure.

Under the budget, the government also announced that that companies providing energy conservation services will get an additional 10-year pioneer status.

Others are:

The investment tax allowance will be increased to 100 percent of qualifying capital expenditure incurred within five years. The allowance will be set off against 100 percent of statutory income for each assessment; and

Companies which incur capital expenditure for energy conservation for own consumption will have their investment tax allowance increased to 100 percent of the qualifying capital expenditure incurred within five years. The allowance will be set off against 100 percent of statutory income for each year of assessment.

In addition to savings from lower operating costs, it said buildings accredited under the United Nations Framework Convention on Climate Change’s Clean Development Mechanism (CDM) programme for reducing emission of greenhouse gases will receive CERs which can be sold for additional income.

The CDM is an emissions trading mechanism under the Kyoto Protocol that aims to facilitate the implementation of emissions reduction projects in developing countries through the sale of CERs.

The Kyoto Protocol is a protocol to the United Nations Framework Convention on Climate Change.

As of December 2006, a total of 169 countries, including Malaysia, have ratified the agreement, representing over 61 percent of global emissions.


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