Bioelectricity in Malaysia: Economic Feasibility, Environmental and Deforestation Implications

36 Pages Posted: 2 Apr 2019

See all articles by Kenneth Szulczyk

Kenneth Szulczyk

Curtin University, Malaysia

Muhammad A. Cheema

University of Otago New Zealand

Ross Cullen

Lincoln University (NZ) - Commerce Division

Md. Atiqur Rahman Khan

Rajshahi University - Dept. of Finance

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Date Written: March 25, 2019

Abstract

We investigate the economic feasibility of bioelectricity production from biomass in Malaysia, and its impact on greenhouse gas (GHG) emissions and storage, agricultural prices, agricultural employment, and deforestation. For this purpose, we develop a partial equilibrium (PE) model that projects agricultural prices, production, imports, exports, domestic consumption, and land use in five-year increments between 2015 and 2065. Our results show that by 2030 biomass-generated electricity can supply 36.5% of the electricity generated in Malaysia, 16 times more than the 2016 electricity supply from biomass. Increased bioelectricity production from biomass will significantly reduce GHG emissions and will help Malaysia meet its commitment in the Paris Agreement to mitigate GHG emission by 45% before 2030. Our modelling shows that biomass-generated electricity creates a derived demand for waste biomass that expands the area of oil palm plantations. The expansion lowers agricultural prices, boosts agricultural employment and leads to some deforestation as landowners clear rainforest to plant oil palm trees. Nonetheless, the deforestation does not increase GHG emissions since GHG gains from bioelectricity significantly exceed GHG losses from deforestation.

Keywords: bioelectricity; waste biomass; partial equilibrium model; cost competitiveness

JEL Classification: C61, O13, Q42

Suggested Citation

Szulczyk, Kenneth and Cheema, Muhammad A. and Cullen, Ross and Khan, Md. Atiqur Rahman, Bioelectricity in Malaysia: Economic Feasibility, Environmental and Deforestation Implications (March 25, 2019). Available at SSRN: https://ssrn.com/abstract=3359465 or http://dx.doi.org/10.2139/ssrn.3359465

Kenneth Szulczyk

Curtin University, Malaysia ( email )

CDT 250
Miri, Sarawak 98009
Malaysia

Muhammad A. Cheema (Contact Author)

University of Otago New Zealand ( email )

Dunedin, 9016
New Zealand

Ross Cullen

Lincoln University (NZ) - Commerce Division ( email )

P.O. Box 84
Canterbury, 7640
New Zealand

Md. Atiqur Rahman Khan

Rajshahi University - Dept. of Finance ( email )

Rajshahi
Rajshahi, 6205
Bangladesh
+8801914254354 (Phone)

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