Policy Development and Regulatory Frameworks

Component 2: Policy Development and Regulatory Frameworks


OVERVIEW
 

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DESCRIPTION

This component will address the current lack of strong policies, concise action plans, legislation and regulations for promoting and enforcing EE in the building sector. The expected outcome from the deliverables of the activities that comprise this component is the implementation of, and compliance to, favorable policies that encourage the application of EE technologies in the country’s buildings sector.

The project activities will support MEGTW in developing an EE action plan and to draft or review the EE Act. Furthermore proposed activities will support and enhance MEGTW and ST in revising regulatory controls and set up a monitoring system for the energy sector. Such a monitoring system will have important implications for future developments in the energy sector in that not only does the monitoring system give the decision makers a tool for following and evaluating specific interventions, but more importantly it will allow monitoring and evaluation of the overall policy goals. This provides the means by which such policies can be developed and revised with much higher confidence than currently, and will supply strong arguments for further policy and regulatory measures by providing concrete proof of their benefits. The monitoring system will by virtue of its nature also be a treasure trove of detailed energy sector information that will feed into not only new policy development but also DSM programme, scholarly research and commercial activities.

On a more technical level the component will support the updating of MS 1525 as well as the development of a code of practice for residential buildings. The project's focus is on commercial buildings but developing a residential code is a windfall opportunity too good to miss, and which can have very significant impacts on energy consumption in Malaysia in the long term. That is an opportunity that may not come again for many years to come.

OUTPUT

OUTPUT 2.1
Improved Malaysia EE Building policies, legislation/regulations & action plan
This output is expected to be realized from the implementation of several activities that facilitate the development of a national EE policy and action plan for buildings and the incorporation of such policies in the 11th Malaysia Plan, contributing towards the enactment of a Malaysian EE Act.


ACTIVITY 2.1.1
Conduct of Building EE Policy Studies

This activity involves the provision of technical advice in the review of existing EE-related policies and regulations in Malaysia as applied to building construction and operations. Similar policies found in other countries, like those in ASEAN, that are aimed at promoting EE in buildings will also be reviewed. It will also involve the evaluation of possible policy support activities and strategies that can be considered for building developers, managers and owners/investors. Specific policy studies will be carried out based on the suggestions of the project stakeholders as well as the recommendations from the policy reviews.

Activity 2.1.1.1: EE Building Options
This will involve a comprehensive study of the current performance of all building types and designs in Malaysia. As part of the study, several options addressing the energy saving opportunities for each type and design of buildings, will be identified and evaluated. The study will elucidate macroeconomic costs and benefits of different measures and approaches as well as linkages to climate change initiatives. Legal context, an extended stakeholder analysis to pinpoint roles and responsibilities will also be necessary. The study will also provide recommendations on an appropriate scope and effective measures for the action plan in order to promote EE in the buildings sector in the long term.

Activity 2.1.1.2: EE Building Incentives Scheme
New and innovative policy and market mechanisms for the application of EE features in the design, construction and operation of new buildings shall be analyzed. Costs and benefits analyses shall also be developed to provide clear economic justifications for the same. Also, fiscal/financial incentives for building developers and owners of new buildings and retrofitted existing buildings to incorporate EE features will also be studied, whenever applicable.

Activity 2.1.1.3: EE Building Blueprints
This is a comprehensive investigation of the feasibility of implementing and enforcing a policy and regulatory framework for requiring new building constructions to incorporate energy efficiency features in their designs. The regulations shall be enforced in phases, with the pilot phase involving the demonstration of the regulatory framework, the next phase involving the provision of incentives for building designs with EE features and verifiable EE savings generated through the EE features; and lastly a phase that involves the mandatory enforcement of the requirements for EE building blueprints (i.e., designs).


ACTIVITY 2.1.2
Formal & Informal Discussions with Policymakers

This involves the organization and conduct of a series of formal and informal meetings with policy makers in order to familiarize them with the project and (where necessary) with energy efficiency issues, consult on project issues, obtain necessary approvals, and gain support for policy initiatives.

OUTPUT 2.2
Approved and Enforced EE Buildings Code of Practice
This output is expected to be realized from the implementation of several activities that assist in further revising the existing buildings Code of Practice, have it approved and enforced by relevant legislation and regulations. Appropriate recommendations will be prioritized according to readiness for implementation of action that needs to be taken to address the current barriers in the inclusion of MS 1525 into the Unified Building By-Laws (UBBL).

ACTIVITY 2.2.1
Review of Existing Buildings Code of Practice
 
Based on available information in the CBEED and the published guidelines, this activity is mainly involving the review of the UBBL and the MS 1525, with the aim of enhancing the chances of officially incorporating the latter to the former thereby facilitating the promotion end enforcement of EE policies in the design, construction and operation of buildings.
 
Activity 2.2.1.1: Review of the MS 1525
This activity will involve the review and updating of the existing MS 1525 to incorporate any necessary adjustments in the provisions, develop the relevant implementation procedures; and building the capacity of government building inspectors on application and monitoring of EE technology systems. Where relevant, design and compliance guidelines for the various energy systems in buildings (building envelope, lighting, air conditioning, etc.), will be recalculated and updated taking into consideration the presently available and applicable building EE technologies. The new guidelines and procedures will be disseminated to the building inspectors of the local governments, and training on the implementation of the guidelines will also be provided. Building permit requirements and building inspector's checklists will be reviewed and will be revised accordingly to include specifications from the updated lighting system guidelines.

Activity 2.2.1.2: Conduct of Stakeholders Consultation Meetings
The results of the policy studies and the MS 1525 review will be presented to the different stakeholders for their comments and additional inputs. For each deliverable (e.g., inception report, draft report, final report, etc.) the stakeholders will be consulted to solicit their inputs and comments. The project will not accept the results of the policy studies and the MS 1525 review unless it has gone through the required consultative process. The project would like to make sure that the policy recommendations provided by the study would gain wider acceptance, particularly by the private sector.
 
 
ACTIVITY 2.2.2
Formulation, Approval and Enforcement of a Policy on EE Building Design
 
This activity involves a series of stakeholders’ consultations on the application of MS 1525:2007 in the energy efficient design, operation and maintenance of buildings. It is aimed at ensuring that all new building projects, starting with the JKR projects, are in line with the principles of energy efficient design and follows MS 1525:2007 (or better). These discussions will be with the JKR for the design issues concerning of government buildings, and with the Ministry of Housing and Local Government (MHLG) as the custodian of the UBBL which will affect both government and private sector buildings. The following sub-activities will be carried out:
 
Activity 2.2.2.1: Conduct of Stakeholders Consultation Meeting
Regular consultation meetings will be conducted with the various stakeholders in the buildings sector to solicit their comments on the adoption and implementation of MS 1525:2007 as part and parcel of the Unified Building By-Laws (UBBL). Among the agenda for discussion include the review of the specific provisions of MS 1525:2007, including the preparation of its implementing rules and regulations. Other potential support programs and incentives to accelerate the growth of EE technology applications in the buildings sector will also be taken up during these meetings.
 
Activity 2.2.2.2: MS 1525 Regulatory Frameworks Recommendations and Endorsement
After series of consultation meetings, proposed policies and regulatory frameworks in support of MS 1525 will be drafted. The proposed policies will be based on the results and recommendations of the policy studies that will be conducted under Activity 2.1.1. The formulated policies will be presented to the stakeholders and the Project Steering Committee. Once favorably endorsed, the document will be submitted to the MHLG.
 
Activity 2.2.2.3: Assisting the MHLG in Facilitating MH1525 Enforcement
This entails the provision of capacity building for the MHLG in the enforcement of the MS 1525 as part of the UBBL. A training program for the MHLG personnel who are responsible for the enforcement of the UBBL will be designed and implemented. This will include training on the evaluation of the EE features of building designs that are applied for building permits and approvals. An evaluation will be carried out to ascertain the level of technical and institutional capacity built within the MHLG a year after the training program completion.


ACTIVITY 2.2.3
Capacity Building on the Application of Building Energy Codes
 
This activity involves the capacity building of building practitioners in Malaysia in utilizing and complying with the building energy codes.
 
Activity 2.2.3.1: Survey of the Local Building Service Industry
A survey will be conducted to assess and evaluate the capacity of the building industry (i.e., building practitioners, building owners/administrators, and service providers) to comply with the requirements of the building energy codes, and to also to provide feed-back for further development of it in the future.
 
Activity 2.2.3.2: Technical Capacity Development on Building Energy Codes
This activity will involve the conduct of comprehensive training courses on building energy codes for building practitioners such as architects, engineers, building administrators, etc. This capacity development activity will form part of a certification program for building practitioners. This certification program and the associated capacity development program are expected to continue even after the BSEEP. It will also involve capacity building for the JKR to enable it to become a service provider to the industry.
 
Activity 2.2.3.3: Assessment of Capabilities of Existing Building Service Providers
This activity will involve the evaluation of the capabilities of the local architectural, engineering and building development firms in performing technical and maintenance services to building owners for compliance to building energy codes. It will also involve the evaluation of the feasibility of, and requirements for enhancing the building services industry, as well as the development of an industry for the local manufacture of EE building materials and associated equipment that are building EE code-compliant.
 
Activity 2.2.3.4: Training Course on the Design, Feasibility Evaluation, Construction, Operation and Maintenance of EE Buildings
This capacity building activity will involve the provision of comprehensive training courses on the design, construction, economic feasibility evaluation, operation and maintenance of EE buildings for local engineering firms and equipment manufacturers, repair and maintenance service providers. The training courses form part of the required capacity building for JKR to enable it to become an EE building service provider to the buildings sector.
 
 
ACTIVITY 2.2.4
Development of an EE & RE Code of Practice in Residential Buildings
 
This activity involves the development of a code of practice for the application EE features, as well as EE and RE systems in domestic buildings. The building industry’s support will be sought to evaluate the present operating performance of representative samples of existing EE and RE systems installed in residential buildings. The industry’s participation is very vital from the outset in order to gain their acceptance of standards in later activities. This activity will result in the delivery of useful inputs in the design of new residential buildings or expansions/retrofits.
 
Activity 2.2.4.1: Assessment of Best Practices on EE Residential Building Design and Operation
A methodology for the assessment of the different residential building designs in Malaysia and in other countries (e.g., ASEAN and other tropical countries) including systems and equipment that are used will be prepared. This includes procedures for drawing out samples of buildings and their energy systems, the parameters in assessing system performance, the procedures for the conduct of performance evaluation and testing as well as the identification of various testing equipment (including equipment and test service providers) needed for the assessment. Upon the approval of the said methodology, the procurement of testing equipment as well as the conduct of actual performance assessment shall follow. Based on the results of the said assessment, best practices on EE building and building energy system design and installation shall be identified and compiled according to criteria set for cost, system performance and/or quality.
 
Activity 2.2.4.2: Assessment and Setting of Domestic Building EE Codes
This activity will continue on the technologies identified in Activity 2.2.4.1. Standards and best practices on the performance, design, construction and installation of energy systems will be researched in-country and internationally. A comparative analysis will be conducted between existing domestic building design and their energy systems and existing building energy performance standards available. The analysis will also include cost factors. Based on the analyses, a set of recommended designs and standards for domestic buildings will be prepared including the corresponding testing and evaluation scheme for the measurement of the same.
 
Activity 2.2.4.3: Establishment of Domestic Building Energy Codes and Standards
Meetings and consultations with concerned stakeholders particularly the building practitioners, building service providers, building materials suppliers, and building owners will be carried out for the setting up of the energy performance standards, best practices and the recommended testing procedures. Registration of said design standards and practices with concerned government institutions particularly the JKR (Government Buildings) and the MHLG (Private Buildings) will be pursued. Once approved, a promotional program for the adoption and widespread use of the prescribed standards and best practices will be developed and implemented. The dissemination of the standards and best practices will be carried out under the promotional programs that will be carried out under the BSEEP.

 
OUTPUT 2.3
Utility regulations that promote/support EE technology applications in buildings
 
This output is expected to be realized from the implementation of several activities that facilitate the development of favorable utility regulations that promote and support EE technology applications in buildings.
 
 
ACTIVITY 2.3.1
Assessment of Utility Regulations Promoting and Supporting EE Building Technology Applications
 
This activity will involve the review of policies and regulations supported by public utilities in other countries that are supportive of the implementation of EE initiatives in the design, construction, retrofit and operation of buildings. Applicable incentive schemes for such projects in buildings sectors will be researched in-country and internationally. An analysis will be conducted to compare various incentive schemes (including the policies/regulations that supported them) as to their applicability and viability in the Malaysian context. The cost requirements and cost implications of each scheme will be analyzed considering the factors that either made them successful or a not too successful.
 
 
ACTIVITY 2.3.2
Design of EE System Incentives in Buildings
 
This activity will involve assisting the ST and TNB in coming up with applicable incentive schemes for supporting EE initiatives in buildings. Technical assistance will be provided in evaluating the design and implementation of the selected incentive options.
 
 
ACTIVITY 2.3.3
Review of Utility Tariffs Focusing on EE in the Buildings Sector
 
The review will focus on identifying problems and opportunities for EE in buildings given the existing tariffs for electricity, gas and other relevant energy carriers.
 
Activity 2.3.3.1: Electricity Pricing Study
An electricity tariff pricing study for electricity used in buildings, as well as electricity generated in buildings for sale to the grid will be made. Various options for financial incentives to encourage EE projects in buildings, as well as power generation using RE (e.g., solar), including capacity and energy payment and investment incentives shall be investigated and evaluated. The study will also provide specific recommendations on the levels of each incentive measure. Successful experiences in other countries such as investment tax incentives, property tax reductions, accelerated depreciation, and feed-in tariffs will be studied to determine their applicability and suitability in the local electricity market. If available, previous electricity pricing studies in the country will also be used in the pricing study. The intention is to provide the key government agencies, particularly the ST, greater appreciation of the pricing issues on decentralized power generation.
 
Activity 2.3.3.2: Public Survey on Fuel Price Perception
This activity entails the conduct of a special survey of building owners/developers and building practitioners as to, among others, what they think as the reasonable or optimum price for typical fuels used in buildings.
 
Activity 2.3.3.3: Study on Gas Fuels Pricing for Buildings
A related fuel supply and distribution policy for MCT should be based on sound policy on the national development of new gas distribution infrastructures that ensures sustainable access to affordable gas for effective building cogeneration technology application. Appropriate grid pricing for cogenerated electricity sales should be develop in order to encourage EE projects in buildings such as cogeneration

Activity 2.3.3.4: Monitoring of Prices of Energy Carriers Used in Buildings
Regular monitoring of the prices of energy carriers used in buildings will be carried out under this activity. The economics of many EE and RE (if feasible) application projects in buildings will be evaluated to determine the fuel price impacts.
 
 
ACTIVITY 2.3.4
Discussions on Energy Pricing for Buildings
 
This activity will involve the conduct of a series of consultation meetings lead by MEGTW with TNB, MoF, EPU and MITI/MIDA and other stakeholders regarding the need for balanced subsidized energy for both buildings and industries. This is to address the importance of broad and regular consultations on the issue of tariffs which is very complex.
 
 
ACTIVITY 2.3.5
Web-based Monitoring of Incentives Scheme Implementation
 
This will involve the design, development, operation and maintenance of a web-based online application and monitoring service for whatever fiscal/financial incentive mechanism will be proposed and implemented under the BSEEP. The development of the on-line service shall be coordinated with the review and analysis in Activity 2.3.2 and linked to the CBEED.