IEEJ：April 2017○ｃIEEJ 2017
Special Bulletin
A Japanese Perspective on the International Energy Landscape (318)

April 7, 2017

Uncertain Future and Scenario Planning: Discussions in Malaysia
Ken Koyama, PhD
Chief Economist, Managing Director
The Institute of Energy Economics, JapanOn April 6 and 7, I had an opportunity to discuss Malaysian energy challenges withMalaysian energy policy planners and energy researchers. As international adviser to the Energy
Commission at the University of Tenaga Nasional in Malaysia since December 2015, I madepresentations to lead the discussions in Malaysia.
As the environment surrounding the Malaysian energy market is greatly changing at homeand abroad, Malaysian officials and experts who are considering their future energy policy
challenges have high interests in various problems and initiatives in Japan and the world. In thediscussions in Malaysia, I made presentations on the up-to-date trend of Japanese energy policy
initiatives from the three angles of energy security, environmental problems (climate change) andmarket efficiency (energy market liberalization and deregulation). I then received many questions
from discussion participants and felt their high interests in the Japanese energy policy trend.
However, another interesting, impressive point regarding the discussions is that theMalaysian participants are highly interested in scenario planning. This may be because uncertainties
are increasing as the energy situation involving Malaysia is changing greatly at home and abroad as
noted above. For Malaysia rich with natural resources, the future course of the international oil andgas market is a significant factor influencing its economy. Meanwhile, Malaysia, even though beingrich with energy resources, is rapidly increasing energy imports with the energy supply-demandbalance changing. Regarding the climate change issue, Malaysia has participated in the Paris
Agreement and submitted its voluntary greenhouse gas emission reduction target and will be
required to enhance the target. Actually, however, Malaysia is going ahead with large coal power
plant construction projects from the viewpoint of economic efficiency or a cut in excessive
dependence on natural gas in power generation, complicating problems. For the immediate future,
Malaysia faces the problem of how to rationally expand renewable energy’s share of the energy mix.
For a long term, it is considering the introduction of nuclear power generation. Under such situation,
the reform and deregulation of the domestic energy market where state-run companies are dominant
are on the table. Malaysia thus faces great energy challenges for the future and sees great
uncertainties.
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IEEJ：April 2017○ｃIEEJ 2017
The discussions focused on scenario planning as one of the possible approaches toMalaysian energy challenges. Scenario planning was established as an approach by around the 1960s
primarily for studying and decision making regarding policies, business administration and strategies.
Oil major Royal Dutch/Shell Group is known for exploiting the scenario planning approach forconsidering various strategies. At present, its website provides a scenario analysis on a long-term
future picture of energy in the world.
The future is filled with uncertainties. Amid uncertainties, it is impossible in a sense toaccurately predict the future and it is risky to make policy, strategic or business decisions based on
any single prediction. Scenario planning is used to describe multiple (usually two or three) futurestories that are structurally different but logically consistent in the respective individual story,depending on key driving forces influencing the future course.
These scenarios are plausible stories that are structurally different, logically consistent andaccompanied by temporal elements. Based on such way of thinking, scenario planning seeks to use
multiple different scenarios for helping users of the scenario planning make strategic decisions,
measure future risks and prepare measures for each future scenario. Scenario planning is expected tobrush up an organization’s change response capabilities through its flexible and compound thinking
and organization members’ sharing of scenarios resulting from such thinking.
In fact, scenario planning characterized by the abovementioned features is used by various
parties in the world. In the latest discussions in Malaysia, however, participants indicated interests inusing the scenario planning approach to consider energy policies and strategies in Malaysia facing
various challenges and uncertainties as explained above.
In the discussions, I explained the characteristics and effectiveness of scenario planning,
introduced discussion methods and specific processes for IEEJ scenario planning workshops andprovided specific past scenario planning achievements. Many participants made serious questions,indicating their strong interests in scenario planning. As a matter of course, no approach can beperfect or comprehensive. Through the discussions, however, I felt that the scenario planningapproach may be useful for discussing energy challenges facing Malaysia, working out various
future scenarios for these challenges and considering and sharing feasible measures among
stakeholders. My impression is that it would be significant to closely watch future discussions inMalaysia and cooperate with Malaysian stakeholders in using or implementing scenario planning asnecessary.
Contact: report@tky.ieej.or.jp
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