“In our strategies leading up to 2030, we are exploring how regulation and supervision can be better calibrated to support energy transition.

“We are considering giving financial institutions room to take higher risks – responsibly, of course – with these risks appropriately understood, priced and managed within an acceptable risk appetite,” he said at the Joint Committee on Climate Change’s (J3) Journey to Zero 2026 conference here today.

Rasheed said while capital was available, the challenge was channelling it into credible and investable projects at sufficient scale and pace.

He said high-impact clean energy projects could struggle to secure financing if they appeared commercially unviable or unattractive, citing a town in Sabah that currently relies on an 800kW diesel generator despite a nearby palm oil mill emitting enough methane to power it.

With more than 120 oil palm plantations across Sabah, Rasheed said methane conversion projects could serve as a model that could be replicated at scale, potentially adding hundreds of megawatts of clean energy in the state.

“A marginal project can become a replicable model. A local intervention can become a statewide opportunity,” he said.

Rasheed said the Climate Finance Innovation Lab, an initiative launched by J3 in June 2025 to connect climate- and nature-related projects with funding, received applications for 45 projects seeking more than RM5 billion in financing.

“My call to funders is simple: how do we scale these 45 projects and others like them?” he said, adding that funders should engage early to identify financial gaps and structure risk-sharing solutions.

Rasheed said renewable energy accounted for 31% of Malaysia’s installed capacity in 2025, up from 25% in 2023, putting the country on track to meet the National Energy Transition Roadmap’s interim target.

However, with data centres estimated to account for nearly a third of electricity consumption by 2035, he said the country must ensure that digital economy growth is supported by “reliable, affordable and increasingly clean” energy.