Would manufacturing go for renewable energy? Manufacturers' preference towards sustainability

Abstract

Malaysia needs to fully utilize its renewable energy resources to meet its goal of installed capacity of 31% of renewable energy in 2025 and 40% in 2035. In order to empower renewable energy sources, the government has established a fund known as the renewable energy fund (RE FUND). In Malaysia, most manufacturing sectors contribute to the RE FUND through their monthly electricity bills due to their electricity consumption exceeding 300kwh per month. As Malaysia's highest electricity consumer, the manufacturing sector needs government investment incentives to switch to renewable energy sources to generate electricity. Therefore, this study was conducted to identify attribute preferences of the manufacturing sector due to investing in renewable energy sources. The Choice Experiment method was employed where the Mixed Logit model was chosen to identify the willingness to pay for the manufacturing sectors based on their preferences among the four attributes: types of renewable energy, project location, annual reduction in GHG emissions, and RE FUND. The study results found that the manufacturing sector places the highest value on the project location, where they prefer to improve the project location from current condition to far location. This study can also help to achieve the Goal 7 in the Sustainable Development Goal (SDG), where investment in renewable energy sources can guarantee that all individuals obtain affordable, reliable, sustainable, and modern electricity in 2030.

Keywords

• Renewable energy
• Choice experiment
• Manufacturer
• Mixed logit
• Willingness to pay