RON95 Subsidy: Green Goals vs. Political Risks

Natural Resources and Environmental Sustainability Minister Nik Nazmi Nik Ahmad has warned that mishandling the government’s targeted subsidy initiative could cost the administration its power.

“I might lose my job, and the government might just lose power,” he said, adding that a political fallout could lead to the initiative being scrapped by a future administration.

The targeted subsidy plan, which includes reducing subsidies for RON95, widely used by most Malaysians, is expected to face strong public resistance when enforced later this year. Nik Nazmi described it as far more challenging than last year’s removal of subsidies for RON97 and diesel, which primarily affected wealthier Malaysians.

He compared this to the backlash faced by London Mayor Sadiq Khan over the expansion of the ultra-low emission zone (ULEZ), which became a controversial issue in a by-election. Nik Nazmi highlighted in his book "Saving the Planet" that such policies, if poorly handled, could significantly harm political support.

Despite the risks, Nik Nazmi emphasized that cutting fossil fuel subsidies is critical for Malaysia’s economic and environmental future. Fossil fuels have been kept artificially cheap, discouraging the adoption of renewable energy and electric vehicles (EVs).

Renewable energy is now more affordable than fossil fuels in the Asia-Pacific region, with solar power being the cheapest. Nik Nazmi hopes the subsidy cuts will push Malaysians toward sustainable energy and EVs, aligning with the country’s decarbonisation goals.

While aware of the risks, he remains committed. “It’s good for the country’s treasury and the environment,” he said.