Government Hopes RON95 Subsidy Changes Encourages Renewable Energy Use, But Acknowledges Potential Political Risk

The Malaysian government’s targeted RON 95 subsidy change has become a pressing topic of discussion, with Natural Resources and Environmental Sustainability Minister Nik Nazmi Nik Ahmad emphasizing its importance and potential challenges. Nik Nazmi stated that mishandling the new subsidy criteria could have dire political consequences.

The targeted subsidy plan, which involves reducing subsidies for RON95 petrol widely used by Malaysians, is expected to be implemented later this year. This follows last year’s removal of subsidies for RON97 and diesel, which primarily affected wealthier segments of society. Nik Nazmi acknowledged the difficulty of the task, describing it as "far more challenging" than previous subsidy cuts.

Drawing parallels with London Mayor Sadiq Khan’s controversial expansion of the ultra-low emission zone (ULEZ), which triggered significant political backlash, Nik Nazmi highlighted the stakes involved. He wrote in his book, Saving the Planet, that poorly executed policies can significantly erode political support, underscoring the importance of careful implementation.

Despite the political risks, Nik Nazmi remains steadfast in his belief that reducing fossil fuel subsidies is crucial for Malaysia’s economic and environmental future. Subsidies have kept fossil fuels artificially cheap, discouraging the adoption of renewable energy and electric vehicles (EV) in the nation.

Renewable energy, particularly solar power, has become increasingly affordable in the Asia-Pacific region, often outcompeting fossil fuels. Nik Nazmi hopes the subsidy cuts will accelerate the shift toward greener alternatives, pushing Malaysians to adopt EVs and other sustainable technologies.

“It’s good for the country’s treasury. It’s good for the environment and I think it’s the right transition that we want to pursue,” he said.

The targeted subsidy plan is anticipated to face significant resistance from the public, given the widespread use of RON95 petrol and the cost-of-living pressures many Malaysians face. 

Politically, however, the stakes are high. As Nik Nazmi admitted, “I might lose my job, and the government might just lose power.”

Tensions are high for the coming months, and whether this will generate public outrage or compliance is more unpredictable than ever.


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