Abstract
Sarawak is emerging as a key player in Southeast Asia’s low-carbon energy transition, with growing ambitions to expand electricity and hydrogen supply for domestic, industrial growth, and cross-border hydrogen and energy exports. However, Sarawak needs to address challenges, including the need to balance cost-effectiveness, emissions reduction, and infrastructure readiness while navigating uncertain policy and market dynamics. In response, this research developed a linear programming (LP) optimisation model to identify the solutions to these gaps. The proposed model focuses on demand-side cost optimisation within an electricity–hydrogen integrated energy system (EH-IES) encompassing industrial, transport, residential, and commercial end uses. The findings show that the carbon-tax level that most effectively motivates local industrial decarbonisation is 592 MYR/t CO2-eq, with no binding carbon cap and hydrogen prices stable at approximately 52.875 × 106 MYR/PJ and 35.250 × 106 MYR/PJ (equivalent to 6.35 MYR/kg H2 and 4.23 MYR/kg H2 for blue and grey hydrogen). This value of carbon tax signifies the great resistance to decarbonising local demand sectors, and the requirement of additional support policies to implement the carbon tax at a gentle pace.
