There are worse places to be than in the eco-paradise of Sabah, a state on the northeast tip of Malaysian Borneo. To one side is the Coral Triangle, home to the world's richest ocean diversity; to the other is the Heart of Borneo, a 22-million-hectare rain forest. In the middle is a vast swath of 1,100 palm plantations. Every year hundreds of thousands of tourists visit Sabah to explore its marvels of biodiversity, hiking elephant paths, spotting shy orangutans and scuba diving with hammerhead sharks.

It's hard to imagine a worse place for a brand new 300 MW coal-fired power plant than here. But it will be a real challenge for Sabah to get by otherwise. And there, in a Southern Pacific garden spot, are all the world's eco-tensions writ small. (See pictures of transforming a coal refinery in South Africa.)

Malaysia has taken clear steps to make environmental health a national priority. In the fall of 2009, Prime Minister Najib Razak pledged at the U.N. climate change conference in Copenhagen that his country, already a Kyoto Protocol signatory, would reduce its carbon emissions by 40% by 2020. It is one of the few countries in Southeast Asia with renewable energy standards, despite the fact that it has reliable stores of conventional fuels; its oil, gas and energy sectors accounted for 10% of the country's GDP in 2009.

But Malaysia is also a land of pressing energy needs, and Sabah tells that story better than most places. Officials anticipate a 7.7% annual energy demand increase through 2020, which Sabah Electricity, the state power company, has proposed meeting by adding seven new energy facilities to the 17 already in existence. Most are fueled by natural gas, followed by hydropower and diesel. One of those new facilities, promised by Razak just months before his pledge in Copenhagen, is slated for the Sabah palm plantation region. And this one will be fired by coal — Sabah's first such plant.

Twice before in the last three years, the local electricity utility, a subsidiary of Tenaga Nasional Bhd (TNB), which owns 80% of Malaysia's power generation, had lobbied to build a coal-fired plant. Both times the plans were shot down by the federal Department of Environment (DOE) and local opposition.

This latest plant, however, is different. Not only is it slated for federally owned land, it also has the backing of the prime minister. Sabah's environmental groups formed a coalition to fight the plant, but they kept hearing the same thing over and over again: Ini Najib mau. Najib wants this.

Still, what Najib wants is not necessarily what the rest of his government wants, and in August, the DOE once again stepped in, rejecting a detailed environmental impact assessment for the plant. TNB is expected to submit a revised statement early next year and when the company does, environmentalists fear the jig could be up; this time a coal plant may actually get built. (See "The End of Cheap Coal?")

It doesn't have to be this way, environmentalists say. Some 60% of Malaysia is rain forest, the vast majority of it found in Sabah and its neighbor state, Sarawak. Though renewables currently account for only 1% of the country's energy production, mostly from hydropower, Sabah's abundant sunshine, geothermal sources, extensive network of strong rivers and a long coastline give it the potential to make Malaysia a regional leader in clean energy.

These resources are underdeveloped, however, and until the renewables sector can get itself ginned up, the threat of a coal-fired plant looms. One stopgap for Sabah would be to build the power plants it needs but fuel them with palm oil production waste. Sabah currently produces about 30% of Malaysia's palm oil, which combined with Indonesia's, constitutes 90% of the world's palm oil exports. A palm waste biomass plant could readily meet the 300-MW target Razak promised, according to one recent energy analysis.

Of course, palm plantations — and their waste — do their own serious environmental damage. In Southeast Asia, slash-and-burn land clearing has destroyed vast forest regions to make way for monocrops like palms, a practice that has been strongly implicated in global warming. That hardly makes this region a good place to do more burning. Still, even greens concede that palm burning is a step up from coal, if only because it provides something to do with the 70 million tons of palm production waste the country generates each year, most of which is dumped in mill ponds or illegally burned in open pits.

Despite these problems, Malaysia still heads into the 2010 climate talks in Cancun on Nov. 29 as one of the world's better-intentioned environmental citizens. But it remains to be seen how these good impulses will play out in Sabah's fragile and beautiful ecosystem.