Extract of debate on renewable energy (during Energy Conservation Bill)

Source: www.parliament.gov.sg (9 April 2012)

 Dr Vivian Balakrishnan:

… [other parts of Minister’s speech responding to MP speeches] …

I am glad that Mr Yee supports our efforts to encourage greater use of renewable energy in Singapore. Unfortunately, let me share some of our constraints in this area. We do not have large rivers in Singapore. So hydroelectricity is not a viable option. We do not have volcanoes. So geo-thermal energy is not an option as it is in other tectonically active countries. Solar and wind farms require large tracts of lands which we do not have. A recent report authored by Stewart Brand estimated that you need land about the size of the entire island of Singapore in order to generate one gigawatt of wind energy. To put this in context, it means even if the entire Singapore was converted into a wind farm, you would produce only about 10% of the installed capacity that we have. It is not possible. Even if we were to cover every roof top and every surface with photovoltaic panels using current technology, we estimated it could provide maybe about 12% to 14% of electricity needs.

Similarly, our gentle winds and the fact that we do not have typhoons and hurricanes, which is a good thing, also mean that the same characteristics that have made Singapore a safe harbour also make wind, tidal and these other renewable sources not viable in our context.

I have taken some pains to explain all these so that you understand that it would be wrong to prematurely and simplistically set a target for renewable energy in Singapore. We are an alternative energy disadvantaged country. Some people say we are not even a country, we are a city state. So you need to understand this basic strategic fundamental constraint because otherwise if you just simplistically copy what other larger countries in very different circumstances do, you will end up imposing an impossible burden on Singaporeans, Singapore enterprises and businesses. So that would be counter- productive.

Assoc Prof Fatimah and Mr Yee have also asked about our progress in achieving a sustainable Singapore blueprint targets for energy intensity and green mark buildings. Well, here, I have some good news. Under the “Sustainable Singapore Blueprint” which was published in 2009, Singapore was supposed to pursue a less energy intensive growth trajectory. Our target was to improve our energy intensity by 35% compared from 2005 levels, and to achieve this by 2030. I am pleased to inform the House that our energy intensity has already improved by some 16% since 2005 levels. This we achieved in 2010.

… [other parts of speech] …

Mr Yee Jenn Jong: I agree with the Minister that solar energy is the main option available to Singapore. The others that we have tried include bio-gas and waste which is quite minimal given the limitations. I understand the Government has been significantly funding solar research with EDB also funding solar and alternative energy research. The question I would like to ask is: if not 10% for KPIs, what other KPIs can we set for all these investments that we are currently putting into solar energy and other alternative energy?

Dr Vivian Balakrishnan: You are right. We have been promoting research and development as well as early prototyping of systems including solar technology in Singapore. For instance, there is an HDB precinct, I believe, in Punggol, where we are evaluating the system, the performance of the system and the economic implications of such a system. But the point right now is that, even as of today, the electron that you get from a photovoltaic cell is more expensive than an electron you get from the grid. So Members have to be very careful that whilst we want to do the right thing, we want to be more green, you got to be careful not, in your zeal, to impose costs onto consumers. And that is why we are taking a technology agnostic approach. And we are taking a very careful approach in the rollout of all these new technologies and green renewable sources of energy. We do not want to add on costs to people.

I do not want to politicise this but, if you take the summation of yours and Mr Giam’s speeches, you have a position where the Workers’ Party is in fact asking me to raise taxes for high energy uses to set standards for the use of renewable energy modalities which will impose higher costs to our people and I am somewhat surprised that you have been so enthusiastic that you are prepared to do that. I just want to add that, as a government, other times when Ms Sylvia Lim gives me “heat” on prices of utilities, so this is an area in which I want to be very careful on. So, we want to do the right thing. We want to encourage the research and development. We are prepared to test-bed new technologies but we are not going to prematurely roll out technologies when they are not economically viable and when they will increase costs to consumers.

Similarly, on your suggestion during your speech on having tiered tariffs for electricity, that in effect penalises big consumers. You need to understand that in the case of Singapore our energy and electricity costs are not subsidised. So, what all people are paying, whether you are a small or large consumer, you are paying market price for it. I would rather make it worth their while to invest in capability and technology to conserve energy, and therefore to make business sense rather than to impose taxes in the name of ideology or in an effort to look green, but actually impose a burden on our stakeholders and our industrial sector. So, this is one of those situations where I understand where you are coming from. I appreciate your support for this Bill. I am just asking for a little bit of careful analysis and not to be over-enthusiastic and lead down the road of unintended consequences. We are not actually that far different in our intention to ensure that Singapore becomes a leader in energy efficiency.

… [query by other MP and reply by Minister] …

Mr Gerald Giam Yean Song: Sir, I would like to clarify my points just now about the taxes or the new taxes that the Minister is suggesting I suggested. I suggested two tax rebates actually for companies which achieve their energy efficiency targets as well as those who have attained their energy efficiency certification that they will be assessed under. So, even though the tiered tariffs might result in some high energy users paying a bit more for their energy, this could be returned to the companies through the tax rebates. And, in fact, the tiered tariffs that will be imposed on the higher energy users could serve as a further incentive for them to reduce their overall bill which would benefit them overall economically.

Dr Vivian Balakrishnan: I am being a bit more constrained because I am acutely aware that he is supporting the Bill. But actually there is a fundamental difference in approach here and I cannot help wondering whether you have calibrated your position with the Workers’ Party, in particular as a whole. So, let us go back to basics.

Our electricity price in Singapore is not subsidised price. There is a market. The market sets the price. Everybody pays for it. For the big consumers, they are in a position to bargain to take advantage of the contracts which are available. But the point is these are all market prices. We are not subsidising them.

If I take your proposal to add another levy on top of the market price, it is a real burden on our industry sector. And if you say let us only target the big consumers, then you can start playing games by having a big company decide it has got multiple subsidiary units and qualifying for the lower rate. All these are regulatory games which I believe are counter-productive. The key point is to have right pricing for energy. It makes sense for everybody to save energy to reduce their consumption and to invest in more energy efficient equipment. But right now there are some barriers to that – lack of knowledge, or the fact that sometimes the split incentives between owners and users of a facility or a building or because the payback period is too long and businesses for instance might be prepared to invest in technology that can pay back in three years, they may not be prepared to invest in technology that takes six years to pay back.

So, our approach right now, rather than play games with tax or additional levies, is to focus on building up capability, building up access to information. And in the case of technology that takes too long a period to pay back, for instance, the Grid scheme in which we co-fund equipment that will lead to greater energy efficiency for the company. Our co-funding in effect reduces the payback period to a level in which the company is willing to go for. By making these measures carefully and slowly we are enhancing capability, building up knowledge, and more important, I am enhancing the competitiveness of our companies in Singapore. I think this is a better and safer way of promoting energy efficiency and conservation. Not by saddling our companies with additional levies and taxes as what you have proposed. So, I do not want to be overly robust to engage in an overly politicised debate with you. But I just want to hasten to add that you got to be very careful about the unintended consequences of your proposal.

I have just been reminded that we do have U-save grants and the reason we do that is so that we can have a system in which energy and water is right priced but yet low income families can afford it, by giving them in effect cold, hard cash which they can then decide how to spend and how efficiently they use precious resources like water and energy.

So, what we have is a unique system. In many other countries, just in our own neighbourhood, they are unable to stop subsidies for fuel oil, for cooking oil, for energy. The logical thing is to actually remove subsidies and then target assistance to low-income families who need access to these essentials in life. But if you do have a government and a civil service that is capable of planning things rationally and of directing assistance in a targeted way without worry of corruption, you cannot get out of this subsidy trap.

We are in a very fortunate position in Singapore to be able to right price, to market price essentials and yet ensure that even the lowest income family has access to water, energy and other essentials in life. So, it is a complete package that you have to look at. That is why be very careful when we try to emulate or copy other people who may be in very different circumstances, from the environmental, social, political and economic perspective.

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My speech on Energy Conservation Bill, 9 April 2012

 Mr Speaker, the Energy Conservation Bill aims to bring about a 35% improvement in our energy intensity by 2030 and to improve the energy performance of our companies in the industry and transport sectors.

 

Sir, I welcome this Bill. As a developed nation, we should be more energy efficient, both for the purpose of allowing our companies to become competitive globally as well as to signal our commitment to good use of a scarce global resource.

 

The Bill sets out the minimum energy management standards. This includes the appointment of energy managers, reporting of energy use and submission of energy efficiency improvement plans for large users of energy. I noted that the Government recognises that these are “minimum” standards, which implies that it is aware that more needs to be done and companies can be encouraged to do more. I like to point out some implementation matters for consideration as well as to offer suggestions on what more can be done.

 

First is in the area of energy management practices. We are generally supportive of making energy management plans mandatory for heavy energy users. There are however potential issues concerning governance that we anticipate with the proposed energy management practices.

 

The Bill gives extensive flexibility to the Director-General and to the Minister to subsequently introduce by-laws, regulations and standards via gazette. The Minister is empowered to gazette by-laws, but no guidelines have so far been given. It is left to the subsequent discretion of the Director-General.

 

Therefore, I like to ask theMinisterto give more indications of the by-laws, regulations and standards the ministry intends to gazette, so that Parliament can debate these. What guidelines do the ministry intend to use? Can theMinistershare the time-frame guidance on when the by-laws may be gazetted? I believe these are necessary to prevent inconsistency in the implementation and enforcement of the proposed Bill.

 

Drawing a parallel from the practices in the building industry, there are the Building Control Act or BCA and Building Control Regulations, or BCR. The BCA and BCR have been in use for more than 20 years in Singapore and are very detailed. Does the Minister anticipate that the by-laws, regulations and standards will take a form like that of BCA and BCR?

 

Second is in the area of the Energy Managers that large companies must now employ and auditors to monitor for compliance. We noted that there have been recent prog-rammes which are supported by E2Singapore and EDB to train auditors and energy managers. How many have been trained and how sufficient are these programmes to ensure that there will be sufficient qualified officers to fulfill our needs? Are there guidelines on the qualification and experience of such Energy Managers?

 

Third, I like to cover an area I believe will be increasingly important for both Singapore and for the world; which is renewable energy. I think a gap in the Bill is that it does not seek to promote renewable energy. A comprehensive energy conservation effort must include renewable energy as a component. South Korea is aiming for 11% share of renewables in total energy consumption by 2030. Another heavy energy consumer country, Belgium, is aiming for 12% share of renewables for electricity suppliers in 2012. Japan, the energy intensity of which is comparable to the EU, is aiming for 10% by 2020. Denmark, already a leading energy efficient country in the world, is aiming for 13% by 2020.

 

According to statistics from Singapore’s Energy Market Authority, in 2010, 79% of electricity in Singapore is produced from natural gas, 19% is from petroleum products (i.e. fuel oil and diesel) but only under 3% is from renewables.

 

This gap is made more pronounced by the fact that our National Climate Change Strategy commits Singapore “to do our part in the international effort to address climate change”. We have promised to play our part by “improving the energy efficiency of our major energy sectors, namely power generation, industries, transport, buildings and households” and “to the global research effort on climate change and energy technologies”, particularly solar energy and green buildings. The Strategy states, “The objective of our research efforts … is to improve the current state of technology, and to bring down production costs to a level that would make large-scale adoption commercially viable”.

 

The Government is conscious of the need to signal to the international community our national commitment to the international climate change effort. The factsheet in this Bill concludes, “Establishing energy efficient standards across sectors under an Energy Conservation Act will also send a strong signal to external parties that Singapore is serious in undertaking mitigation actions to meet its international responsibilities”.

 

Therefore, I like to know the progress of our development in using more renewable energy. What are our current plans to significantly increase the use of renewables? I like the Government to be more proactive to signal to the international community of our commitment to international efforts to address climate change by setting a target share of renewables in total energy consumption to be achieved by a specific year. Using the four benchmark countries’ targets as reference, how far can we push for a target of say 10% share of renewables in total energy consumption by 2030.

 

Lastly, I like to cover another area which I feel can be promoted more aggressively to drive energy conserveration practices, which is having an integrated system of financial incentives and disincentives. A comprehensive energy conservation policy, especially for a liberalized energy market such as in Singapore, should include such a financial system to support volunteer agreements with corporations on energy efficiency targets.

 

In terms of financial systems, the developed world could be divided into three zones: EU and UK, AAC (America, Australia, Canada) and Asia (Japan, Korea, Singapore). AAC offers both financial assistance to promote energy management and tax incentives to encourage achievement of energy efficiency targets. EU and UK use carbon emission market “cap and trade” to promote energy efficiency, but individual countries use a variety of other instruments, including financial assistance, tax incentives, and green taxation. Asian countries, including Singapore use only financial assistance.

 

We can look more aggressively at using tax and cash incentives to encourage the achievement of energy efficiency targets set for different industrial sectors in consultation with stakeholders. Currently the energy efficiency initiatives of E2Singapore are mainly support schemes for implementing programmes.Only the Greenmark scheme gives out cash incentives for hitting targets. I am interested to know how effective Greenmark has been, and if effectiveness of all our schemes have been indexed and tracked. I am also interested to know the utilisation rate of existing schemes listed in E2Singapore and if the Minister thinks these have been effective in promoting energy efficiencies.

 

Calling current assistance schemes as “incentives”, is also a misnomer as they do not really measure actual achievement of targets. Besides current support schemes, I hope the ministry can look at providing real incentives for hitting energy efficiency targets.

 

My colleague the Hon. Member Gerald Giam will elaborate further on suggested taxation and incentive schemes that can be considered.

 

In summary, I support the Bill in its intent to bring about a more energy efficient Singapore. I hope the implementation issues and other suggestions that I have raised can be considered by the Minister to more aggressively set the pace for Singapore to be a global leader in energy conservation and energy technology.