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.


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

  1. We are not sitting on volcanic land but we have two hot springs, one in Sembawang and the other on Pulau Tekong, which is proof that there is heat under our feet that we can tap. The hot spring water coming out from these two sources are extremely hot and are left to flow into the drains, wasted. Why not tap the hot water from these two sources for power generation?

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