"Singapore's Net Zero Target: Are we ambitious enough?"
Had the opportunity to hear from a senior civil servant and an industry leader about the current state of our energy industry and sustainability efforts. It was refreshing to see how their distinct portfolio (public sector VS corporate) shaped their perspectives on the same issue.
Importance of Energy
Both individuals acknowledged the massive energy system powering the world today. Humans can't do without energy -- we need it for everything from travel, agriculture to waste management. The annual global energy consumption (2018) is estimated to be 580 million terajoules, which is the equivalent of energy produced by 9 Tōhoku Earthquakes daily (1.9×10^17 joules).
We know that the demand for energy would not be going away, and thus the focus now should be on topics such as energy efficiency, clean energy and carbon sequestration.
Perspectives from a senior civil servant:
Role of Government
The carbon tax implemented is a significant move by the government, given that the carbon tax would inevitably raise business and operating costs, yet it is a sacrifice that needs to be made.
The Energy Market Authority (EMA) is also looking into importing low-carbon electricity, with our target being to import up to 4 gigawatts (GW) of low-carbon electricity by 2035. This way, we will be able to access low-carbon electricity that is abundant in the region by connecting to regional power grids. This also promotes the development of renewable energy in the region and paves the way in realising the ASEAN Power Grid vision.
Another example of the government's efforts in climate mitigation is the generous EV subsidies to make it a competitive offering. Owners who register fully electric cars from 1 Jan 2021 to 31 Dec 2023 will receive a rebate of 45% off the Additional Registration Fee (ARF) under the EV Early Adoption Incentive (EEAI). This move will narrow the upfront cost gap between electric and internal combustion engine cars.
The disposable carrier bag charge is Ministry of Sustainability and the Environment (MSE)'s way of highlighting individuals' role in the sustainability movement -- simply put, even "heartland aunties" can play their part.
The government is cognizant of the impacts the green transition have on individuals, with the less well off being disproportionately affected. The government has already looked into mitigation packages in the form of utility rebates for lower income households. The rebates can cover up to 10 months of utility bills for an average household living in 1- and 2-room HDB flats.
Nuclear: A Possibility?
Singapore is not writing off the possibility of using nuclear energy to generate electricity, since it is currently the most cost-effective low-carbon alternative. Passive cooling technology could make nuclear a safer and more feasible energy source for urban cities. However, one main consideration in whether to adopt nuclear is public acceptance levels. More would need to be done in terms of educating the public on safety-related concerns.
Climate Change: Threats and Opportunities
Anticipating that climate change could threaten Singapore's status as a financial hub, Monetary Authority Singapore (MAS) is at the forefront of global discussions relating to sustainable finance. It launched the Finance for Net Zero Action Plan (FiNZ Action Plan) earlier this year to mobilise financing to catalyse Asia’s net zero transition and decarbonisation activities in Singapore and the region. This is how Singapore is turning a threat into an opportunity -- financial solutioning/negotiation is our strength, and is hence what we contribute to the world.
Perspectives from an industry leader (ExxonMobil):
Role of Corporations
It is easy for Singaporeans to forget that energy poverty is an issue plaguing less developed countries, and to prioritise human development of these LDCs would mean that fossil fuel is often needed as a stepping stone (since it is the cheapest way to generate electricity).
The Paris Agreement is in fact a big win, given that it allows countries to set their own Nationally Determined Contributions (NDCs), goals that would be respectful of countries' unique set of circumstances.
ExxonMobil aims to be a leader in energy transition -- ExxonMobil has committed USD$17 billion to lower-emission initiatives in the next 5 years. These investments are designed to make possible reduced emissions in ExxonMobil's operations and are also directed towards reducing others’ emissions through commercialising and scaling carbon capture and storage (CCS), hydrogen, and biofuels.
In fact, ExxonMobil has been doing CCS for 30 years. They has cumulatively captured more CO2 than any other company – 120 million metric tons – accounting for approximately 40% of all the anthropogenic CO2 that has ever been captured.
CCS is one of the most important low-carbon technologies required to achieve societal climate goals at the lowest cost. It is a readily available technology that can reduce emissions at scale from sectors like refining, chemicals, cement and steel sectors, and power generation. This is especially important for sectors that are hard to decarbonise, e.g. cement and steel, which require large amounts of heat to produce.
On biofuel, ExxonMobil pilotted sustainable aviation fuel at Changi Airport last year. Though biofuel does not get us all the way to net zero, we do not want to wait until the best solution has been invented before taking action because by then, we would already have missed the boat. The goal is to start chipping away at the problem early on. This was a sentiment echoed by the senior civil servant.
Another solution by ExxonMobil is the introduction of renewable diesel, a consumer product. The renewable diesel is produced by bio-feedstocks.
Challenges and Opportunities
In terms of sustainable aviation fuel, ExxonMobil has the technology to produce it, but people need to be willing to pay for it (since sustainable aviation fuel is costlier to produce than normal fuel).
We live in an exciting time, where the world has to create two new industries from scratch -- carbon and hydrogen. An industry is not just the physical value chain (in terms of how to make, sell and move products), but also the business models and financing frameworks. In terms of these frameworks, they have not been established yet, and this is a process that would require large amounts of resources.
ExxonMobil is working closely with local universities to develop low-carbon technology, but also urges for supportive government policies in supporting nascent technology. Supportive policies are needed to kickstart the technology, drive scalability and eventually drive costs down. A case in point would be solar energy in Singapore, which used to be very expensive but eventually became more cost-efficient due to the scale of operation.
We cannot forget the fact that ExxonMobil is a corporation. When deciding how to utilise its investment funds, they ultimately need to take care of its investors first, and that would mean to devote its resources to projects that produce high returns. Countries with more friendly policies would thus be favoured, something that states need to be mindful of as well.
Beyond government intervention, consumers need to change their lifestyles and be willing to shoulder some of the costs in the green transition, because limited resources mean that it is impossible for the government to fund everything. It is possible to get to net zero, but it will take concerted effort and support from the government and consumers to get there.
Carbon Tax vs Tradable Permits
With carbon tax, what is certain is the price of carbon, while the amount of emissions is not. On the other hand, with tradable permits, the amount of carbon emissions is certain and not the price. From a corporation point of view, tradable permits makes more sense. By leaving the price of carbon up to the free market, tradable permits do not burden society, in the sense that only companies that are not meeting emission standards would have to take action and invest in cleaner energy.
One trade off of introducing the carbon tax is export competitiveness, and this is something that would concern Singapore greatly as a country whose trade volume is more than 330% of its GDP. Singapore is currently the only country in the region that imposes carbon tax. If we do not tread carefully, our businesses may flow to our neighbouring countries. [Though another way we could look at this is: Singapore would be attracting investment from responsible companies.]
Why doesn't ExxonMobil account for Scope 3 emissions?
There are concerns of double counting. Scope 3 encompasses emissions that are not produced by the company itself and are not the result of activities from assets owned or controlled by them, but by those that it's indirectly responsible for up and down its value chain. An example of this is when we buy, use and dispose of products from suppliers.
Case in point, liquefied petroleum gas (LPG) is commonly used in residential heating, cooking and hot water systems (hence is burned and should be accounted in emissions). However, LPG is also a feedstock in other processes and do not get burned. The way people drive also affects the amount of fuel burned when driving the same distance.
Ending this off with a quote from Minister of National Development, Mr Desmond Lee at Ecosperity Week 2023:
"I think what we all need to be are realists. Realists with a quiet optimism that this can be done, because it must be done, if the next generation is to have a fighting chance."
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