BIG IdEAs Speech by Minister Iswaran at the International Energy Agency

​BIG IdEAs SPEECH BY MR S ISWARAN, MINISTER FOR TRADE AND INDUSTRY (INDUSTRY), AT THE INTERNATIONAL ENERGY AGENCY, ON MONDAY, 04 JULY 2016, 11:00 AM, PARIS, FRANCE

 Dr Fatih Birol, Executive Director, International Energy Agency,

Excellencies,

Distinguished Guests,

Ladies and Gentlemen,

Welcome

1. A very good morning. It gives me great pleasure to speak at the International Energy Agency, the leading international organisation on energy issues. Let me first thank Dr Fatih Birol, for the warm hospitality extended to me, and for the invitation to speak at the Big IdEAs series.

The international energy landscape has evolved over the past year, with a global climate agreement being inked in Paris.

2. In this very city last December, at the United Nations Framework Convention on Climate Change’s (UNFCCC) 21st Conference of the Parties, we witnessed history being made. Years of negotiations towards a global climate deal culminated in the adoption of the Paris Agreement. This landmark agreement paves the way for more comprehensive, ambitious, and sustained global action on climate change.

3. The Paris Agreement is a crucial step to averting the Tragedy of the Commons in addressing global climate change. Countries worldwide now recognise that limiting the impact of climate change is a common objective that can be achieved only with collective action. To date, over 160 countries have submitted their Nationally Determined Contributions (NDCs) to the UNFCCC, making the Paris Agreement a truly global effort in the fight against climate change. These NDCs must now be implemented consistently and faithfully.

4. Energy policy is inevitably at the core of this global effort. As highlighted in the IEA’s Special Report on Energy and Climate Change, energy production and use account for roughly two-thirds of the world’s greenhouse gas emissions.[1] We cannot tackle climate change without effective action in the energy sector.

5. Energy is also a critical issue for Asia as the region continues to grow in importance, both in the global economy and in the energy landscape. For instance, non-OECD Asia is projected to account for more than half of the increase in global energy consumption from 2012 to 2040.[2] Closer to Singapore, the IEA has projected that the ASEAN region’s energy demand will grow by 80% from now till 2040, as its economy more than triples in size.[3]

6. Asia has some of the world’s most dynamic economies. While China and India have been major sources of Asia’s dynamism, the ASEAN region has also contributed significantly, with a youthful population of over 600 million people[4] and the third largest GDP in Asia. The challenge for the economies in the region is to not only grow, but to do so sustainably, to create opportunities for their people whilst preserving if not enhancing their living environment.

7. Asia is already responding to the demands of an increasingly carbon-constrained world. For example, China has overtaken Germany to be the country with the highest solar photovoltaic, or solar PV, capacity, with 15.2 gigawatts of solar PV additions in 2015 alone.[5] The IEA forecasts that China alone will account for 40% of global renewable capacity growth in the medium term.[6] India is also targeting a 20-fold increase in solar power capacity by 2022 to 100 gigawatts. The ambition and commitment of these large Asian nations is clear.

8. Singapore has also been part of the Asian growth and sustainability story. As a small city state, Singapore has had to address the challenges of resource constraints from the very beginning of our development. Today, I will share some perspectives on how Singapore aims to address the challenges of a more carbon-constrained world, and the role we hope to play in the region. Our experience may offer reference points for other nations embarking on a similar journey.

Singapore is committed to play our part in the global fight against climate change despite the constraints we face as a small city-state.

9. As a responsible global citizen and a vulnerable island state, Singapore is committed to contribute to the global fight against climate change. Singapore has pledged to reduce our Emissions Intensity[7] by 36% from 2005 levels by 2030, and to stabilise our emissions with the aim of peaking around the same time. This will require a significant effort on our part, especially given our unique circumstances.

10. As a small, densely populated city-state with no indigenous energy resources, it is much harder for Singapore to implement many mitigation options available to other countries. For example, Singapore is not endowed with hydro, wind or geothermal energy resources.

11. Despite these constraints, Singapore has taken early action to moderate our emissions growth while continuing to grow our economy. Our GDP grew three times faster than our greenhouse gas emissions in the first decade of this century. Singapore thus generates relatively low levels of emissions per GDP dollar, ranking in the bottom 20% of the 142 countries studied by the IEA[8]. Even though Singapore contributes only around 0.1% of global emissions[9], we are committed to doing our part as part of the global effort.

With energy at the heart of global climate change solutions, our domestic energy policies will help to achieve our climate change pledge.

12. As I emphasised earlier, energy policy is at the heart of global climate change solutions. I will highlight key elements of Singapore’s energy strategy that have helped move us towards environmental sustainability. Even before the Paris Agreement was concluded, we took important actions which laid a foundation in seeking a balance between Singapore’s energy trilemma of environmental sustainability, energy security and economic competitiveness.

13. The first prong of Singapore’s energy strategy is to promote the efficient use of energy. Higher energy efficiency not only reduces our carbon footprint, but also enhances Singapore’s energy security and enhances our competitiveness.

14. The Singapore government thus continues to drive the adoption of energy efficient technologies in all sectors of the economy, using a combination of regulations, incentives, as well as efforts to build capacity and raise awareness. For example, Singapore provides financial support for industrial energy efficiency and offers tax rebates on low-carbon vehicles. We have also set energy efficiency standards for new and existing buildings. We will continue to review and enhance existing policies and study the introduction of new measures to improve our energy efficiency.

15. We believe clear price signals are fundamental to achieving energy efficiency. When consumers know the true cost of energy, they can adjust their behaviour in response to signals from its movement. Hence, Singapore allows the market to set the price of energy, without any subsidies, thereby reflecting resource scarcity and promoting judicious usage. By pricing energy right, we incentivise firms and households to make appropriate choices, which in turn will help to reduce emissions.

16. The second prong of our energy strategy is to promote competitive energy markets to improve efficiency, spur innovation, and keep prices affordable. Since the 1990s, Singapore has progressively liberalised our gas and electricity market by separating the natural monopoly segments, such as transmission and distribution, from the contestable segments of generation and retail. Competition in the liberalised power generation sector has encouraged power generation companies to switch from steam plants powered with fuel oil to more efficient Combined Cycle Gas Turbines (CCGTs) fuelled by natural gas. Today, more than 95% of our electricity is generated using natural gas, the cleanest form of fossil fuels.

17. Besides our transition to natural gas, Singapore is exploring other ways to reduce our carbon emissions and widen our energy options. Renewable energy options have featured significantly in many countries’ mitigation plans as a way to decouple economic growth from energy-related emissions. Among the various renewable energy options, solar PV currently has the greatest potential for wider deployment in Singapore. Even then, there are limits to adopting solar energy in Singapore, due to the limited land we have for the large scale deployment of solar panels, and intermittency in generation due to high cloud cover and urban shading.

18. Despite these challenges, we have made progress, growing the amount of solar PV deployed seven times from 10 megawatt peak in 2012 to more than 70 megawatt peak today. And this is just a start. We are planning to raise solar generation capacity to 350 megawatt peak by 2020; increasing today’s capacity by five times.[10]

19. We will achieve our goal by investing in research, development and demonstration (RD&D) of solar PV and related energy technologies; addressing market barriers to deployment; enhancing our regulatory framework; and by taking the lead through aggregation of demand from public agencies.

20. Businesses have responded to Singapore’s efforts to raise the use of solar PV. In November last year, a local company, Sunseap Group, aggregated more than 800 rooftop solar systems to fully power Apple Inc’s operations in Singapore. We hope to see more of such players in our domestic solar market as more companies incorporate sustainability measures into their business practices.

21. Solar is an example of how technological advancements enable us to widen our energy options and reduce emissions. This brings me to the third prong of our strategy, which is to invest in technology and innovation to address our energy challenges and sustainable development objectives.

22. We have funded innovative research proposals on both the supply and demand sides of the power sector. To translate research outcomes to real-world applications, we have established several demonstration and test-bedding platforms. For example, to overcome our land constraints, we are exploring the viability of generating power through floating solar systems on our reservoirs.

23. To maximise the impact of our efforts, our focus is on solving problems specific to Singapore and the region. For instance, Singapore is seeking to better at understand how to operate batteries efficiently in tropical conditions, and how to deploy these systems safely in an urbanised environment. Our regulator, the Energy Market Authority, and our grid operator, Singapore Power, have also recently announced plans to implement a utility-scale energy storage system test-bed. Successful R&D outcomes in this area will help us to deploy energy storage systems at a scale sufficient to enable our grid to accommodate higher levels of intermittent generation sources such as solar.

Singapore can contribute to the development of lower-carbon technologies in the region.

24. Ultimately, to achieve more sustainable energy use globally, we need companies to deploy technological solutions. Singapore can contribute to Asia’s clean energy journey by serving as a base from which for clean energy companies can deploy their solutions in the region. Singapore is already a choice business and innovation location for clean energy companies, with the number of companies based in Singapore growing from just a handful in 2007 to around 100 home-grown and international companies today.

25. We support companies located in Singapore with the essential ingredients for innovation, including talent, RD&D capabilities, and a conducive business environment. These will be complemented by niche strengths in smart city solutions enabled by data analytics as well as system integration and optimisation capabilities. In addition, Singapore’s compact size and regulatory expertise make it an ideal “Living Lab” to test the feasibility of new technologies and processes, before scaling them up for deployment in regional markets.

26. Singapore also seeks to develop as a regional gas trading hub. A gas trading hub, or a network of such hubs, can serve as a platform for price discovery and more efficient market outcomes. A well-coordinated and connected gas market in Asia reflecting the region’s supply and demand dynamics will not only enhance regional energy security, but also contribute to the adoption of natural gas as an alternative to more carbon-intensive fuels. Currently, our LNG terminal is capable of supporting storage and reload operations to facilitate LNG trading, and we are expanding our LNG terminal capacity to meet growing domestic demand. We are also supporting the use of LNG as a bunker fuel, which would help lower emissions from the global shipping industry.

Singapore will continue to play a role in international cooperation to fight climate change.

27. I have spoken about Singapore’s domestic energy policies, and how they contribute to our mitigation efforts. However, international cooperation, beyond the UNFCCC process, is critical to ensure effective action on environmental sustainability and energy security. Singapore has thus been playing an active role in international forums such as ASEAN, APEC and the G20. A key part of our energy strategy is to learn from and contribute to the international discourse on best practices.

28. Within ASEAN, our focus for regional energy cooperation over the next ten years is to enhance energy connectivity and market integration, to meet growing energy needs and encourage energy efficiency in the region. Under the new ASEAN Plan of Action for Energy Cooperation (APAEC) 2016-2025, ASEAN countries have agreed to the collective, aspirational, and long-term Energy Intensity targets of 20% reduction by 2020 and 30% reduction by 2025 over 2005 levels.

29. ASEAN members are also working towards implementing an ASEAN Power Grid. This project comprises 16 cross-border power interconnection projects, six of which have been completed. The longer term vision is to have an integrated Southeast Asian power grid system, in which electricity is freely traded between ASEAN nations. This will enhance regional energy connectivity, trade and cooperation. ASEAN members would then be able to leverage the region’s geographical diversity. For example, generation capacity can be located in the least cost areas, and electrons supplied to areas with higher electricity demand. Cleaner sources such as hydropower, geothermal, solar, or wind can then also be exploited more widely.

30. The trading of electricity within ASEAN can also be complemented by the trading of natural gas. The share of coal in power generation for ASEAN is expected to rise from 32% to 50% by 2040[11]. If we encourage a greater use of natural gas instead, we can make significant progress in the fight against climate change. Singapore will play our part through our plans to develop ourselves as a regional gas trading hub.

31. Singapore also hosts the annual Singapore International Energy Week, or SIEW, as a platform to further international energy cooperation by bringing together key stakeholders in the energy sector to discuss global energy issues.  This year, SIEW will focus on the theme of “New Energy Realities”, which reflects on the opportunities and challenges we collectively face, given the current excess supply in oil and gas, and the new impetus for developing greener and smarter energy systems following the Paris Agreement.  We are honoured that Dr Birol will be joining us at SIEW this October to share the IEA’s insights at the Singapore Energy Summit and for the global launch of the IEA’s Medium Term Renewable Energy Market Report.

Singapore has been working closely with the IEA and looks forward to expanding this collaboration in the future.

32. As the need for global cooperation becomes more pressing, international energy organisations are also becoming an increasingly important part of the global energy architecture. They help to maintain global energy security, facilitate international partnerships, build and spread best practices and expertise, and shape a sustainable energy future.

33. The IEA has played a central role in these aspects, and I am happy to note that Singapore shares an excellent working relationship with the IEA both bilaterally as well as in multilateral forums such as ASEAN, APEC and G20. For instance, we have worked with the IEA to host the launches of reports such as the IEA Medium Term Coal Market Report 2015 in December last year. We have also seconded officers to the IEA’s World Energy Outlook team. On the regional front, as the country coordinator for ASEAN-IEA cooperation, we have contributed towards the initiatives on power sector development, energy technology and natural gas in ASEAN.

34. Singapore supports the IEA’s vision to expand its outreach to emerging economies, including those in Asia. In particular, we welcome the IEA associate membership initiative towards building a more inclusive global energy architecture.  We look forward to working with the IEA in these efforts.

35. One possible area for further collaboration between Singapore and IEA is capacity building. Singapore regularly hosts specialised technical and policy related courses for officials from all over Asia and Africa to support needs for capacity building. For example, Singapore has collaborated with the US to organise the “Energy Efficient Buildings Workshop” to provide participants from ASEAN countries with a better understanding of the overall framework for energy efficient buildings applicable to the ASEAN region.[12]

36. To take this further, we could explore partnering the IEA to host regular training sessions in Singapore to develop capabilities in areas such as low carbon technologies and energy efficiency in the region. The potential gains from building these capabilities are tremendous. For instance, as the IEA has estimated, almost three-quarters of Southeast Asia’s potential economic gains from energy efficiency are set to remain untapped in 2035.[13] I am confident that our partnership will be fruitful, and I look forward to deepening Singapore’s collaboration with the IEA.

Conclusion

37. Singapore is committed to playing our part in the global effort to address climate change. With energy policy at the heart of global climate change solutions, our policies of promoting energy efficiency, competitive markets and R&D, as well as increasing the use of renewable energy, will help to achieve our climate change pledge.

38. At the same time, situated at the crossroads of Asia and the world, Singapore stands ready to work with key partners such as the IEA to contribute towards the region’s efforts for a more sustainable energy future. By focusing on efficiency and the deployment of low carbon technologies, the region can deliver environmental benefits without harming growth.

39. Thank you once again for the invitation to speak at the Big IdEAs series.​

[1] IEA Special Report on Energy and Climate Change (2015)​ [2] US Energy Information Administration’s International Energy Outlook 2016​ [3] IEA’s Southeast Asia Energy Outlook (2015)​ [4] ASEAN’s youthful population of 600million people is more than the total population of the EU.​ [5] REN21’s Renewables 2016 Global Status Report (2016)​ [6] IEA’s Medium Term Renewable Energy Market Report (2015)​ [7] Emissions Intensity refers to the amount of greenhouse gas emitted per dollar GDP. It is a measure of how efficient a country is in terms of greenhouse gas emissions relative to its economic activities.​ [8] OECD/IEA Energy Statistics (2015)​ [9] NCCS (2016)​ [10] EMA 2016 Statistics - Installed capacity of grid-connected solar photovoltaic systems (2016) [11] IEA’s Southeast Asia Energy Outlook (2015) [12] BCA Centre for Sustainable Buildings Ltd (2014).  The workshop showcased the experience and best practices in the US and Singapore in policy development and implementation, research, technology and financing for energy efficient buildings. [13] IEA’s Southeast Asia Energy Outlook (2013)​

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