Prime Minister Lee Hsien Loong delivered the annual Singapore Energy Lecture this morning at the 3rd Singapore International Energy Week (SIEW). PM Lee spoke about how Singapore is preparing for the new energy future amid uncertainties in future energy prices, a global regime on climate change, and new technologies. Singapore’s challenge is to have energy that is cost-competitive, secure, clean and sustainable. PM Lee outlined four key strategies towards a smart energy economy:
1. Promote Competitive Markets
To promote competitive markets, Singapore will price energy properly and avoid subsidies for households and businesses, and foster competition in the production and supply of energy so as to increase efficiency. PM Lee also said that Singapore should work through the market to cut carbon emissions as pushing for efficiency is limited due to the rebound effect. Therefore, there is a need to impose a charge on consumers to induce them to change their behaviour, and the best approach is to apply a carbon price, whether through a carbon tax or cap and trade scheme.
Singapore currently calculates a shadow price for carbon in its cost-benefit analysis to better inform government policies and decision-making. However, if there is a global regime to curb carbon emissions, and Singapore has to reduce carbon emissions more sharply to comply with its international obligations, then Singapore will have to make the carbon price explicit to send the right price signals.
[We don’t think that there will likely be a carbon tax anytime soon (within the next 5 years) but could be possible in the long term. Anyway we feel that a carbon tax if implemented, should be on carbon intensive industries and not consumers.]
2. Diversify Energy Supplies
Singapore will secure access to new energy sources to protect against supply disruptions and price fluctuations. New energy sources include the importation of liquefied natural gas (LNG) with the new LNG terminal ready in 2013, and the possibility of using coal or importing electricity from regional countries.
3. Build Up Energy Infrastructure
Singapore will build robust, advanced and extensive energy infrastructure. One major infrastructure is the development of an intelligent power grid. Singapore has embarked on an Intelligent Energy System pilot, involving 4,500 customers in a mix of residential, commercial and industrial settings, to evaluate new applications and technologies around a smart grid.
4. Invest in Energy Research and Innovation
Singapore will continue to invest in energy R&D, to be a â€œliving laboratoryâ€ for companies to roll out their technologies, and to attract major industry players to set up their operations here.
PM Lee spent some time to speak on nuclear energy, which will be an important part of the solution to global energy needs and to tackling global warming. Several countries are expanding their nuclear energy programmes while countries in Southeast Asia have expressed their intention to build nuclear power plants.
PM Lee stressed that Singapore cannot afford to dismiss the option of nuclear energy altogether and should keep up with new developments. It will be a long time before Singapore takes any decision on nuclear energy but should be ready if one day it becomes necessary and feasible. Singapore will start building up its capabilities now.
[We think that if Singapore decides to build a nuclear power plant, it is unlikely to have one before 2025 as we currently lack the necessary manpower, standards and regulations. Making the decision is going to be tough with divided opinions and even more difficult debate than the integrated resorts.]
PM Lee concludes that Singaporeans have to make lifestyle changes, our industries have to be more energy efficient, and our economy structure may change to emphasise less energy-dependent activities. And he is confident that Singapore can make the changes and progress to a smart energy economy.
Download the Singapore Energy Lecture.
Source and image credit: SIEW