IEA Chief Economist offers a look at our energy future

June 21, 2011 by  
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The era of cheap oil is over, and policies fall short of what is needed for a secure and sustainable energy future, says Dr Fatih Birol, Chief Economist of the International Energy Agency, in his lecture titled “A Glimpse into the Energy Fututre” at today’s EMA Distinguished Speaker Programme. This lecture is jointly organised by the Energy Market Authority and the Energy Studies Institute.

Era of cheap oil is over

Dr Birol shares that the era of cheap oil is over because of structural changes, and there is growing risk that the upturn in oil prices could undermine economic recovery.

On the demand side, strong growth from the transportation sector due to booming demand for mobility in emerging economies drives up oil use. The global car fleet continue to surge as more people in China and other emerging economies buy a car. Read more

Singapore Preparing For a Smart Energy Economy

November 1, 2010 by  
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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. Read more

Committee of Supply Debate 2010: Ministry of Trade and Industry

March 20, 2010 by  
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Mr S Iswaran, Senior Minister of State for Trade and Industry, gave his speech during the Committee of Supply Debate under the Ministry of Trade and Industry (MTI). The speech addresses questions related to Singapore’s energy policy, and can be downloaded from the MTI website.

Here are some key points that he raised:

Our goal is to make Singapore a Smart Energy Economy with an energy ecosystem that is secure, sustainable and competitive. Our strategy to meet the global energy challenges rests on two key thrusts: diversification and competitive energy markets.

The Government agrees with the Economic Strategies Committee’s (ESC) recommendation to adopt a portfolio approach towards energy – in other words, no one energy option will be adequate to meet our varied energy objectives.

We will adopt a pragmatic approach by evaluating the alternatives on the basis of energy security, economic viability and environmental sustainability.

Among the renewable energy sources currently available, solar is one of the most promising in our context for electricity generation. While still relatively expensive today, solar energy prices could achieve grid parity in the medium term.

… why are we prepared to study nuclear energy as an option now. There are several reasons for this. Firstly, it can potentially enhance energy security, reduce carbon emissions, and mitigate the impact of volatile oil and gas prices – thus it could meet, potentially all our objectives embedded in the national energy policy.

The aim is to ensure that we fully understand, and objectively evaluate from all perspectives, the opportunities, challenges and risks involved with nuclear energy. The study will commence later this year. It will entail a careful, deliberate and rigorous examination of the technical, economic and safety aspects of nuclear energy.

Clean coal could be a component of our energy diversification strategy. Currently, coal makes up more than 40 per cent of global power generation. And, it is expected to remain at this level until at least 2030 given the relative abundance of coal sources in the world. Coal also has a cost advantage though this may be eroded by any future global carbon pricing regime. However, combustion technology is evolving, making coal cleaner than before and we must, therefore, keep this option open.

We are price-takers in the global energy market because we are small and import almost all our energy requirements. We therefore must allow the full cost of energy to be reflected in prices. Subsidising energy would be encouraging wasteful consumption and it will also be a drain on public finances.

Source: MTI

Recommendations and Strategies by the Economic Strategies Committee

February 9, 2010 by  
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The Economic Strategies Committee (ESC) has completed its work and has submitted the report of its key recommendations to the Prime Minister. The report is released today and can be downloaded at the ESC website.

The ESC was formed in May 2009 to:

develop strategies for Singapore to build capabilities and maximise opportunities as a global city in a new world environment, so as to achieve sustained and inclusive growth.

The ESC is chaired by Tharman Shanmugaratnam, Minister for Finance, and comprises members from the government, the labour movement, the private sector as well as academia.

Key Recommendations:

We must achieve higher productivity growth of 2 to 3 percent per year, enabling our GDP to grow on average by 3 to 5 percent per year over the next decade.

Increased productivity is not achieved merely through increased efficiency, but restructuring our economy to provide more room for rapidly growing and innovative enterprises.

7 Key Strategies:

  1. Growing through skills and innovation
  2. Anchor Singapore as a Global-Asia Hub
  3. Build a Vibrant and Diverse Corporate Ecosystem
  4. Make Innovation Pervasive, and Strengthen Commercialisation of R&D
  5. Become a Smart Energy Economy
  6. Enhance Land Productivity to Secure Future Growth
  7. Build a Distinctive Global City and an Endearing Home

Here’s the ESC’s recommendations on Smart Energy Economy in the report:

Become a Smart Energy Economy

As a small, resource-constrained country, we have to ensure that energy does not become a limiting barrier for Singapore’s economic competitiveness and growth. We also have to play our part in reducing carbon emissions as a responsible member of the global community. We must become a smart energy economy – resilient, sustainable, and innovative in our energy use.

The ESC recommends the following:

1. Diversify our energy sources

In the medium term, Singapore should explore coal and electricity imports to diversify both the fuel types and fuel source countries in our energy portfolio. The import of electricity is an option which can free up valuable land in Singapore. It could also allow us to tap on the significant renewable energy potential in our region, such as in the form of hydro-electricity or geothermal power.

For the long-term, we must continue supporting innovation and investing in the infrastructure necessary to develop renewable energy. We should also study the feasibility of nuclear energy, a possible option in the long-run to meet baseload electricity demand, as well as energy security and sustainability imperatives. Advances in nuclear technology will make it much safer than earlier designs, and we should carefully study its viability for a small city-state like Singapore.

2. Invest early in critical energy infrastructure

Push ahead to establish Intelligent Energy Systems (IES) as the centrepiece of a smart energy economy. The IES will promote greater competition among retailers and enable households to make informed choices on their electricity consumption. At the same time, the IES will incorporate devices such as smart meters and home automation networks to programme appliances to function during off-peak hours when electricity prices are lowest.

Make early investments in public goods such as energy infrastructure to improve national energy security and efficiency. One example is the liquefied natural gas (LNG) terminal which will allow Singapore to gain access to global gas markets. Investing in the extension of the gas pipeline infrastructure can also potentially reduce the cost of electricity and open up new economic clusters in Singapore.

Develop Jurong Island as an energy-optimised industrial cluster. We should harness innovative systems-level solutions, to provide integrated, low-cost and low-carbon solutions for the industry clusters on the island. For example, recycling waste heat from industry for desalinating sea water; the desalinated water would then be channelled back to industry for cooling industrial processes, forming a virtuous cycle. With government planning and infrastructure investment to enable such “exchanges”, we can significantly improve resource efficiency.

3. Increase energy efficiency

Step up measures to promote energy efficiency for buildings, industry and in homes. We should enhance incentives, education and adopt essential legislation such as mandatory energy audits which will help build energy conservation know-how and internalise energy management practices.

Support low-carbon solutions in transportation. We should continue the shift of commuter load to public transport and support the introduction of clean and efficient technologies for public buses. This will ensure that energy-efficient public transport can be realised without higher prices for commuters. We should set the appropriate incentives for the adoption of clean vehicle technologies for private vehicles by awarding the Green Vehicle Rebate (GVR) based on fuel efficiency or carbon emissions of the vehicle.

4. Price energy to reflect real costs and constraints

Price energy to reflect its total cost, taking into account various externalities and constraints, such as energy security and environmental sustainability. Appropriate price signals could both promote the use of, as well as encourage investments in energy-efficient and low-carbon solutions.

The Government should study how best to implement a carbon pricing scheme in anticipation of future carbon constraints, should there be a global agreement on climate change. It can also insure us against future spikes in energy prices. This should be carefully calibrated and introduced gradually, with offsets for specific groups like low income households to buffer the transition.

Source: Economic Strategies Committee Main Report; ESC Press Release Annex A