Resource Scarcity Drives Singapore to  Sustainability Leadership

Photographer: Munshi Ahmed/Bloomberg

Traffic flows in front of the skyline in Singapore. Close

Traffic flows in front of the skyline in Singapore.

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Photographer: Munshi Ahmed/Bloomberg

Traffic flows in front of the skyline in Singapore.

With more than half of the world’s population now urban, cities are natural venues for business, government and community efforts to identify key economic drivers of the early 21st century. Cities have the scale to effect real environmental change and -- in many cases unlike their national governments -- the political will to do so.

Singapore has become an internationally recognized leader among global cities, for its forward-looking policy goals and strong execution. The southeast Asian city-state was found to be literally in a class by itself (pdf) -- “Well Above Average” -- of the 22 Asian cities analyzed by the Economist Intelligence Unit for the Siemens Green City Index. PricewaterhouseCoopers LLP ranked it the world’s leader in transportation and infrastructure in its Cities of Opportunity, 2012 report. Bloomberg editors and reporters took in the Singapore experiment firsthand in December, at the Bloomberg Businessweek Global Green Summit. Bloomberg New Energy Finance just published a conference overview in its Results Book (pdf).

Miss the Bloomberg Businessweek Global Green Summit? Read all about it (pdf).

Vivian Balakrishnan, Singapore’s Minister for Environment and Water Resources, recently spoke with Agnes Teh of Bloomberg New Energy Finance about the island nation’s natural-resource challenges and the long-term plans it has put in place to overcome them.

Q: Let’s start with the big picture. What’s Singapore’s environmental sustainability strategy?

A: It is very important in an open, localized world to get the economic signals right. One big problem in the world now is fossil fuel subsidy. There’s something like 500-600 billion dollars a year spent by governments subsidizing fossil fuels. The problem with subsidies is that they distort prices, misallocate resources, promote over-consumption, deter investors from investing in new technologies and prevent new technologies from being competitive.

In Singapore, we do not subsidize electricity, water, fuel and food. All the necessities of life are priced at the right market price.

"Fifty years ago, Mr. Lee Kuan Yew, then our Prime Minister, intuitively understood the value of blue skies and clean air. He said we will not have smoke stacks and coal-fired power stations," Balakrishnan said.

The next is informed choices from a consumer perspective. We need to ensure that people know how energy-efficient a product is. So before you buy an air conditioner, you’ve got the data on the energy consumption, which lets you calculate the total lifetime cost of ownership.

The last two things are investment and competitiveness. We’ve committed at least 350 million [Singapore] dollars to seed funding and research into clean technologies. We’re not doing this just for ideological reasons. We believe these are essential attributes of a competitive economy for the future.

We’re green because it is the right and responsible thing. It is also a sensible thing to do from a business point of view.

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Q: Singapore has long depended on water imports from Malaysia. The agreements will expire in 2061, after 99 years. What happens then?

A: Yes, the last one expired in 2011. The whole water equation transformed about a decade ago when we rolled out reverse osmosis [filtration] on a national scale. It gives us the ability to be self-sufficient, certainly before 2061, if need be.

Today, we have sufficient capacity to generate 10 percent of our water supply from desalination -- basically seawater pushed through reverse osmosis to produce fresh water. We recycle used water, about 30 percent of our water needs generated from that. The balance of 60 percent is a combination of water retrieved from Malaysia, as well as water from our own reservoirs.

Today we have 17 reservoirs. Two-thirds of all our land area are water catchment areas, including our city, which makes us unique because of the ability to take water from every drain in the city. The ability to harvest every single drop in every drain in the city -- to treat and use it as portable water -- is a major achievement in its own right.

"We are what we define as an alternative-energy disadvantaged country. We have no real rivers, and so no hydroelectricity. We have no earthquakes in Singapore. We have no geothermal energy... There’s a breeze in Singapore. There’s no wind," Balakrishnan said.

Q: How will water be produced?

A: By 2061, the water would look this way -- 30 percent desalination, 50 percent recycling water and the remaining 20 percent from our own local water catchments. We are well on our way to having the ability to be completely water independent, if need be.

Q: How are you looking to produce water less energy-intensively?

A: The thing about reverse osmosis is that you can produce virtually an unlimited amount of water from desalination or recycling. Every drop can produce another drop. However, reverse osmosis requires energy. It takes us about 3.5 kilowatt-hours of energy to produce one cubic meter of water. Our research efforts are focused on bringing that down by a factor of half or one-third.

The equation for water today is therefore energy.

Our focus, therefore, is on the energy efficiency of producing water. We are working with researchers, the private sector and multinationals, like Siemens. We expect that there will be a global water crisis in the next one or two decades, so the ability to produce water cost-effectively will be a tremendous advantage for the companies that are able to do that.

We’ve converted water from a strategic vulnerability into a strategic opportunity. Companies like Hyflux Corp., Keppel Corp. Ltd., SembCorp Industries Ltd. are competitive and their track record is based on what they’ve done in Singapore. We didn’t invent reverse osmosis but we had the ability to create a working model that is competitive, compelling and gives opportunity to our companies.

Q: Over 80 percent of Singapore’s energy mix is generated from natural gas, 20 percent from fuel oil and renewables. Do you see this evolving in future?

A: I expect natural gas to grow. Fifty years ago, Mr. Lee Kuan Yew, then our Prime Minister, intuitively understood the value of blue skies and clean air. He said we will not have smoke stacks and coal-fired power stations. Instead of coal-powered electrical generation, we used fuel oil. This went on for three or four decades, until we secured natural gas from our neighbors.

In a decade, there was this transformation -- from 99 percent fuel oil to below 20 percent. Natural gas [rose to] 80 percent. The next part of that story was to gain energy security. We then decided to have an LNG [liquid natural gas] terminal, which will allow us to import gas theoretically from anywhere in the globe. We made this decision quite fortuitously because at that time we did not expect the advent of fracking and the collapse of gas prices in the U.S. You could say that was a bit of a lucky break – it sets us up quite well for the future.

Two to three percent of our electrical supply is generated by incinerating all our garbage. That, again, is a bit of a lucky break because we ran out of land for landfill.

Q: Do you see a framework for solar and biomass?

A: Here’s where there’s a key challenge for Singapore. We are what we define as an alternative-energy disadvantaged country. We have no real rivers, and so no hydroelectricity. We have no earthquakes in Singapore. We have no geothermal energy. The fact that we are a safe and sheltered harbour over the past two centuries also means we don’t have significant wind power. There’s a breeze in Singapore. There’s no wind.

If you were to cover every single rooftop in Singapore, you would get maybe about 10-15 percent of our electricity supply.

The point is that for 90 percent of our supply for the foreseeable future, it will be fossil-fuel based. Our policy – where energy is concerned – is focused very tightly on energy efficiency.

Q: You’ve said that energy efficiency is a cornerstone of your energy strategy. How are you pushing that?

A: We are so constrained in our source of energy that the main thing we can do is efficiency. If you go to any industry, household, or transport sector, most companies or households should be able to achieve 10-15 percent savings. It’s one of the reasons why we passed the Energy Conservation Act, which will come into effect on April 1. What it mandates is that all the large energy users -- those using more than 15 gigawatt-hours per year -- have to appoint an energy manager, who has to submit data on energy use within the company, and to also formulate plans for energy efficiency.

Q: How do you ensure you price energy right?

A: First, we are very religious about not subsidizing energy -- especially fossil fuels subsidies. Even America, in effect, subsidizes fossil fuels. In Singapore, everybody pays full price for electricity and water. What about people who are less well off? In the case of Singapore, we provide grants. We call it the U-Save rebate. We give you cash -- now you decide how you will utilize the cash, how much electricity and water you will consume.

What you have is a system where the correct price is charged, sufficient to encourage sensible and rational consumer behavior. At the same time, you make sure that every consumer, even the least well off, has enough cash in his wallet to purchase the essentials of life.

Q: What keeps you awake at night?

A: This is a very exciting time because I can see dark clouds on the horizon. With climate change, I suspect that we are too late. Global warming, the impact on weather, on floods, on sea level rises are probably inexorable, so we know there’s a storm on the horizon.

At the same time, it’s really exciting because there are so many technologies being invented. In Singapore, we are organized in such a way that if anything shows promise and makes sense, both scientifically and business-wise, we are going to be amongst the leading countries that will invest in research and development, prototyping, rolling it out and showing the world how it’s going to be done.

Analyses and commentary on The Grid are the views of the author and do not necessarily reflect the views of Bloomberg News.




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