Singapore Clean Energy Policy

Invited Keynote Lecture - ASEAN COST+3: New Energy Forum for Sustainable Environment (NEFSE) 26-27 May 2008, Kyoto University, Japan S C Low and K T Cheong School of Mechanical and Aerospace Engineering, Nanyang Technological University, Singapore Contact : msclow@ntu.edu.sg

Abstract Singapore is a small island state with a vibrant economy which cannot be sustained without imported energy. The resource-scarce country refines 1.3 million barrels of crude oil daily with less than 100,000 barrels per day for its own consumption. Global warming is an important issue for Singapore due to her low-lying islands. The rise in sea level reduces the coastal land size and floods the densely built-up financial hub. Opening of the Arctic sea route, owing to the melting ice caps, would hence directly affect Singapore strategic location as a regional trans-shipment centre. Singapore plays her roles as a responsible world citizen in mitigating climate change. It ratified the United Nations Framework Convention on Climate Change (UNFCCC) in August 1997, and acceded to the Kyoto Protocol in April 2006. Clean energy will be encouraged where ever feasible. The country also will ride on the opportunity due to the clean energy to grow its already robust energy sector. Its energy policy will strike a balance in between the economy, energy security and the environment. 1. Introduction In the global energy scene, rising energy prices and world climate change are the dominating issues. Any country energy policy must address these concerns and capitalize on the opportunities generated. An efficient market system working towards an achievable minimum price would help maintain low and affordable energy prices. Measures like supply competition, alternative choices of energy, availability of supply infrastructure would contribute towards this objective to control inflating prices. For countries whose energy depends on import, they must have taken appropriate measures in ensuring an undisturbed supply of energy to sustain their economy. There is no exception for Singapore. Despite the undisrupted supply of fuels, one should also ensure the consumption to be minimized through conservation efforts and equipment/process efficiency. It would help in cost reduction, reduce energy consumption and cause less environmental pollution. Singapore aims to build a livable city with a vibrant economy means a city of economic and environmental excellent. Pollutions, not limited to green house gas, must be minimized through the best viable technologies. Clean energy is a new dimension in its energy policy. Clean energy applications are encouraged with incentives to overcome the cost entrance barrier of the clean energy 1

technology. It is also believed that clean energy would bring new opportunities to the energy industries, manufacturing sector and energy trade. 2. Dealing with global warming The concerns over global warming fuel the demand in renewable energy through both government incentives and consumers inclination toward green energy. The IEA predicted an 80% share of hydrocarbon fuel and a 2% of renewable energy by 2030. The renewable energy, though is small in its share, the annual growth rate (6.6%) would be high due to its current low base. Singapore will ride on the rapid growth rate of the renewable energy to add it as a new dimension into its energy industries, manufacturing sector and the energy trade. Since the fossil fuels will still have a dominant share (80%) in total energy consumption, the efficient use of fossil fuel has great potential to both mitigate CO2 emissions as well as conserve the fossil fuel reserve. The increased energy efficiency also leads to better air quality, reduces energy costs, and moderates the growth in energy consumption. 2.1 GHG and electric power generation (a) Efficiency and low carbon fuel Power generation consumes 51% of total fuel in Singapore. From 2000 to 2006, the overall power generation efficiency was raised from 38% to 44% through the adoption of combined cycle using steam and gas turbines. This accounted for 15.8% reduction of CO2 emission. A switch from the fuel oil fired power plants to dual-fuel plants with 75.8% share of natural gas further reduced the CO2 emission by another 25%. The combined effect of these measures had contributed to 37% reduction of CO2 from the electric power generation plants. This reduction well exceeds the growth in total electricity consumption of 20% (average annual growth of 3.5%) during the same period. (b) Increase energy utilisation rate Cogeneration and tri-generation: The other ways that improve fuel utilisation and reduce GHG emissions are cogeneration (electricity and heat) and tri-generation (electricity, heat and chilled water). This idea utilises every rejected heat from the system to push the energy utilisation rate close to 100%. There are already cases of success like the 815 MW SembCogen combined cycle, the 155 MW ExxonMobil cogeneration and the 5 MW Pfizer tri-generation plant. (c) Biomass and waste as fuel Biomass and waste are no longer disposed by land-fill in Singapore. They are converted to electrical energy by four modern gigantic incinerators. The one installed in year 2000 has an annual capacity of 1 million tons - one of the largest in the world. The power from the incineration plants contributed to about 2.8% of total power consumption incinerating about 2.5 millions tons of solid waste per annum. Incineration might add to the CO2 discharge but it help in the conservation of fossil reserve. (d) Is nuclear power feasible? 2

Under the pressure of high fuel price and CO2 emission issues, nuclear power again re-emerges as an alternate clean energy in the region. Due to Singapores small size and dense population, the option of nuclear power is not feasible. However, as espoused by a recent National Energy Policy Report, Nonetheless, we should not write off any energy option for Singapore. As technology improves, energy sources which are not viable for Singapore today may become viable in future, the nuclear issue is not ruled out completely. (e) Renewable energy The Solar and fuel cell power options are available but subjected to key constraints of cost and technology. In the past one year, billions of dollars from private sector have been already committed to clean energy research and manufacturing in Singapore. Three companies (Natural Fuel, CMS Resources and Neste Oil) committed to a total production capacity of 2.8 million tons per year in bio-fuel production. The world largest wind power firm, Vestas, set up a research centre in Singapore hiring more than 150 staff. The Renewable Energy Corporation ASA (REC) invested 3 billions Euros in Singapore building a world scale solar manufacturing complex. It produces solar wafer, cell and module with annual capacity of 1.5 GW and employing 3000 people. A consortium is actively conducting product development in Singapore for direct methane solid oxide fuel cell for power generation.

2.2 GHG and transportation 16% of the total fuel consumed is used for the transportation purpose. One of the strategies in conserving energy and reduction of GHG is to promote mass transport system that move a large number of people using public transports. It works out to be the most energy efficient, energy per person, option for transporting people during the peak hours. Ownership of private cars is discouraged through high taxation and the number is controlled by the highly priced quota. Fuel efficiency, exhaust emissions and alternate fuel are built into the policies. All cars must comply with the EURO IV emission standard - means gasoline car equipped with the 3-way catalytic converter and lean burn. It ensures that all new cars equipped with the latest fuel economy and emission control technologies. The efficient cars emit less CO2 for the same use. The alternate fuel car is also known as green car in Singapore. A very generous tax incentive (40% cut in taxes) is granted to the green car owners. It helps the potential owners to overcome the cost barrier of the green cars. The recent high price of gasoline over that of the compressed natural gas (CNG) has generated many first time green car owners taking advantage of the price natural gas and the tax incentive.

Biodiesel blend fuel trial A nine members group signed a MOU in 2006 to test and evaluate biodiesel powered cars for a period of two years. The project aimed to establish the use of 5% POME (Palm Oil Methyl Esters) by volume blended diesel. 2.3 GHG and buildings Buildings consumed 1/3 of the electric power generated. The efficient use of energy would reduce energy consumption and GHG emission. For air-conditioning buildings, the building envelope design must ensure its heat gain within the limit set in order to reduce air-conditioning load. To exemplify, a Green Mark scheme was launched in 2005. Part of which is to evaluate the building energy performance. By 2008, all buildings of gross floor area (GFA) above 2,000m2 (either new or old building undergoing renovation) must comply with the Green Mark Buildings standards. 3. Clean energy and economy The oil refining and trading industry contributed a 4.5 % to Singapore GDP in 2006. Riding on the growth of the world energy demand and the emergence of new energy (like solar power, fuel cells and bio-fuels), Singapore plans to raise the current value added of from $20 billion to $34 billion by 2015 and to triple the employment in the sector from 5,700 to 15,300. 3.1 Oil refining/production and energy trading (a) Refinery and oil trading - Singapore refines 1.3 million barrels per day of crude oil and trades about 15 to 20 % of the worlds crude oil. The oil bunker trade up-lifts 28 million tons of fuels per annum the largest bunker fuel centre. Following the increase in the world demand, this traditional sector would be grown further to match the real demand. (b) LNG trade - The natural gas will rise to 23% of total world energy demand by 2030. Since LNG will be used for our electric power generation, the infrastructure for importing, shipment handling and storage of the LNG offers an opportunity for the LNG trading. With the introduction LNG trade, it adds to the range of energy products traded. (c) Bio-fuels Trading The bio-diesel industries already committed to the production of 1 million tons per annum by 2010 and 3 million tons by 2015. The trade in biodiesel helps the products to enter international market. After bio-ethanol gaining potential in Asia, the trade will include the bio-ethanol. At this moment, bio-fuel derivative contact is under consideration. (d) Carbon Trading and CDM - The Kyoto Protocol has created international markets for the pricing and trading of carbon emission allowances or credits. Actions are taken to promote Clean Development Mechanism (CDM) projects using Singapore as base for local and regional projects. A Renewable Energy Exchange was set up to provide financing opportunity for bankable renewable energy CDM projects by bringing together the investors and developers. Asia Carbon Exchange (ACXChange) began operate in 2005 its worlds first on-line auction of forward CER (Carbon Emissions Reductions) contracts arising from CDM projects in Asia. 3.2 Expanding the energy sector 4

Clean energy was endorsed as a key growth area for Singapore targeted for generating $1.7 billion value-added and 7,000 jobs by 2015. Emphasis was placed on four focus areas; namely solar, fuel cells, bio-fuels and energy efficiency solutions. (a) Solar photovoltaic (PV) cells The committed 3 billions Euros in setting up a world scale solar manufacturing complex indicated that Singapore is a good location for solar cells industries. The country strengths are: The established semiconductor industries support the photovoltaic (PV) cells manufacturing which is dominated by silicon technologies. The landscape with high rise buildings provides opportunities for buildings and PV panels integration for urban application. Located close to the region of sun-belt for direct market access. Near the region with strong growth opportunity in electric off-grid market. (b) Fuel Cells - Fuel cells promise clean and efficient way of energy conversion. However, there remains a lot of development work before mass-scale commercialization can take place successfully. For Singapore, her clean energy aspirations as well as capabilities in managing complex industrial equipment and manufacturing places her in good stead to capture future opportunities in this area. Large amount of resources, both public and private sectors, invested in this area to place her in a favourable position for future competition. (c) Bio-fuels - Bio-fuels, which include biodiesel and bio-ethanol, refer to fuels derived from bio-based sources and treated as renewable fuels. The committed biodiesel production had been substantial, utilizing the first generation trans-esterification technology from edible oil. However, bio-fuels derived from food crops has driven up the price of food products, and this may not be sustainable in the long term. There is need for second generation bio-fuels that using non-food crops such as grass, wood chips and plant waste as sustainable feed stocks and to be truly renewable. Going forward, more projects involving and/or by alternative technologies that produce higher grade bio-fuels will be encouraged. 4. Clean energy and Research New energy technologies are important in response to the challenges of energy security and climate change. It would mean energy diversification and sustainable environment for us. Furthermore, mastering energy technologies through research and development would be crucial to the success of building an energy industry. It helps to position Singapore favourably in capturing the new economic opportunities that are emerging. 4.1 Current energy R&D As clean energy was identified as a new growth sector, already there was more than $300 million to build up energy R&D capabilities. Prior to this, there are already a number of energy research activities taking place in research institutes, universities and the private sector. Researches include solar cell materials, fuel cell engines, cellulosic ethanol conversion and wind power. 4.2 Research strategy A forward-looking and holistic approach has been adopted. It is building an energy R&D infrastructure and test-bedding platforms, establishing energy R&D programmes, 5

with strategic funding. By keeping a strategic focus in R&D initiatives, maximum impact will be generated from the limited resources available. The key initiatives are: (a) Singapore Initiative on New Energy Technologies Centre - Establish a research electrical infrastructure in serving the development of clean/sustainable energy technologies. It consists of the following: Microgrid : This will enable researchers and companies to test-bed novel power generating, storage, and integrated power/thermal systems and study their performance in a grid environment. Command & Control Facility : It will serve as the control and monitoring centre for the assets on the microgrid and provide access to other systems and assets operated by the other project collaborators. The facility will have technology to enable real time information exchange, remote and intelligent monitoring, diagnosis, decision making, control and management. Such capabilities are important for the operation of physical energy and power systems; and for complex energy markets.

(b) Energy Technology R&D Programme - It funds, coordinates, integrates and expands existing efforts and capabilities in projects such as the fuel cells; alternative fuels (bio-fuels and hydrogen); and next-generation solar PV technologies. In addition, it identifies and develops new research thrusts relevant to the energy industry strategies and enhance internationally competitive. The programme also seeks to attract renowned scientists and technology leaders to lead research ans foster research partnerships overseas research organizations. (c) Clean Energy Research and Test-bedding Programme (CERT) It was set up to stimulate research in the application of clean energy in Singapore. Projects like application of green building technologies and Zero-Energy Building would be the good examples to reflect the objective of the programme. By conducting testbedding in Singapore through CERT, one will be able to build competencies in system integration and application of the research results. (d) NRF Clean Energy Programme It is the biggest funding body. It funds clean energy R&D with a focus on solar research as a start. The funding, in the order of $100 millions each, will be used to support the establishment of world-class clean energy R&D centres, 5. Conclusion The pressure of global warming and the international action in the reduction of the GHG give a strong push for the demand of non carbon base energy, which includes the clean energy. The long term forecast for such clean energy may not be high (2%). However, the growth of clean energy application would be tremendously high due to its current low base. Singapore, as a country already has an established strong position in the world energy trading, the emergence of clean energy would benefit her immensely. The new energy trade will add to the already successful portfolio of her energy products traded. Every effort as laid down in the aforementioned policies will boost Singapore energy sector in terms of trade, production capacity, economic contribution and employment for Singapore. 6

6. References Energy for growth National Energy Policy Report Ministry of Trade and Industry, Singapore ISBN 978-981-05-9512-8 Nov 2007 Introduction to the Singapore New Electricity Market Energy Market Authority, Singapore, Jan 2006