SINGAPORE'S FUTURE ENERGY OPTIONS - KEY CHALLENGES

Abstract

Energy is needed to maintain the well-being of every living organism on earth, including human being. Energy is also the core of economic growth of all countries across the globe as all social and economic activities require usage of energy. Energy demand has been increasing with growth of world population and urbanisation. While ensuring that our energy sources are able to meet the increasing energy demand, we have to consider the impact of the use of the energy sources on the Earth’s natural system. Effects of climate change is already being observed through rising temperatures, melting glaciers, shifting weather patterns, increased storm intensity and frequency and rising sea levels. It can be largely attributed to increase in greenhouse gas (GHG) emissions from human activities through fossil fuel use, deforestation and agriculture. A reduction in GHG emissions are achievable and this can be done at relatively low costs, provided the right policies are put in place.

This thesis provides a brief overview of the global energy outlook focusing on understanding global energy demand, related environmental issues, progress and strategies to address the issues. Having a global picture is essential and helps to steer the direction of Singapore’s future energy options and policies. In the transition towards low carbon economy, Singapore is heavily dependent on the “cleanest” type of fossil fuel-natural gas to generate electricity while we aim to reduce emissions intensity by introducing a carbon tax, enhance industrial energy efficiency, and develop other energy alternatives to diversify our energy sources. By doing this, we can also ensure better energy security for the nation.

Singapore has always aimed to reflect the actual cost of electricity through reviewing the electricity tariff every quarter by the Energy Market Authority. However, internalisation of the environmental cost of carbon emission from emission intensive industries such as the power sector through a carbon tax is a challenging task due to difficulty in measuring the cost of the actual impact on environment and economic implications. A more in-depth discussion on carbon tax effectiveness will also be presented in the thesis.

Energy efficiency has been defined as the “first fuel” of economic development. Improving the energy efficiency of industry is indeed crucial due to its wide spread impact on productivity and cost reductions in capital, operations and maintenance. It could also positively increase the competitiveness of industry. Under Singapore’s legislation, the Energy Conservation Act (ECA) mandates energy efficiency requirements and energy management practices to promote energy conservation and improve energy efficiency. Further enhancements to the ECA focusing on improving energy efficiency of the industry were introduced in 2017. On this note, this thesis will also discuss areas where the existing policies for improving energy efficiency of the industry can be strengthen and to provide plausible and implementable suggestions for policy makers.

The current most viable renewable technology in Singapore is the use of solar photovoltaic and suitable policies should be in place to enable wide scale deployment. Although benefits can be derived from such policies, there would potentially be issues that could derail such initiatives. Hence, this thesis also discusses on foreseeable issues that may arise and the possible mitigating measures that can prevent or minimise the occurrence of the issues. This work also provides ideas to improve/ fine tune current policies so that Singapore can achieve its climate change commitments in a more effective way.