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Thanks for stopping by! Hi, I’m Kevin, with a dream to empower our generation to create a future for themselves and the world. I do this through my day job as an Energy Transition Consultant at Enea Consulting, my social media content curation (instagram), creation (blog), and my career coaching practice. I’ve a background in education and infrastructure industry, both in the public and private sector, which informs my writing and coaching practice significantly.

Scaling up production

At the recent presentation I gave on ammonia as the new low-carbon maritime fuel, I was asked about the ability to scale production over the next couple of years. I think the time horizon we should be looking at is over the next 8 years up to 2030 and then 10 years after that, how things are likely going to change. We as consultants are often asked to look into our crystal balls and envision the future. We try our best to do it using data, looking at trends, making assumptions and all.

For ammonia, the demand is expected to more than double over the next 28 years. That’s still a fair amount of time, and as long as it grows by a rate of about 4% per annum, the supply will be able to meet demand in 2050. Not inconceivable though from historical trends on the production figures, it seems far fetched. But that is because ammonia has traditionally been demanded only as an industrial feedstock and for production of fertilisers. The people concerned about the competition with the existing agriculture or food industries have misplaced concerns because those are the guys who have been using grey ammonia and perfectly happy to continue to do so. The new demand is likely going to require green hydrogen; which means we are going to start growing new supply of this ammonia from scratch; no legacy issues of waiting for existing facilities to ramp up.

Then there are people pointing out the challenge of getting green electricity which seem short in supply to begin with. That is true to a certain extent; Singapore is having to import electricity from neighbouring countries, using actual physical transmission lines. But most of the time, this is caused by the fact that renewable resources may be scarce where the power demand centers are. If there are far flung locations rich with renewable resources, we can still capture these sites to produce green hydrogen as well as green ammonia, then ship them out.

So I’m actually pretty optimistic about trying to hit those demand and supply numbers over the long time frame that we are talking about. It might well surpass those numbers when the market really takes off. But the key is ensuring there’s clear price signals; and if there’s proper legitimate demand for green hydrogen, then someone will have to certify it and audit the production.

Up before it goes down

I was giving a presentation over this week and the topic was around new fuels like hydrogen and ammonia. The key to these “no-carbon” fuels is how they are produced. Because hydrogen and ammonia does not occur in huge quantities in nature and is not a stable form taken to store energy, they require energy from other sources to be produced as fuels themselves. As a result, though they emit no carbon when they are combusted, there might be carbon dioxide emitted in their production pathways. In that sense, saying they are no-carbon is a bit of a misnomer.

The challenge for all the equipment, vessels, engines looking at which fuel to run on is that they have to start re-tuning themselves to be able to burn these alternative fuels but then things will not be able to switch over all at once. Greener versions of these alternative fuels still takes time to be produced. There is about 185 million tonnes of ammonia produced each year and more than 99% of them are produced using natural gas as feedstock to provide the hydrogen required. In addition, energy is used as an input to the Haber Bosch process which further increases the carbon emissions of ammonia.

Yet we all have to start somewhere and pushing along the end-use equipment to adopt these alternative fuel is a large step. Perhaps larger than producing the green versions of the alternative fuels. It’s the same with electric vehicles which are being touted as low-carbon. Well, it all depends on the grid. We can switch all our cars to electric cars but if the subsequent increase in electricity demand causes countries to reactivate their coal power plants, the overall emissions are going to increase and not decrease.

For now, it still seems like carbon emissions have to go up further in order for it to go down.

Subsea cables and biomethane

Subsea cables uses loads of materials and for power evacuation, it makes more sense to lay a really high capacity cable rather than low capacity one if one is to invest in doing it over long distances. The environmental impact to marine life is unclear; and given these electronics components, they actually might last only 25 years.

So Singapore is importing electricity through interconnectors, and the first seem like they are going to come from Laos through Malaysia and Thailand? While the deal seems sealed, it is not clear when the physical electrons will be arriving in Singapore. Next up there’s the request for proposal by Energy Market Authority around importing electricity from neighbouring countries, likely though some kind of new subsea interconnectors to draw power from some renewable energy projects.

Given the requirement for firm electricity supply, the solar or wind projects will require battery storage. The green electricity from Laos is different as they are hydropower which has much more dispatch-ready quality to them. The subsea cables, the energy storage systems as well as the solar or wind projects are going to be very costly and the fresh infrastructure is supposed to somehow displace some of the infrastructure we have already built in Singapore such as the LNG terminal etc. Since the renewable electricity should probably replace some of the local gas-generated power?

Why don’t Singapore consider greener fuels instead such as looking at biomethane and building out the supply chain in the region. It can concurrently achieve some positive impact in the region by reducing toxic palm oil waste, and hence pollution, harness waste into a resource while achieving decarbonisation by leveraging existing infrastructure. Granted, it is a long journey and might be more tedious to pull off than just calling an RFP and importing electricity through a sub-sea cable.

But don’t we want to participate more in regional infrastructure?

Double-counting

In economic accounting, there’s an issue of double-counting when a transaction is counted twice. It can lead to overestimation of costs or value of goods, etc. In particular, if we sum up the value of intermediate goods transactions and then final goods transactions, we might double-count and overestimate the value of economic production. So second-hand transactions cannot be included in national income accounting.

In the workplace, a boss may claim credit of the work of his staff while leaving the staff to also take full credit of the work. The warm glow and glory of the work gets multiplied though it is probably an happy affair.

There are cases when it is not happy. When it comes to the environment, there’s a risk of double-counting of the carbon emission reductions or avoidance when more than one party claim the same reductions. If someone is generating their own electricity using solar, registered for renewable energy certificates and then sell it for a stream of payment so that someone else is able to claim the green attributes, then the one generating the solar power can no longer claim his carbon footprint is reduced by his own solar panels. The de-coupling of actual generation from claiming the attribute is a mechanism to improve efficiency of the market but creates the double-counting problem.

This problem has been talked about since a really long time ago but there is no clear consensus on how to solve it. The worry is that countries are counting the same reductions towards their nationally determined contributions to carbon reduction. When does this really happen? Perhaps when companies take the carbon reductions they have in another country either through purchase of green electricity or renewable energy certificates and then claiming to have achieved carbon reduction in their facilities in a particular country.

Technically it should not matter if that is somewhat registered nationally and there’s a cross-border trade in that contribution but it is probably too complex for the nation’s own accounting. So as long as we don’t allow companies to make such claims and to deal with all their emissions with local abatement, that should work. But it creates some really round-about issues which is inherently a little inefficient such as the actual, physical electricity import into Singapore through sub sea cables. That’s for another day.

Choosing your battles II

Sometimes, choosing your battles is not just about the strategy that was first determined but the metrics that we choose to track our progress along the strategy. Using the wrong metrics can lead us to adopt the wrong tactics when executing the right strategies. At the end of the day, the wrong metrics causes us to lose sight of the strategy that we are pursuing and go down the wrong path entirely.

For example, there is this curious point about services job creation and de-industrialisation of an economy. A government might be pursuing a strategy of job creation and targeting to attract particular FDIs so they track their own performance by looking at the manufacturing job growth each year. Concurrently, the manufacturing companies are increasingly looking at outsourcing so the security guard at the factory is now employed by a security company rather than the factory, though he is still guarding the same facility. At the same time, the truck drivers are now hired by a logistics firm who took over the fleet of trucks delivering the output of the factory to the port. Total number of jobs that this factory created and kept has not changed but on the statistics, it would seem that manufacturing jobs have declined because those who were previously directly hired by the factory have been re-employed by services firms. The government might start thinking despite attracting much manufacturing FDI, the manufacturing job growth is low and so they might want to pursue a different strategy, not realising that they are embarking on the right strategy but just looking at the wrong metrics.

Their subsequent decision might derail the overall policy actions that was supposed to address the issue of job creation in the economy. Likewise, companies and businesses needs to think about the right metrics when they are tracking progress of their strategies. Have you thought whether your metrics are still serving you well as an individual?

Choosing your battles

When I was a junior staff in the public service, I often try to get every single thing aligned to my ideals and get rather upset when things don’t go in that direction. For example, I believed that as a public servant, our goal was to serve the public. But often, there were overriding management and leadership priorities that could detract from that even though those actions were trying to serve overarching policies which were supposed to serve these people.

Of course, I was rather disappointed and I came up with this catchy phrase for the younger people who were rather disillusioned by the jobs they had, “you thought you were working for a cause but actually you’re just working for a boss”. Yet as I mature and grew, I came to recognise that because we don’t have unlimited resources, we need to develop strategies. Strategies mean picking your battles in order to win the war. And by focusing resources and coordinating your actions, you are able to move towards your goals more efficiently.

But understanding that is insufficient; there’s a need to know which battles to pick. It has to do with being extremely clear what are the fundamental problems and issues to deal with. For example, in public service, there are fundamental challenges in the society we have to deal with that may or may not seem like we’re serving the public upfront in a single case. We may have to choose not to help a single person in order to focus our resources on dealing with more fundamental challenges.

For example, there may be a lot of good in helping a single small business to expand and grow but often, the expansion of a larger business can create more jobs and greater spin-offs whereas the single small business might just enrich a single person.

Using models

Critical thinking is really important when one derives results from a model. They are behind so much of modern day decision-making. Whether it is a decision to invest (financial models) or policy-making (economic models or models calculating social impacts); they generate a false sense of precision and scientific-ness in the process. There is of course the interdisciplinary subject of decision science that tries to be eclectic in drawing out tools and resources from various disciplines to help support decision-making.

I recall at one point, Dr Goh Keng Swee talked about how economics is not necessarily going to help us get things right but it does help to eliminate almost 99% of the options which are necessarily wrong. In the same spirit, I think modelling should be a way to eliminate the fringe cases and allow us to work within scenarios that make sense rather than give us a view of the future.

Forecasting should not so much be seen as ‘what will happen’; but to help us cast out the ‘what will not happen’. Decision-making, on the other hand, is choosing between eventually the options that are plausible within what was not eliminated. To that extent, we need to use models extremely critically – even after we have spent lots of time and money building a model. We cannot say to ourselves, ‘if we spent all the resources building this model and not using the results, it is a waste‘.

The model is wrong

When I was labouring away in my economics classes at LSE more than 10 years ago, there was a lot of debates around accuracy of models we were using to understand the economy. And the agreement was that all models were ‘wrong’ because they are (over)simplified versions of reality.

But simplification was necessary for us to understand something that was complex. Incorporating the complexity into our models may not help us very much. To give a concrete example, in economics, we claim that all purchases which were the realisations of demand for all goods were driven by individual preferences. But in reality, there are also goods which were gifts and because you are buying it for someone, it is not about the preference for the underlying goods but something more complex. Yet if you need to start working out a model where the demand for a good is driven not by preferences for it but cultural perception of the signals around the gifting of a good, it is not so generalisable and would not be useful.

Today, models are getting more complex, and we are building out more and more models in order to perform sophisticated calculations and help support decisions. We create metrics to test our models and they tend to be around how ‘right’ the models are with ‘predicting’ results we already have. The challenge is no longer oversimplification but a problem we call ‘overfitting’, which is where we are trying to create models that is able to fit the data we have so well that it is not generalisable. This is actually the problem above – just because we are capable of building more and more complex models, we think it is better when it isn’t.

Wasting time

What is time-wasting to you? I realise that perspectiv matters a lot when it comes to this. But as this article in The Economist suggests, there are some perhaps universal time-wasters in the modern day office worker’s life: logging in, mistyping, deleting emails, scheduling meetings that eventually gets cancelled or rescheduled, looking for available meeting rooms. All of these are often ridiculous. Most of the time, technology plays an important role in both time-wasting and time-saving.

I spend time to write for this blog daily – is that a waste of time? Perhaps so to some people in my circle, including some loved ones. But for me, it’s an investment, a training that I sorely need, and the development of a positive habit. On the other hand, I think that time spent making small talk to ease into a meeting is a waste of time but I’m too culturally attuned to do otherwise, plus it doesn’t help I happen to be naturally curious and happy to make conversations.

As I enter a stage of life when time becomes so much more precious, I need to guard it more carefully, and make sure I’m not wasting time. But that’s only possible when I know what are my objectives.

What is Goodwill?

In accounting, goodwill is when a business has somehow paid the past owners a price over the book price of the original business and now capitalises this premium in the books of the acquired business. At the same time, we may say we do things out of goodwill, basically for free or token, as an act of kindness towards people. Most of the time these are towards strangers, or clients, customers. It may or may not involve expectations for reciprocation.

Now the last part of the previous paragraph is the part that I think is the most tricky thing about goodwill. There’s a sense, in our modern world where there is always a chance of repeated interaction, that goodwill is worthwhile and also worth multiplying. At some point or in some way, it gets reciprocated in profound ways. Some might think of it as Karma – or at least just the positive sort of it.

What I think is strange is that the use of the term goodwill in accounting or business may have contaminated our sense of what it really is. I personally identify the non-business ‘goodwill’ to be something in a spirit of generosity and giving, whereas in business and on commercial basis, goodwill is treated like an asset, something that is supposed to bring value – therefore the returns that reciprocation of a kind gesture might bring.

Maybe it’s me thinking too much about semantics – but it matters.