How far ahead do you plan in your life? In Singapore, we take a serious view on long-term planning. Not just because we want to do it; but because we know it manners immensely to the society and individuals living in it.
On hardware matters, we’ve done exceptionally well. That’s why our PM Lee can say during the National Day Rally 2022 that plans laid out for our infrastructure more than ten years ago such as Tuas Port and Changi airport are progressing well – and the Tuas Port plans of 65 million TEU container will only be complete in two decades time. And now we are also making plans for these infrastructure to be more resilient in times of reduced demand.
This might require some degree of economic forecasting: how much can we afford, how much will that bring in return in terms of growth, how much can we grow, where can we find the resources. When I was in public service, I did get to think through some of these questions; and even now, at Enea consulting, I continue to work on these problem for clients. So at an individual level, it pays to consider doing some visioning and forecasting as well.
For those who are busy daily and worrying about bills all the time, this can seem discouraging and de-moralising but it is precisely what one needs to have that path beyond the daily grind and struggle with the forces in life. Long-term planning and developing a vision provides some clear sense of hope and also allows one to open up one’s mind further to see the bigger picture, and pockets of resources for one to try accessing.
Something I observed quite a while ago but never quite written about. Nature operates in cycles; not just in terms of weather patterns and seasons but lifecycles, cycles of day and night and so on. For us as humans, we tend to try and hack these cycles and hence we have shops that open 24h, try to have plants that can bear fruits every season and so on. Some of these work out with success, others not so much.
In particular the cost we afflict on humans emotionally and mentally is huge. As we are made to work with the same intensity through the year, when we don’t have seasons to help us modulate that intensity in Singapore, the strain accumulate each year.
While air-conditioning may have allowed us to control our environment a bit more, the lack of seasonality needs to be properly dealt with emotionally and psychologically.
Once we have determined the priorities, the goals and then from there, made decisions on which technologies to push for and how to wire up the new low-carbon or climate-transited economy, we need to then make the economics work. There are many decisions that we allow the markets to make and it is true that various technologies can emerge to provide us with multiple solutions to problems we have. But when it comes to climate, we need to be able to gather more resources together.
I don’t think this is so different from the EU’s decision to come together and say we are going to mandate that all gadgets have to use the USB-C connector. Changing our energy system is not as simple but once we can decide on a clear roadmap, then it is easier for the economics to come together. And let me just give an illustration; it is just a demonstration of how things can work:
Let’s start with natural gas or LNG as a transition fuel, reducing coal power, rewiring supply chains and logistics
When the coal players are clear that there’s a timeline and they are definitively headed for extinction globally, all the coal-based plants will need to prepare for decommissioning and be phased out, alternative power sources to be identified and planned
Coal logistics players will need to determine alternative uses of their asset base and start building viable businesses behind them
Other innovations around coal might still remain on the condition that it results in low or zero carbon emissions
At the same time, LNG infrastructure will expand and gain from scale economies, resulting in more demand as well as supply induced from new resource exploitation.
A liquid market forms from that and allows more trading activities and greater access to the resource – which becomes a viable alternative to coal in most places.
We then see the emergence of LNG fueled vessels, long-haul transportation trucks and so on.
The same type of cycle can take place though at a grander scale with more winners and losers as we determine for example that hydrogen will be the next major fuel after LNG. The economics of hydrogen will come to work because all players recognise that as the de facto future fuel. Innovations will drive the economics in that direction. Instead of waiting around, taking more actions to speed up the adoption would be critical. And small things can improve the economics:
Introducing proper standards and certification for green hydrogen across the world – focusing on the lifecycle carbon accounting in the production of the hydrogen as well as the logistics of moving it to where it is used
Allowing certifications to be marketised and traded while also satisfying any targets for decarbonisation.
These innovations will also start to incentivise more activities on the hydrogen end-use space such as hydrogen-fueled vehicles and even heating systems using hydrogen (such as in Japan).
While there may be some competition between hydrogen fueled systems and battery based systems such as in the case of energy storage, battery electric vehicles; there should be sufficient room for hydrogen – both long haul transport in air, land or sea will not be able to run on batteries.
Japan has also invested substantial efforts in making ammonia a fuel – which might prove wise as the use of ammonia itself eliminates any direct carbon emissions. If we truly want to reduce carbon emissions, removing carbon completely is probably easier than trying to capture it, use it and then re-capture it again. Biofuel can still be in the game but in the extreme long term, its availability is still going to be an issue – besides, there’s always some kind of competition between arable land for food versus fuel.
We all can tell ourselves a story about making the economics work but this requires forward movement in a coordinated way for a handful of stories rather than too many stories and running all over the place. Someone has to take leadership; and that must be one able to mobilize the resources, connections, influence and ideas to do all that.
I’ve actually been in the UK over the week for a vacation. It was a strange for me to say I’m going on a vacation in London because there was really nothing so relaxing about the city. Probably especially since I had already spent three years in London during my undergraduate days. Yet, the timing for my first overseas break since the beginning of the pandemic could not be better.
So many things happened in the UK whilst I am here, with the change of the Prime Minister and then the passing of the Queen. This truly marked the end of an era for not just the United Kingdom, the Commonwealth and the world. The times Elizabeth II had gone through were not just one of unprecedented changes; the pace of changes in the world, the diversity of trends, sheer number of world leaders whom she had experienced or at least met with.
United Kingdom itself has been in a state of flux and some would say decline since Elizabeth II took the throne. And it would be hard to tell if that trajectory will change with the monarch and political leadership changing at almost the same time. The death of the queen is likely to help galvanize the people; and depending on the direction the new King Charles wants to take, it could mean formation of further republics, splintering of the Kingdom.
To a certain extent, history is being made every single day as we operate. These events just makes us a little more conscious about it.
I subsequently talked about the need to get the energy technologies, and energy security issues sorted out. There are a lot of new technologies needed to help us deal with the energy and climate transition. Most of them already exist, but because of uncertainty around which would be deployed, the development on these various technologies are uneven throughout the supply chain.
For example, there are established hydrogen storage technologies, hydrogen transport technologies and fuel cell technologies. But because it is not clear how the supply chain will be configured, each aspects of these technologies could be deemed expensive. And if you zoom into a single component: say the fuel cell, you’d discover that a major part of the cost contributor is the the materials because platinum is used as a catalyst in the process.
There are different ways to deal with this such as creating catalyst that does not use platinum or use less of it and yet have sufficient efficiency. Or there are competing fuel cell technologies that uses a different approach. No one is sure which should take the lead and how resources should be allocated to move the various approaches through to technology readiness. Moreover, there may be insufficient resources in the market at the moment to go into all of those competing technologies for them to reach sufficient maturity.
So instead of relying on economics at this stage, we should be thinking about the other non-economic considerations that are worthwhile. Issues like energy security, safety, having a bigger picture of whether those various technologies alignment with these goals. More importantly, the technologies we want to back must be able to provide gains in carbon reduction and environmental improvements which allows us to feasibly expect to meet the aspirational climate goals I raised before.
To think about economics before setting the goals and determining technologies can be putting the cart before the horse – because we need to be clear what we are trying to achieve and try to manage the cost of achieving it. If we are solely concerned about costing at today’s level to try and achieve new things, we will never get anywhere.
It’s been almost two years since I wrote about my dream for Singapore’s education system. Over the past two years, with Covid-19 and all, the system has move towards a worse state for many teachers, with students not any much better-off. With the pandemic as a crisis or shock to the system, I had hope that more changes would come forth – but it seemed to me the most major one was just bringing forward the plans to deploy more education through technologies by getting every student to have a ‘personal learning device’ from Secondary 1.
There is a sense that families by themselves are finding it hard to cope with kids studying or learning at home. The parents are definitely unable to work from home under those conditions. At the same time, I think they have for far too long, outsourced the responsibility of coaching their kids, occupying them and thinking about their development to teachers, tuition and enrichment classes, or various different computer devices. They are out of touch as parents to take on holistic responsibility of the development of their children the way parents of the past did.
Sure, we got more efficiency and productivity out of it; probably most parents are able to make a better living and raise the standard of living for their children; but at what cost? If there’s one thing to learn about education and raising a child through the pandemic, it is that the society must jointly undertake the effort together. Education in the mainstream system, tuition, enrichment and all, must not be transactional or seen as such.
We need more support and aspiration towards an education system where everyone feels more vested: teachers, parents, students and young people who needs to work with the future leaders. Together, we can build a different system that will be able to serve our future and our people better.
I talked about the strong, aspirational goals around climate change mitigation and adaptation. For some reason, because the boomers had really wild dreams and set their resources, and efforts to it then achieved just a small fraction of their dreams, we got scared of setting goals. Just because the boomers helped drive such a period of strong growth, stability and advancement, we are worried we can’t live up to our goals. We forgot they didn’t quite live up to theirs.
We sometimes achieved different things. “Back to the future” expected hover-boards but we got instagram instead. It doesn’t mean we have to be worried about setting wild aspirational goals.
At the same time, the boomers have taught us to keep thinking about making lives better. Living longer, being richer, enjoying more materials. But we forgot that giving people more time is good, and getting good natural environment is good – not just for the people but for earth as well. We can aspire towards nature, conservation and heritage – not just more gadgets and fancy stuff. So our goals about the climate can be bold even if it doesn’t improve lives the way we think about it traditionally.
Better environmental stewardship can lead to cleaner conscience, healthier bodies and better mental health. Our focus on economic growth, money and finance, the macroeconomic indicators of inflation and employment are all distractions compared to the issues around future of mankind. Yes we need to manage short term survival but not at the expense of mankind in the longer term.
So we need to learn to be bold with our goals, to take them seriously enough that they drive us nuts when we fail them. And we need to come together around them – regardless of whether we agree how bad things are in the current state. We need to establish that farther-ahead, clearer vision of where we all want to be as a planet.
I consider myself to have spent all my career since I left school (and academia) in the energy industry. It just happens to be the industry that is essentially in the nexus of climate and economics. Which is just as well because I’m trained in economics and have such a keen interest and passion in the subject. Even when it is just a simple mental model that orients us to look into incentives as drivers of behaviours and human decisions, it powerfully describes what happens from scarce number of variables.
The way man’s use of energy have developed throughout history has more or less been the same. It has always been driven by economics, by the productivity gains we have in terms of bringing up the standards of our living, and that in turn grants greater ability to harness more energy and the ratchet turns. Climate turns out to be somehow a victim of this ratchet. It was some kind of collateral damage that appeared small at first and then snowball, and soon it becomes life-threatening. Not to any particular life, but threatening life as we know it. We can no longer ignore it as we face more volatile climate; with one of the hottest summers in Europe just this year, and increasing frequency of supposedly rare flooding events.
As it also turns out, the way we have built our communities, infrastructure, cities are not exactly the most resilient towards climate changes, or natural disasters for that matter. So there are many overlapping problems across energy, economics and climate.
First, we need to be really clear on our strong, aspirational goals around climate change mitigation and adaptation. Next, we need to get the energy technologies, and energy security issues sorted out. Making sure there is good alignment with these goals. Then, we need to make sure we are behind them pushing for the economics to eventually work – just as the non-market forces helped drive space technology and the development of the internet.
Hope to address these in turn for the coming days.
Recently there were more attention put on the demand-side of the picture when it comes to the modern Singaporean lifestyle. Woke Salaryman had a post about being average (more about the real average rather than your imagined one); and CNA had an article around the resurgence of the FIRE movement. Whether it is a movement or not, and the direction that people choose, there had been a long-time recognition that the kind of fire and hunger that Singaporeans used to have in earlier days of nation building is no longer the same. There is more questioning of what exactly are we pushing ourselves for.
Of course there has to still be the political narrative, being a community, united and being aware of the threats. But we cannot always be building ourselves up and trying to get better on metrics we don’t care about. We need to know what we are all trying to build ourselves towards. There was a period about getting better lives. Now that we all managed to realise that, what is the next step?
The government is keen on understanding what we want as a people as much as to shape that together with us. Forward Singapore is an interesting concept to take part in – how, I’m still not too sure but I have to hold on to the belief that we can all still take these things seriously, tap into the listening ear of the government.
I believe they will harness our passions, talents and the resources to drive ourselves towards it. There’s also this need for more consciousness about what we are striving for, what we need to give up in the process and who is giving up what – ie. the social contract. The speech and cogent explanations about the social contract in Lawrence Wong’s speech at the launch of the initiative is good. I really appreciate the contrasting views he raised on some principles and values we had previously left unquestioned – competition, meritocracy, and emphasis on self-reliance.
Ultimately, we need to consider, what is the Singapore we want. Because we know that if we are not building a Singapore that Singaporeans want; then sooner or later, there won’t be a Singapore for anyone.
We caught the movie Lightyear which was supposedly the favourite movie of Andy (the kid from Toy Story) and where the character Buzz Lightyear came from, which of course resulted in the toy figurine which he got. While it did turn out to be a flop for the strength of the Disney-Pixar brand name as well as the Toy Story franchise, I felt that there was a pretty important and relevant message that the story had.
The struggle I believe was the slow pace of it, the fact that the message wasn’t really properly emphasized repeatedly, and the problem of introducing controversial distractions (such as things like representation, etc.) Anyways, the message that I thought was important is that our mistakes can be the fertile soil for many good things and we should not subject ourselves to trying to correct or redeem mistakes without observing the true nature of the impact our mistakes had.
We’ve been conditioned to think of mistakes as a problem rather than a way to learn what would be right. And there’s also the idea of redeeming one’s mistakes – trying to make things right. These are all probably well-intention-ed but an unqualified belief in those principles would be disastrous and in the movie, the Buzz who became ‘Zurg’ was exactly one who acted in that manner. Clearly, we pick that up and it appeals to us because we are so focused on ourselves. We are able to try convince others to look past their mistakes but we are unable to do so ourselves when we are the ones making that mistake.