Energy efficiency rebound

As we replace our lighting with more energy efficient LEDs, we’d expect the overall system to consume less power, perhaps proportionate to the energy efficiency improvements that LEDs bring to traditional lighting. But that doesn’t seem to be the case because two things happen when you introduce more efficiency into the system:

  • Brightness of light bulbs or lighting increases with the same amount of energy input
  • Keeping the brightness constant, the energy input required falls.

Typically, the result is a combination of these two phenomena; so we have got people using brighter lights that may consume a little less energy. Or, at the same time, people started installing more lighting now that the LED lights are cheaper and more common.

Overall, the energy consumption reductions is less than the energy efficiency gains. This is known as the energy efficiency rebound effect. We see similar issues potentially with the deflation of goods and services over the recent decades. People did not spend less but in fact they spent more, buying much more of those cheap things that their parents could not enjoy at the prices they had paid. Probably also spurned by the easy credit available.

Do you spot any other areas like that in your life?

What is our social compact?

I thought this document from our Ministry of Social and Family Development about Singapore’s social compact is really interesting. It neatly articulates many challenging issues and dilemmas that policy makers have, and also the challenge to try and articulate decisions made. I think our approaches in terms of communication has become more complex over time as Singaporeans demand more sensibility and sensitivity from our government.

Shanmugam’s conversation on BBC Hardtalk Podcast itself is probably a best practice for Singaporeans and politicians in Singapore representing our country and the social dimension of the approaches we have taken. At the same time, we must not shy away from asking these hard questions and to get an account of why we are doing things the way we do. We as a society cannot be relying on foreign countries to try and ask our government these questions; we ourselves have to be the ones asking that as a society.

Maybe sometimes we are afraid that there are no answers or solutions; but that’s not the point of the discussion. To bring up what is perceived as a problem is the first step to possibly resolving the knots that we have in our hearts. What our government cannot do is to say that they have better things to do than to answer the pesky questions of citizens. Or that these questions stand in the way of a better, harmonious society. Typically they don’t.

Alternative education

People who have known me for years will know that I’m incredibly passionate about education and I can probably speak for days what is wrong with the education system, and what is my vision the ideal system. Or at least just some elements of it.

And that is why I think Sal Khan of Khan Academy is incredible. How he came to find the Internet as a powerful medium and channel for learning and meaningful, educational interactions that allows us to deliver education at a fraction of the costs. He spent the years, resources, gathering support and building up Khan Academy, extended his philosophy and even announced a new collaboration with Arizona State University to set up a real school. He has indeed manage to attract a good following a lots of support to make his vision closer to reality.

I wonder if one day I’d be able to set up an alternative structure like that to mainstream education in Singapore; or perhaps I would be better off trying to do something like this in a developing country to help intelligent but underprivileged students gain access to the opportunities that better education can afford like how Mohnish Pabrai’s Dakshana.

Bean-counting

“Bean counter” is an expression in English language referring to “a person, typically an accountant or bureaucrat, perceived as placing excessive emphasis on controlling expenditure and budgets”. There are people who are mission oriented by focusing on the vision of a future but there are also bean-counters who are obsessed with measuring along certain identified metrics without recognising whether the metrics make sense or not. And that is the problem with our relationships with KPIs.

Let’s start from school. Today, we have more students than ever who are going through education system just to get a grade – not out of curiosity or a zeal to learn, but full of anxiety about a devastated future due to missing the grade. Why is the grade even an indicator and what is it indicating? Have we taught our students what the grade really mean? What an award or a prize really do to them? Thinking meta is important – and I’m definitely not referring to the metaverse.

Then businesses. There’s more than financial disclosure and accounting these days; there’s a lot around climate and impact related disclosures. At Enea, we help some of our clients navigate the requirements but more importantly, we advise our clients from first principles how to think about their business’ impact and interaction with the environment so as to report meaningfully to their stakeholders. Yet there are always consultants or companies who are focused on just taking a KPI which is popular out there and then using it – even cherry-picking the ones that look more favourable without a clear sense of what those measures are actually for.

Finally, there is the government, focused on giving a good report card to their political masters to show constituencies. There is still the traditional obsession with GDP and the growth figures, targeting job creation and so on. In fact, the term ‘statistics’, have more to do with the state than to do with the concept of numbers. Policies will really need to better articulate why metrics adopted are a good representation of the policy objectives and that results are not just reported when they look good, or for metrics to be chosen only after results are in. Being mission-focused is also more important than just sticking to a set of metrics. Because Goodhart’s law still applies.

Are you recognising the bean-counters amongst you? Those who are overly obsessed with the numbers without really appreciating what they mean? It’s probably worth focusing first on the parents who are obsessed with their kids getting an A.

Mission orientation II

How mission-oriented are we as a society? When Kennedy decided that America was going to send man to the moon, the economy and society responded. The government put in funds from taxpayers, the people supported the goal, the companies took risks to develop the technologies required, first with the government as customers but just having faith those technologies will find application in other areas. Research institutes, students’ aspirations were radically influenced by that sense of mission. Even if it just meant you were acting as a ‘calculator’ to make complex calculations for the space mission, it was a great deal. The Americans all felt they were involved in one large national project.

In many ways, Japan is a society that always seem to be on a mission. The government is able to come up with really long term plans and roadmaps and push funding to galvanise the society and people towards various different areas of technical and economic progress. I would say that growing out of “losing” World War II, emerging as the world’s third largest economy for most of recent history is still an incredible feat that Japan has pulled off as a country that is just a collection of islands. The fact that Japanese society was homogeneous helped but the kind of long term mission they have is equally admirable.

The question is what about Singapore? What is our mission? Can our mission be just about survival? Because it once seemed to be just that but we have not just survived but thrived, while being mindful also that we are always just really close to losing everything we had built. The only problem is that we now have so much more to lose. So we need a mission that is not about loss-prevention, not about avoiding being a laggard (though we indeed can’t afford to be); but it is about creating a future that we actually want to live in. Because, I don’t think I want to be living in an island economy powered by lots of carbon-emitting industries, or a society stubbornly maintaining internal-combustion based engines burning fossil fuels. More significantly, I don’t think we want to live in a future where mental health continues to be a great challenge with work being so stressful and schools being so competitive and education sector being such a nightmare for young aspiring teachers. We need to reimagine and envision our advantages, resources, and strength that we can evolve and create which would make sense in 2050 or 2100 as we move towards the first century of our independence as a nation.

Mission orientation

What is your mission in this world? For me, I want to be part of creating a future we want to live in; and I’ve chosen to start in the world of sustainability and environment. This is not only because that is a ‘hot topic’ right now but because I am convinced that it is one of the greatest and trickiest problem confronting mankind.

I first learnt about global warming and carbon dioxide concentrations rising in the atmosphere when I was in secondary school. That was more than 18 years ago; and subsequently I learnt a lot more about it during Junior College days as part of my geography curriculum. This little geography topic came to the fore during my university days as I became the first official cohort for the LSE100. In that year, we actually had Nicholas Stern who published the Stern Review give us a lecture on why Climate change is such challenging problem to settle from multi-disciplinary lenses considering the politics involved, the social and economic sacrifices, etc. Apart from seeing it as a problem of coordination, I recognised it also as an opportunity for the world to work together, and for businesses to move beyond their obsession with profits and work for the society.

I probably would not have expected myself to end up taking on the role of a consultant with a strategy firm that focuses on accelerating the energy transition. What I love about my job is that I get to live out that mission – a large part of it – to be working with various organisations and stakeholders across the energy value-chain to create the future that we would like to live in. Your mission may not be lived out through your work, but it still matters that you know your mission.

First Principles

I’ve written about first principles problem-solving before and what I want to share here is why that is a superior approach to a lot of our problems. There are a lot of work in the world today that is about incremental improvements and innovation. That typically involves isolating part of the difficulty or problem and then trying to deal with it by throwing different solutions. Often, you arrive at a solution by identifying a similar problem. That sort of tinkering on the edge of development, of management by exception is responsible for the solar panel costs to have fallen so much over the last decade it could be the cheapest source of electricity in many places (provided you have enough space); and for batteries to have become energy-dense and light enough to be powering ordinary cars.

But the challenge with such approach is that it gradually accumulates a lot of legacy issues in the overall system. There are parts of the system that developed solutions for problems of the past that might have gone away or there are clunky processes and work-around designed to solve problems created by another part of a system. This is why when Elon Musk set out to create Tesla or SpaceX, he ended up actually reworking a lot of supply chains for the existing products because the original supply chains had inefficiencies made what he was aimming for impossible.

A lot of our public systems have such legacy issues because they evolved by some measure of consensus over the decades or centuries and accumulate different constituencies and stakeholder groups. Which is to say that first-principle approach to problem-solving is very critical. I certainly welcome the exercise to refresh our social compact in Singapore and hope that it can be something we build from ground zero rather than be bogged down by past legacy issues. It is heartening that Lawrence Wong is actually taking time and intellectual bandwidth to ponder some of these issues; it will take decades to translate them into action but if we all can buy into the process, it’d be worth the effort to make the translation.

Story of ammonia

The Haber Bosch process for synthesis of ammonia using atmospheric nitrogen was discovered early 20th century and subsequently scaled up into an industrial process in 1910. It was perhaps an important industrial innovation that really made a significant impact in the progress of mankind that we often overlooked.

Before the process was invented, the fertilisers that were produced relied on nitrates from niter deposits and guano (the poop of certain birds and bats). These were all short in supply globally while the demand for nitrates and ammonia increased steadily. Note that at the point of human history, the global population was somewhere around 2 billion.

To a large extent, food resources was soon going to be placing an upper limit on how far the human population could go. The artificial synthesis of ammonia enabled large scale production of fertilisers, revolutionized modern agriculture as well as chemical industry. Nitrates were important for other applications beyond fertilisers, and for a long time, ammonia was an important precursor to that chemically.

Interestingly, in the more recent times, ammonia had become interesting for the fact that it held a fair amount of hydrogen, and is a relatively stable way of holding hydrogen chemically without using carbon. Hence the talks about ammonia as a fuel. It was actually used in 1942 in Belgium when there was a shortage of diesel; engineers had discovered that they could combust ammonia with the help of mixing a small amount of coal. 80 years on from that mini experiment, we are here thinking about how to use ammonia as a fuel again – not because we’re short of hydrocarbons but because we probably over-used it.

Meaning of our jobs

There is a certain quality about the modern appreciation of the meaning of our jobs and the impact we are making in the world. Of course, we have to start by appreciating that to even bother with whether our work is meaningful is in itself a reflection of privilege. It is often because we no longer have to worry that much about bread and butter that we can ponder over whether we should take on a job at a place that makes an impact or not, rather than just deciding whether our work place has a comfortable level of air-conditioning.

But so much of that is actually in story-telling. The banker likes to think that they enable the infrastructure they are financing – just consider how UOB engaging BBC Storyworks to run ads about lighting up Myanmar. Honestly, I’d say it is the businessman who borrowed the money, pulled together the resources and built the power plant who lighted up Myanmar and created jobs. The bank that provides financing shares only part of the risks.

And depending on whether you think McDonalds is bringing happiness or destroying people’s health, you might find working there meaningful or not. Or, if you care just about bringing in the dough in the most pleasant environment, you’d prefer to work at McDonalds compared to a stall at the hawker centers in Singapore that do not have air-conditioning.

So if much of our job’s meaning is storytelling, why don’t we learn to be better at that? And more importantly, why are we not recognising how our employers are trying to define those narratives, and shouldn’t we as employees be holding them accountable to the stories they are telling?

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.