There is a collorary to our economic system in nature. It’s not considered a single subject or discipline but involves a mixture of physical geography with ecology, biology and so on. Nature is truly circular to the extent that the outputs of one system feeds into the input of another and the overall grand scheme of things is in a kind of dynamic equilibrium that eventually shifts over time.
For a while humans have mimicked nature in creating circularity in our economy. And then we gave up because it was easier to scale things up and create wastage in order to fulfill profit motives. The unequality in an economy, the more wastage is produced because production gets inevitably skewed towards satisfying a demand that is aligned more to the distribution of “means” rather than a distribution of “needs”.
Nature behaves differently because the currency of nature is multi-dimensional and rich. There is no “monetisation”; nature do not base its value on a single commodity. You can’t exchange one calorie for another easily within the diet of most animals.
Real circularity involves richness that the industrial capitalist manner of approach cannot replicate.
Singapore is going to import low-carbon electricity soon; well, technically it already has been importing these electricity through some “small pilots”. The idea of importing electricity isn’t new. For a long time, Thailand had been importing power from Laos, developing hydroelectric plants there and building transmission lines into their network.
Most regional electricity markets started out first with interconnectors to help with load balancing, which also provides for imports and export. The Nord Pool in Nordic states started out that way. And the purpose of that had always been to enhance resilience and promote regional integration.
Singapore’s case is interesting because of the focus on securing green electrons. From a GHG Protocol carbon accounting standpoint for Nationally Determined Contributions to emission reduction, the electrons that are imported are carbon-free. This is because countries only need to care about Scope 1 emissions. That is to say the electricity exporting country will need to care about their energy mix and be responsible for the carbon emitted during the power generation process.
At the country level, all imported electricity is carbon free. But for companies consuming the electricity, things can be complicated. Do they use the grid emissions factor assuming the imported electricity is carbon-free? Are retailers who purchase the import electricity able to claim the power is carbon-free?
Because of these controversies, Singapore took the clear path of requiring the power imported to be from low-carbon sources / renewable sources. So hydroelectricity qualifies, and so does solar and wind. The challenging layer that Singapore added to the electricity importers is for the power to be firm; ie. the solar power cannot be just supplied in the day when the sun is shinning. The message is that we want green electricity but not the intermittency that comes with it. Nevertheless, managing the intermittency will come down to the importer rather than the exporter since the requirement comes from Singapore.
I do wonder if this whole musical chairs around who should own the cost or benefit to the matter of carbon emissions a big distraction from the world’s attempt to reduce carbon emissions though. If Singapore could simply develop more projects overseas and secure the relevant credits from other countries on a government-to-government basis, we could still create new instruments that could help to release more supply of green energy for companies in Singapore to meet their obligations.
At some point we need to cut through the whole posturing, learn to be strategic together as Team World and work on the problem of climate change together.
Singapore Airlines is trying to switch their in-flight dining serviceware to paper rather than the current single-use plastic and met with accusation of attempting to cut costs. There is an issue also of sacrificing in-flight experience of customers for the sake of costs despite profits.
There are a few dimensions to consider in the debate and wider issues around the consumerist culture and system we have created. For the longest time, it pays off for companies to upsell: by providing better materials, packaging, a little more space and convenience, they can sell at higher price than it costs them to deliver the service or product. In fact sometimes they spend additional costs to cheapen the alternative because encouraging you to consume more and creating the cheaper alternative simultaneously enhance their customer base without cannibalising on some of their profits.
But as we step into a world where sustainability matters increasingly, these values and strategies we used to leverage on becomes more complex. We no longer just trade off customer experience, price and the costs of providing that experience. Now we have to consider how much being sustainable adds or subtracts that experience, how perceptions will be reshaped. And how important this is, for our culture to shift towards more sustainable consumption.
When dealing with a global issue with local variations of a problem and the need to change culture the way we are trying to do with climate change, there are important lessons we can learn about curbing smoking, especially here in Singapore.
Before we go there however, I want to first envision a state of the world where carbon emissions become more like stigmatised like smoking. Carbon-emitting industries would be like the cousin or uncle we have who is our relative and we can’t quite shake off but still be puffing away, causing our clothes to smell and our lungs to be polluted. We would want them to smoke far from us but they will inevitably bring that odour and whiff of smoke, and also ash back to us.
As employers, we would have competent workers who are smokers – and while we know that they might be taking smoke breaks, we still need to keep them as they are largely productive. So they will continue to exist, but we can treat them a little badly to nudge them to reduce their carbon emissions. Currently, we’re definitely not doing enough.
Some ideas on how to treat the carbon-intense companies/industries like smokers:
Labels could be slapped on all of the products and service invoices of these companies – imagine going down the aisle of supermarkets and seeing these labels on the fresh beef packaging.
These industries could be made to situate together (maybe within a yellow box); and if they are not in that given zone, they cannot run processes that emits carbon dioxide above certain threshold.
Tax them based on escalating, progressive carbon tax rates; this is above
These companies are not allowed to emit carbon dioxide until they registered their business in the jurisdiction and operated for at least 21 years.
So consider if we are doing enough for climate change; compared to public health. Both concerns survival of a nation, of the entire mankind.
We spend a lot of time thinking about emission reduction. And it is all based on considering the existing state of affairs and how to move ahead from here. So we often consider how a process can be optimised to use less energy, or to use alternative materials. So a decarbonisation roadmap plays an important role in considering an existing business and how carbon emissions can be gradually eliminated from the workings of the business to transit it towards a low-carbon economy.
But just as important is how we can envision a new business to perform exactly the functions of an existing business but with zero carbon emissions. It is no longer about mapping or developing emissions baselines but rethinking how the same process can be achieved without emitting as much carbon. It is rethinking processes altogether. Heck, it might even involve rethinking products.
Major oil & gas companies are now refashioning themselves as provider of energy, competing with their customers who are power generators. Or they can think of continuing to supply the electricity generation players by going into mining and extracting of minerals and metals that are needed for wind turbines and solar panels. Or they could reconsider that they are actually logistics players ferrying molecules around and look into dealing more with chemicals transport. They could even consider themselves producers or inventors of new materials.
This exercise can be repeated for other industries and we could potentially have very interesting outcomes.
The first makes assumptions explicit. The second hides the assumptions and takes them for granted.
In my work as a strategy consultant, I make extensive use of scenarios, and often we might not consider the likelihood of scenarios while constructing them. It matters because it helps us to immerse ourselves into a reality such that our construction of the reality is not affected by how likely we think it would be. It is more important to be able to extensively work our the implications of our assumptions at that stage.
Only after the scenario modelling is complete, it makes sense to step back and examine the assumptions, perform sensitivity analysis and consider how the outcomes are sensitive to some of the assumptions.
And then what? Then we consider likelihoods of those assumptions manifesting.
What does additionality mean? There’s this idea that the activity needs to add on something to the existing context. This is a big matter in the case of renewable energies as people are speaking against carbon credits or renewable energy certificates that are actually not adding more renewable energy or removing carbon emissions from the atmosphere.
We are trying to create a system where incentives themselves are not blunted or abused. If for example, we introduce incentives to reduce rat infestation by rewarding those who catch rats, then you risk the abuse where people are breeding rats to be killed and submitted for incentives. The result of this unintended condition is that people are taking actions that may be contrary to what the original intent of the incentives were.
The world is trying to shift towards a low carbon world. Incentives ought to be rejigged and aligned towards reducing carbon emissions. Yet if we allow abuses and undermine the credibility of emission reductions, we’re hurting ourselves. If forest land owners are suddenly making new revenue streams for trees they are already protecting, it might be a problem that there is no additionality for the new carbon assets.
We should only be incentivising activities that will reduce the world’s carbon emissions. Or increasing its sequestration. The problem is that is hard to measure and align standards of what really counts.
One of the most power tools that economics have brought to the world is cost-benefit analysis and really assessing what is the constitution of cost or benefits at various levels: individuals, firms, regional government, national government, countries.
Where it fails is the ability to properly ascribe who cares about what. The assumption around rational, selfish agents cannot possibly hold in reality. On the other hand, there is radical inconsistencies when you perform such optimisation on behalf of “government” which is staffed by human agents and with politicians have their own agenda. Over the years, these poor assumptions have made room for more colourful, richer analysis of agents, decision-making units at different levels.
Now if we move our attention to the dimension of time rather than perspective of our agents, we realise another issue. We can assess somehow the cost and benefits of today if we use our imaginations but to stretch it to the future would require even more manipulations. And the uncertainty make render the exercise less fruitful than one may expect.
Alas, we continue to use these tools expecting them to work while not having proper assessment of whether they work or not when the outcomes play out in reality. It is not the issue of calculating those figures but how we incorporate them into our judgment that matters. Yet with limited budgets and resources, most have chosen to opt for a semblance of the exercise, paying a smaller cost but getting almost none of the benefits.
Following my observations on Google’s mutated identity, there’s more news of the company’s “decay”. The focus here this time is something else; about the shift in the company culture that results in a bureacracy that plays it safe. There’s a common strand around the fact that Google has changed. And part of the change involves becoming removed from the needs of the user and a bit less grounded on realities.
Indeed, reality is about what the market wants when your company is small and just leading parts of a large market – usually a small part. Yet when a company grows, the insides of the company and the decisions of the management often can be more real than the user. In fact, your boss is likely going to have way more influence over your fate than the users have over the fate of the company. At least in the short term.
So should we have a cultural metric that is about how much a company revolves around serving the user? Maybe. But it is only possible from the top-down. The management have to model and lead that. Yet the management is usually selected by shareholders and at some point when the company grows big. At some point, the short term interests of the shareholders can conflict with that of the user. Moreover, the business model of Internet companies like Google is “ads” – which means users don’t even contribute directly to the revenues of the company!
It can be pretty hard for me not to think about energy. It probably has to do with my job but the topic itself is fascinating. In some sense, ‘energy’ could be a subject itself that draws on science, mathematics, economics, engineering, law and many more disciplines to help us make sense of it. While we learn a lot about it in science, most of those fundamentals just remain where they are in our minds and do not connect with the wonders of modern technology and everything that we are so immersed in.
Electricity of course is the most fascinating of it all. It is the energy form that we have been able to manipulate with great precision and even enable energy to take on so much more new roles in life that it would not have been conceived to take on centuries ago even when electricity was first discovered. Electricity of course is a form of energy manifesting and needs to have various mediums, and the best carrier of electricity remains to be chemical batteries.
There are many other energy carriers as well and typically these are fuels; they are released through combustion. That produces heat energy which then can be transformed into kinetic energy, and in turn that tends to be then transformed into electrical energy with appropriate mechanisms such as some kind of motor and generator.
Carriers of energy are themselves interesting and fascinating because there are losses that results from going through the carriers and the various different forms of them. They also come in different forms, shapes and stability, influencing their functionality. Coal is a solid fuel; oils are liquid while natural gas is gaseous. Their state allows them to be conveyed differently and also affects the cost of transporting them.
Last century, the world was afraid of running out of them. Because they are commonly known as non-renewable energy. We use them faster than we can replenish them. Fossil fuels are created through millions of years. This century however, we begin to realise we will end up changing the climate of the world even before we run out of fossil fuel so we’re in a race to phase it out as quickly as we can. Alright it isn’t actually a race because many countries, organisations, assets are stubbornly using it.
But the point of this piece here is to help us recognise that fossil fuel does not have the monopoly in carrying energy and there can be more ways for us to obtain and use energy. Ways that can lead to sustainability and circularity in the world.
