Energy Nerd | Circular Economist
“We need to collaborate across the value chain….”
“We need partnerships to drive the….”
*Repeats an entire press release of a corporate/government announcement*
“Regulations need to catch up with the market…”
“Markets will only respond with the right incentives….”
“We can all play our part…”
When I watched Secondary the Musical last year by Checkpoint Theatre, there was so much that resonated with me, with the teachers around me about the Singapore education system. It stirred me to feel something about teachers, students, inequality, and even though there was something moving about the end where the teacher chose to stay and continue to live her passion for teaching, I could not but feel a sense of unease for the character.
I had thought and understood that this was what art was to do for us. And this was why there was such a time when the artists seemed as though they were critical of government all the time. Artists’ role in society is ultimately to bring out the subjects, topics and matters worth the attention of society. They could be overlooked groups in society, or matters that still need to be deliberated and discussed, rather than considered a “sacred cow”.
Arts is also a way to cry out in a deeply human way the causes that are worth attention not because of commercial numbers or tangible metrics but that they touches deeper aspect of being human. Whether it is our relationship with nature, or heritage and history, minority culture, there are just things that our marketised, industrialised modernity do not capture though we as humans ought to.
The place of the arts is also for aesthetics and beauty, but one that has identity and soul in the society from which it blossoms. Yet what is the business model for the arts? In a capitalistic society, what are we to do to feed our artists? Whose responsibility is it to ensure they are not exploited by commercial interests to support unworthy causes? What alternative systems are available to fund, to protect them?
I listened to a couple of episodes of the Founders podcast, and also to a few episodes of The Knowledge Project podcast where Shane talks about the stories of different business leaders, founders and icons. There are some hallmark traits that recur in some of these people that I find are difficult to exists in many cultures and societies, and particularly challenging in Singapore.
And I particularly wonder if Singapore as a culture really celebrate the attributes that will really allow us to accommodate and nurture the sort of personality who will build the next unicorn or silent business giant that dominates entire sectors quietly. Or maybe Singapoeans are just going to be the sort of people who goes out to build the dreams of someone else who have taken the risks and put together that safe structure for them to navigate within and expend their energy and life into that other dream.
Honestly, I think it matters for us to learn to dream and to make mistakes on our way to getting there. The way our education system and culture are structured to accentuate mistaken avoidance rather than cultivate mistake management. The latter, I believe, is more important than the former, but never quite gets celebrated in our sensitivity, thin-skinned, conflict-avoidant culture here in Singapore.
In DBS’ latest report projecting the growth for Singapore up to 2040, they noted that a “culture of risk-taking” will be needed for the next phase of growth. What is going to drive that, I’m still unsure.
Is job creation the responsibility of the government or businesses/entrepreneurs?
Sure, most governments in capitalistic democracies work hard to reduce red tape, improve ease of doing business and provide all kinds of support to businesses. But can policies to create jobs end up crowding out the private sector activities that create jobs, perhaps even undermining the private sector activities?
For example, when EDB in Singapore attracts MNCs that comes into Singapore and starts hiring, providing good and stable jobs, do they end up disincentivising prospective entrepreneurs from starting their own business? Do they also bid up the cost of strong junior hires for the local companies that need them more? Do the companies that comes into the Singapore market compete out local firms who may have been able to perform the same services in the local economy?
Is there a risk that existing investments in the market hold-hostage our domestic policies? Take, for example, the oil & gas industry in Singapore; do its presence slow down our climate policy? Would the fact that government is busy attracting companies and making things smoother for them cause them to compete more effectively with other local companies who may not have that same support from our own government?
Just bringing up the questions worth pondering over. I’ve no answers but I think it’s worth actually looking into actual data and finding ways to understand some of the answers to these questions I’ve raised.
I sat down and listened to the National Day Rally speech with a break in between. In terms of delivery and finding the stories to tell, I’d say Lawrence Wong did well. He also positioned the 4G team well, and to a large extent, it almost feels like political campaigning. The election results this year have shown a good amount of trust in the PAP government and reduced tolerance for weak opposition candidates. So I’d expect that the ruling government would lead confidently and start working on rolling out a vision.
I think the elements of vision involve more of the old playbook, unfortunately: another committee to work on the economy, more new towns and spaces earmarked to be developed, and then programme funding or tweaks to support Singaporeans, in terms of reskilling or upskilling.
There’s this common thread that Lawrence Wong seem to have been emphasizing, but I’m not sure I observe much of it on the ground. He seems to be recognising that general sense that the government had been dominating decision-making, and so there are generally more attempts to involve the people, to gather feedback, or to listen in. If that was his diagnosis about the sentiments, it is correct. It is not something to be ‘fixed’ overnight however. And it will take time to create a culture where people contribute responsibly to policy-making, and to concern themselves with the needs of the wider society.
Over the years in Singapore, there had been more individualistic attitude – because the government’s approach to just about everything involves sticks or carrots, more often than not, there’s this general attitude of ‘what’s in it for me?’ From the NDR speech, I can see Lawrence Wong urging less of that individualistic attitude, more of the ‘we’, but I wonder what are some behaviours that the government or the civil service can lead with, in order to foster and encourage that.
I’ve been fighting against the prevailing culture for the past decade of my career. And for those who blame things on culture and act like it cannot be changed, they are being delusional. I have a few examples to show:
While it takes time, culture can be changed. It also takes identifying some loose bricks in the existing edifice to overhaul the structure of our prevailing culture. Energy transition is one tough one to crack, but that said, our region in Southeast Asia has already moved quite a bit from the days of coal-fired power generation. Yes there was a bit of attempts to catch on with the hype around hydrogen but the dollars and sense prevailed at least for now.
So I’ve been toying with the idea of doing a lot more content to teach all of us about energy transition and to be able to learn together. There is a whole lot of de-stigmatising, trying things out, and unlearning our previous biases to be able to move the culture a bit and accelerate the transition. There’s a question of format, level of engagement, how to manage and nurture a community and so on. I guess I’ll have to dive in head first.
Having worked in consulting across cultures, I have begun to recognise some cultural behaviours when buying consulting across different countries and the attitudes towards consultants. Having advisors is nothing new; the monarchs of ancient times have had advisors to support them for as long as they existed. These advisors offered more than just advice, insights or knowledge that leaders did not possess (or did not think they possessed).
They offered assurances when it was scarce. Soothsaying, contrary to what people might think, actually means telling the truth; with ‘sooth’ being an old English term that meant truth, as opposed to ‘soothe’, which means to calm. And the advisors also provided perspectives that during times of wiser monarchs, could contradict the conventional wisdom or call out the folly of the leaders.
So if we distil it down to the value that consultants provide today:
I begin to recognise that Asian firms especially with rather paternalistic leadership tend not to use consultants the way the West use them. So for example, when it comes to knowledge, the Western clients may appreciate specific subject matter expertise that comes through years of experience and in-depth research. In contrast, Eastern clients may value knowledge of implicit/unwritten local rules and norms rather than expertise in a more technical subject. The more institutionalisable the knowledge set is, the less likely an Eastern client would appreciate it as worth paying for.
Western clients see assurances from consultants as important while Eastern clients prefer to take the risks of not having check through things by themselves. This might have something to do with the way trust is formed. In Asian societies where getting things verified can be read as a sign of mistrust, it is challenging to value such independent checks and perspectives. The very deed of using independent validation can almost be an insult.
Finally, when it comes to having a sparing partner, the typical harmony-loving, and conflict-avoidant Asian culture would really struggle with the idea of paying someone to challenge you. In fact, leaders might instead assert the power of their wealth/influence over people so that they would not be questioned.
In this sense, Asian cultures tend towards getting advisors who can provide knowledge that is undocumented and unavailable in the public domain, and are often independent individuals with the specific gifts of being able to reveal ‘truth’ to the client. They also prefer that the knowledge advisors gain about the client cannot be easily disseminated. And as far as possible, they only care about knowledge that cannot be institutionalised.
This means that it is incredibly challenging for most professional, western-chain consultants to survive solely from serving a pool of Asian clients. If anything, they usually have to ‘survive’ off the big multi-nationals who are growing into new, and perhaps opaque markets, or needing more capacity support. In other words, consulting has grown out of an increasingly international market, yet not overly uncertain because surely some stability is necessary for consultants to be deemed to have accumulated enough lessons and experience to share.
Random musings as I continue to build up my knowledge and capability of managing a consulting practice.
I am a Singaporean. And one aspect about Singapore highlighted by many stories of its growth and early leaders is the notion of pragmatism. Yet I feel that this notion probably has been overplayed.
Pragmatism is used to suggest that the ends justify the means. Now within the context of school, it could mean that you can get your grades by rote memorisation as opposed to genuine learning. Or that you could simply find the right answer to copy than to solve a problem yourself on an assignment.
Same goes for the worker at work – just find the answer, don’t bother solving the problem. This may mean finding out how it was done before; or to figure out what others who had the same problem was doing. One could argue those are problem-solving heuristics. Maybe. But I call those “answer-finding”.
As a consultant, I cannot help but recall clients who are asking, “but have you done this same thing before with another client or somewhere else?” This is answer-finding, not problem-solving.
The Singapore today needs trail-blazers and problem-solvers; as it always had. But decades of overemphasizing pragmatism means we prefer to pay for answers than purchase problem-solving capacity. We desperately need to shift this culture and move towards real problem-solving than answer-finding.
Some interesting announcements and updates were coming out of Ecosperity last week. Most of them oriented around financing of the transition. This is an important topic considering that a lot of our existing economic system is locked into high carbon intensity systems because of financial incentives. Being able to change the incentives can help adoption of more emission-reduction measures.
Transition credits
Launched in 2023, a coalition of players were studying the use and deployment of transition credits. Verra also started working on a proper methodology to account for the carbon emission reductions from transition; and they launched it last week. Since the initial MAS announcement, the Acen Coal-fired power plant in the Philippines have become a candidate for a project that will issue transition credits in exchange for shortening the project’s tenure. And Mitsubishi also announced joining the team of firms taking a stake in the consortium that will generate the transition credits. The idea is that the consortium could then sell off the transition credits to players in Singapore who can then offset the carbon taxes; and there is hope to do the same for Japan.
I believe there is interest for these players to also participate in developing more renewable energy projects in the Philippines to help make up for the shortfall of power generation. After all, the article linked above quoted Rockerfeller Foundation that the shortfall will require “1,000MW of solar, 250MW of wind, and 1,000MW of battery energy storage”. Not sure if it comes as a surprise to all, but because of resource availability, solar and wind farms are not ‘always-on’. They only generate a fraction of their nameplate capacities most of the time, which means a lot more capacities must be built to produce the same amount of gross energy. Energy storage is needed to help time-shift the energy to when required.
WEF-GenZero aviation initiative
Launched as ‘Green Fuel Forward’ – it is a capacity-building initiative that is aimed at drawing in airlines, refiners, logistics companies, banks and others. I think the idea of building up capacity to deal with the entire SAF ecosystem is useful. Aviation decarbonisation over the next few decades disproportionately depends on SAF. It is good that the global aviation industry have more or less settled on this particular decarbonisation pathway and is developing various tools to be able to adopt it.
More than just using a different fuel, it involves getting customers to share in the higher cost of the fuel. How to do so is the issue; and all the airlines are afraid of the ticket pricing affecting their competitive position. Different approaches to distributing the emission reduction costs have been mooted: (1) some like the idea of a corporate decarbonisation programme where partners are gathered together and somehow agree to some formula to share the cost of the low-carbon fuel premium; (2) others think we could convert the emission reductions into some kind of credits to be sold to freighters or passengers who are on board those flights. Those methods involve using airlines as the market-maker for emissions reduction.
The customers of airlines especially the corporate players will need to determine their strategy when it comes to flight carbon emission abatement, as well as the budget they can allot to it. For now, corporate probably have some kind of trip budget – they might have to scale it down based on the SAF prices they are expecting. The airlines themselves will have to develop their own strategy of allocating the cost of SAF to passengers or corporate customers. And of course they can then issue or bundle the SAF-credits (SAF-C) accordingly.
As stated in the ST article on this initiative, each SAF-C means a reduction of 2.5-2.8 tonnes of carbon emissions. Assuming that each SAF-C is priced exactly equals to the premium that airlines pay for SAF above their conventional jet fuel, you’re looking at about US$1000-1,600 for each SAF-C. Now in comparison, a typical carbon credit (representing 1 tonne of carbon dioxide abatement) out in the market is selling at around US$3-4; or if it’s CORSIA-eligible, maybe US$20? So corporates are going to have quite some difficulty working out what is worth paying for SAF-C if you were supposing there was going to be some kind of market and price-discovery for those credits. Does it mean the airlines will have to pass on the rest of the cost shortfall to other customers? Then why do only the SAF-C buyers get to claim the reductions?
A lot of capacity-building will be needed and a proper vision for the workings of the ecosystem worked out.
Singapore government’s clean energy fund
There was yet another announcement about US$500m fund that Singapore government is going to deploy for green projects in the region, as part of the new ‘office’ that MAS is going to set up (named FAST-P). That’s actually going to be really interesting though the news was very scarce on details. I suppose they just wanted to announce some parameters they have decided during Ecosperity week while many other things are still being worked on.
We know there will be 3 pillars: (1) accelerating the energy transition away from fossil fuels to clean energy, (2) ramping up green investments, and (3) decarbonising emissions-intensive sectors like cement and steel production. I suppose the first pillar might relate to the transition credits mentioned earlier. The FAST-P office will probably be spending more efforts for (2) because that will be a lot more complex and require someone to drive or coordinate across different parties. It is not clear how (3) can be done when those sectors are likely the beneficiaries themselves either through energy efficiency investments or fuel/electricity substitution.
Having been involved in the set-up of Infrastructure Asia some 7 years ago, I am fully aware of how much effort behind the scenes just to get the resources together, not to mention the actual work of setting up the office. The work to be done by the office is really to identify the activities where it is worthwhile helping to reduce the riskiness of other financiers or funder. The metric would probably be more impact driven though for the sake of Singapore’s economy, it would be necessary to require anchoring some activities out of Singapore.
I think it’s really great to see how the various entities within the Singapore government or related organs (and I’m almost definitely stretching that by implying platforms like Genzero, which is part of Temasek, and some of those Singapore firms dealing in transition credits) are trying to tackle the issue of the transition, not just for Singapore but for the region.
So it’s general elections season. It’s really interesting how this general election gives a great sense of a maturing democracy where more capable candidates are stepping forward, and emphasising the need to provide diversity of voices in the parliament. Peers of mine are stepping forward as candidates. I’m seeing even young independent candidates like Darryl Lo stepping forward.
The features of the Westminster Parliamentary system that Singapore inherited create a strong government because of the ‘first-past-the-post’ approach to voting. While the governing party can somehow gerrymander to optimise their support across constituencies, there is a natural limit to that as their vote share decreases.
The other feature is that the system calls non-ruling parties the ‘opposition’. It is perhaps a result of the typical debate terminology where they talk about proposition and opposition. As our democracy matures, we begin to see what it means more and more to be a loyal opposition, and not be misled by this somewhat ‘confrontational’ sense of the term.
Even as the country faces uncertainty from the global situation, this general election thus far fills me with a sense that Singapore is really ‘coming to age’ as a country that is learning to deal with challenges. Looking at the MPs coming from different walks of life and at a broader range of socio-economic backgrounds (at least from my perception), there is more a sense of ordinary people trying to make a difference in the society they live in, recognising it is no longer enough to slog for their own personal lives and expect the society to develop desirably.