Tag Archives: politics

Waste management complexities

Since starting my career in the environmental sector more than 10 years ago, I’ve been dealing with waste management issues. Frankly, the circular economy wasn’t spoken of yet. And in any case, a lot of the waste generated cannot be recycled. The fact is that we never even quite gone into the first ‘R’ of the three ‘R’s yet.

Singapore waste disposal figures
Total waste generated and disposed in Singapore (tonnes per annum), Source: NEA Statistics

The thing is, as the country’s population grew and economic activities multiplied, waste growth continued. There was probably a dip in terms of per capita waste generation, but the overall amount of waste we were disposing of grew even if the gross waste generation didn’t quite reach the ‘peak’ we had in 2017.

Our ability to manage this waste is important and it is largely because we’ve been able to get rid of them and maintain the cleanliness of our city, and not burden our businesses with the excessive waste that we have been able to keep up with our economic growth and remained an attractive destination for business, and economic activities. These are, of course, the positive externalities of having a robust waste management programme.

Yet waste is a complicated matter; the fact that waste management produces a positive externality doesn’t necessarily mean that we need to have more of it because that is usually based on the amount of waste that needs to be managed. On the other hand, when you subsidise the management activity, there is a risk that you’re undercharging the people generating the waste, which is the source of the problem in the first place. That brings us beyond the territories of your traditional economic externality analysis.

So, it becomes a political issue. And there’s even a question of willingness to pay, not in the traditional sense that people will not do it anymore. It is about how much you can keep charging the people without losing political support and risking losing votes. This is why public policy surrounding waste is complex, and you can’t leave it to a technocratic government to solve such a problem. You can employ some of the technocratic arguments to help you get some buy-in, but you’d likely need to deploy more tactics than that.

Analysing externalities

In public finance, there are multiple approaches to determining how to use the public budget. There will always be the standard expenditures that will have to be costed in, the overheads to cover the public service.

Then there are past liabilities that will need to be paid for. But then, each time, the government can make a decision whether those liabilities are still worth their while to continue financing.

After which, we determine the infrastructure and other investments essential for development of the society. When it comes to investing into infrastructure, the government will definitely need to meet needs, but they might have to ask themselves what kind of social benefits are generated in order to work out whether the price tag for fulfilling those needs make sense.

This is the realm of externalities. And the reason we care about that is because the free market would not. If private benefits exceed private costs, then the free market will find its own means of fulfilling those needs. When there are externalities, the government has to step in. From a business point of view, where there are negative externalities, it is a revenue-opportunity for the government. And where there are positive externalities, the ruling political party can get some political mileage out of it.

Such is the interaction across politics and economics that is worth a bit more attention.

The corporation

The faceless corporate had been painted as the enemy of man in popular culture and broader artistic endeavour. The idea is haunting. Some kind of machinery driving its machinations through its cogs and gears to achieve some broad vague goal that sounds appealing in concept but nefarious in practice.

Of course, the reality is that it is not just the corporate that can behave and seem this way. There is the bureacracy that is a manifestation if a “government” or even a non-profit. There is also loose organisations centered on single-dimensional stuff (hobbies, interest groups, certain kind of political activism, etc).

The point is this idea of a “corporate” or some kind of machinery is anti-thetical to being human. Why would that be so? Here’s the tricky part.

We are all complex and multi-dimensional that in creating singular objectives or goals and trying to relentlessly pursue them reduces us to something less than human. And those “big entities” essentially embody this limited dimensionality compared to what life really is. Same goes with money, when we make everything in business about that. We reduce richness with riches. What a shame.

We don’t have to be anti-corporate. But we probably would do better to understand why its reach should not be all-extending.

Solving the right problems

One of the greatest challenges confronting our modern world is the sense that when there is a solution for something, the idea that we didn’t apply it indicates a lack of responsibility or some kind of mistake on the part of a human. The fact a surgeon could have healed someone but failed to puts the blame on the surgeon even when the chance of success is probabilistic. Of course, some things require a lot of resources to achieve even when they are feasible, so that doesn’t mean that the feasibility of a solution isn’t the only parameter to determine whether it should be applied or not.

Yet somehow at the back of our minds, if we didn’t apply it, that seem to imply we did not try hard enough or do our best. The issue is that with limited resources, you probably can’t ‘do your best’ in everything. There’s only this much you can give. This applies even to the government, whether it is taken from the budget perspective or the use of manpower.

And for a small country with a lean government like Singapore, solving for the ‘which problem’ to tackle is perhaps increasingly important as there will always be some fringe issues that you can deal with to make yourself look as though you’re doing your job when you’re not making any progress. The recent cigar dish case seems like one of those situation where it is probably not significant enough to escalate to higher (or more mature) decision-makers while seeming to have that easy solution of ‘order them to remove it’. We have a limited attention span available for our public servants, especially those handling frontline issues.

Non-profit organisations

We can organise our economy in very different ways, and even as the free market and the idea of capitalism reign, there can be different extents to which goods and services are produced and supplied to the end consumers. The non-profit organisation can serve as a way to coordinate activity that delivers real economic results in the form of goods and services.

I think we have overlooked the ability of such a form of economic organisation to do more for the world. The advantage of a non-profit that it explicitly pursues resources specifically for a cause. It doesn’t mean it will squander resources inefficiently, but the stated purpose of it, is to generate the impact or advance towards the mission. Ironically, some of the more profitable companies in the world can tend to make claims that are similar to non-profit in terms of the contribution it brings to society.

And since non-profits often have to deliver results in exchange for funding, or to unlock pre-committed funding, they will learn to optimise their budget and utilise resources optimised to deliver some of the results or at least provide inputs to the causes they are trying to champion. The funding portion of non-profits may be different but the way it should be ran operationally is probably not so different from a typical company, with the exception it may not be able to use the usual incentives for its staff (in those circles, they sometimes call it a passion tax).

Yet perhaps more forms of organisations should be acting as non-profits. For example, banks should potentially operate without profits, with the key objective of optimising risks in the system while providing access to credit for organisations and people. In fact, I think that all financial institutions, even those providing payment solutions probably should have limitations placed on their profits because ultimately, it is the real economy that they are trying to drive and allowing them to extract too much from the real economy can hinder the more fundamental process of capital allocation – which is what we are already seeing. Everyone needs to contribute to the real economy and finance in particular, has become the tail wagging the dog, in name of the pursuit of profit. That is a shame.

Geopolitics-driven transition

There is increasing acknowledgement of China’s leadership in a huge range of technologies around the energy transition and yet the struggle is that a lot of narratives in the Anglo-saxon world seem to be rather negative about this whenever the conversation on economics of equipment starts talking about using Chinese products.

I’m not sure if trying to re-invent the Chinese leadership in the technologies should be a key priority. Isn’t it the typical ‘western’ idea of trade that every country can develop their comparative advantage and should stick to it? One of the huge comparative advantage that the west has lies in taking seriously very preliminary, immature and ill-formed ideas and persistently exploring, improving, refining them until they are good enough for the market. At that point, the Asian economies with its ability to scale up further and drive costs down takes over those hardware aspects and this allows for prosperity and mutual gains.

The innovations in business model, technology and regulations that are needed probably will proceed the same way. Geopolitics can seem to drive the climate transition at times (such as putting a price on carbon, regulating flow of goods based on carbon content, enforcing carbon disclosures for companies, etc.), but they could also drive things in another way. When America or Europe puts tariffs on China batteries and other technologies, it can set back more advanced technologies that their local ecosystems are trying to build on top of solar, or batteries.

The truth is, more developed markets with more firms in the ‘traditional’ industrial sectors will definitely have to deal with some can of stasis introduced by incumbents lobbying, the inertia from having to restructure the economy, whereas the newer and up-and-coming markets have less to lose, or less industries to cannibalise when they are trying to develop their own industries. China’s advantage of leapfrogging some of the fossil fuels and moving straight from coal to renewables is simply something more fundamental.

The question as a global society is how we can lean on the strengths of different countries to deal with this global climate problem. Geopolitics and global competition can sometimes help. But not when competition turn towards having to re-invent the wheel.

Carbon pricing

I’ve written about carbon credits (here and here); but I never really quite considered them from the perspective of carbon tax, because I generally thought of it as just another instrument that is used to price carbon. In reality, the different mechanisms actually work differently. And even for ‘carbon markets’, where you allow trading (which can take the form of credits or allowances, again slightly different conceptually), the carbon price can take on different meanings depending on the underlying instrument in question.

Singapore’s carbon tax system introduced the idea of allowing carbon credits to ‘offset’ these taxes. And the carbon credits are essentially international carbon credits generated from projects that removes or mitigates emissions in one way or another. This is not new as some other markets have allowed the use of offsets to reduce ETS liabilities (eg. Korea). In Singapore, companies who wish to do so can only have 5% of their carbon tax exposure offset using eligible carbon credits; and there are clear specifications of what works and what doesn’t.

This marriage of carbon taxes and pricing with the generation of quality international carbon credits is something critical to bring the next step of carbon pricing to maturity. Global ‘carbon resources’ in the form of means of removal and sequestration is not uniform, even when we are all sharing the same atmosphere. It is therefore necessary to be able to trade carbon. Technically, because there is negligible transport cost when you ‘trade’ carbon, global pricing of carbon should eventually converge to the same levels. It is potentially as close as it gets to a good that can be pure commodity. Yet because of the whole issue around measurement integrity and the lack of consensus around some of the dodgier types of carbon credit methods, it is going to be very difficult for pricing to converge any time soon. The variations globally in regulating carbon emissions and putting a price on carbon emissions would also serve to slow down global carbon trade.

At the end of the day, there are wider geopolitical and economic considerations blocking stronger climate action. Working along these forces will be necessary since fighting them is rarely an option.

Single pivot point

To make a change, we need a single pivot point each time. The pivot point is where things are fixed in place and do not change, and all the other changes hinge on it. And then when we make the next change, we can have another pivot point. But with any one change, we need to select a point of invariance to ensure some kind of order for the change.

In our climate transition today, too many people are trying to change things without a pivot point, thinking that the whole world has to transform. Determining what can be kept constant first is probably a good way to use consensus to drive actions. Then you’ll begin to realise what you are trying to keep the same can have far reaching consequences. For example, if you want to keep energy demand constant and start switching out existing demand into renewables, then you’re making it difficult for economic activities to expand. If you want to keep energy cost constant, then you risk keeping things to status quo and banishing adoption of costlier but greener technologies.

Laying out the trade-offs matter but one can consider how we fix certain parameters and move others first before coming back to revisit these. Take energy costs for example; given the cost of living issues and challenges, governments might want to focus on expanding proven, existing low cost green energy sources and pushing through all manner of regulations, and coordination necessary. Capture of landfill gas to be upgraded into biomethane and upgrading the biogas produced in wastewater treatment plants are low-cost sources of renewable gas that can be plugged into the existing system to displace fossil fuels. Malabar’s biomethane injection plant has just received the Greenpower certification and is the first biomethane plant in Australia to do so, ushering in what we hope to see as an era of using market mechanisms to drive renewable gas and fuel growth as it had done so for renewable electricity in the past decade in Australia.

Some may argue that prolongs the life of fossil infrastructure but we are calling them fossil infrastructure only because they are majority driven by fossil fuels as a result of legacy. One day, those infrastructure could be 100% driving renewable fuels.

Gas in households

When corporates purchase carbon credits and try to ‘offset’ their emissions, environmental groups would accuse them of greenwashing and to a certain extent, tokenism. Yet when Victoria state government bans gas in new homes from 2024, environmental groups were pleased and herald it as some degree or progress and victory.

It is easy to pass this off as a big move. Developers of new homes may have more planning restrictions. Those buying new homes will need to stop using gas. Gas demand growth from households will slow down but gas use in homes are a really tiny fraction of 17% contribution to the state’s emissions by the gas sector.

At the system level, Victoria’s grid emission factor in 2022 is actually such that it emits 4.6 times more carbon dioxide equivalent than combusting piped gas for an equivalent amount of energy. You can easily work that out by consulting the greenhouse emission factors published each year. Of course, I’m probably ignoring some of the emissions associated with the distribution part of things and also with fugitives. The reason for this big difference is the presence of coal-fired power plants on Victoria’s grid. In any case, all renewable energy injected into the grid from wind and solar will be used. Coal-fired power plants provide the baseload and gas-fired power plants usually absorb the additional load demand. What this means is that during the times (early morning or in the evenings) when you’re using electricity for heating or cooking in households, it is quite likely you’re consuming more gas fired power than solar power (whose generation peak in the mid-day).

There are questions on the efficiency of the whole process. Burning gas at power plants and converting them to electricity will result in some energy loss, and then using the electricity to convert it back to heat will mean a bit more losses (less than at the power plant of course); so heat applications for electricity isn’t all that efficient.

And then there is the question of energy bills. Whether you are consuming gas directly in the house or indirectly through electricity in the system, you are going to bear the cost of the gas that is consumed. In Australia, a large proportion of the cost of energy isn’t really in the energy itself but the share of cost that goes into infrastructure, especially that of distribution. Going full electric in households serves to help decarbonise the system only when the renewable electricity is supplied during the times when household’s demand peak. For solar, this is unlikely to be the case unless the household installs its own battery system to charge when solar generation is peak in mid-day. Batteries, additional distribution network assets to cater to peak renewable generation, are all infrastructure that will add to the cost of electricity.

So let us be honest about it: banning gas in residential use is unlikely to move the needle much in terms of decarbonisation in the electricity system right now. At least not all that much in Victoria. It is going to push the problem upstream where it can potentially be managed better. But a lot more actions will have to be taken. Would it improve indoor air quality for homes? Maybe, if your house is not properly ventilated but I doubt it is a very serious issue. Would it really reduce energy bills across the household? Quite unlikely. What it could accomplish is some degree of tokenism to pacify the groups of people who thinks it is a good idea.

Yet it is probably a setback for decarbonisation because we are narrowing ourselves to decarbonise by using a narrow set of technologies and forgetting about the ability to decarbonise gas through biomethane.

Among us

There are imposters around us; they pretend to be doing their work but are actually creating problems for their coworkers to solve. They are starting fires around workplaces that we all have to put out. The only issue is that companies are trying to get people to practise teamwork and they are not trying to sniff out imposters who are just pretending to be teammates. Unless you start playing office politics and all that.

What this means is that if you have been doing well, and keep doing well even though you didn’t seem to have previous experience or built any credentials around it, you’ve already proven yourself. What this means is that if you have some suspicion about yourself as an imposter, consider your intentions rather than your qualifications. What makes you an imposter is when you have drastically different intentions from the rest of the team.

It’s not just your qualifications that gets you there. It’s your intentions as well.