Foreseeable Podcast: Renewable Energy – how real is this for Asia?

What does that mean? I think the coastal areas will be difficult to inhabit. Indonesia could see five to 10 million people displaced if this sea level rise continues and say, Vietnam could see a quarter to a third of its population severely affected. 

So these are unthinkable scenarios.

And so, averting them is the top of the list for this region, but it's the same, really for the rest of the world. And there are many ways to think about that. But one essential way is that the root cause being carbon emissions, attacking that root cause will have to be the top billing. So that is often summarised in terms of our efforts to achieve global net zero emissions, let's say by 2050.

And add to that. If Asia itself did not achieve net zero, there is no chance on earth that the rest of the world, taken together, will be able to achieve global net zero. That's because it is a big player. It's about half of the emissions already and has overtaken North America and European Union terms of incremental emissions.

So the challenge is very clear. It stares in our face.

David Austin: So it's clear the status quo, that's not acceptable. We can't keep going the way we are. It's clear that Asia has to be part of this drive. But specifically talking about Singapore, in your opinion, do you see, is Singapore ready for renewable energy?

Vinod Thomas: Right. I think in the case of averting global catastrophe, Singapore, as we all know, while the highest per capita income country in Asia is also small in terms of the global perspective. Its carbon footprint is minor. At the same time, every country needs to make a contribution and Singapore's role as the highest per capita income in Asia is also one of modelling behaviour.

And so the question of what can Singapore realistically do is critical as well. The starting point, however, is not a favourable one in the sense that 95 per cent of the energy use in Singapore relies on a fossil fuel, that is natural gas, much better than coal, but nevertheless, it is a fossil fuel emitting half the amount as coal.

And so, being primed to help, even lead on mitigation where possible, Singapore needs to be looking at the composition of where that fossil fuel base is hinged on. One is part of the power sector. 40 per cent of the emissions in the Republic comes from the power sector. But so do industry and transportation, these have roles as well. So switching to renewables, cleaner forms of energy from fossil fuels, including natural gas is the agenda for Singapore.

And can that be done quickly enough? Effectively enough? Can we switch to solar, wind, other forms of clean energy in real time will be the challenge for Singapore.

David Austin: Singapore's carbon footprint is small, but the per capita income is high. So I suppose the implication is that if a rich country like Singapore can't do anything to mitigate or shift to renewables, how would anyone expect a poorer country to do anything? Is that right?

Vinod Thomas: That is correct. When we think about the total envelope within which we look at carbon emissions, if Singapore were to go to clean energy overnight, that will not by itself solve the problem. And so there is a question of everybody else doing the same, especially the big emitters. The location that Singapore is in, it is hard to imagine Southeast Asia making a dramatic move if the more affluent regions or countries in the same area were not to follow the same behaviour. So in that sense, Singapore acting on mitigation forthrightly will be a signal that Southeast Asia for sure, and the rest of the world will take away as well.

David Austin: And speaking of Singapore specifically, everyone here, we're very used to our kind of comfortable lifestyle with things like, air conditioned office buildings and a very nice quality of life. Can you tell me about the mindset that would need to change or how people need to think about comfortable living versus taking ambitious steps towards decarbonising the economy?

Vinod Thomas: I think that goes to the root of our dilemma. I think we are looking at possibly two critical dichotomies. And both of them, I would like to say, are false dichotomies. 

The first is that economic growth cannot continue as we have gotten used to in the future, if we switch to cleaner forms of energy. The truth is the other way around.

If you look at the scientific projections, there will be no economic growth if we do not switch to clean forms of energy. So we have the truth on its head and that drives short-term decisions. I think that in the long-term, all reasonable people agree that cleaner energy needs to be the fuel for the future.

However, the short-term decisions, especially in election cycles and so on, are driven by the short-term economic growth being affected by the transition to clean forms of energy. So we really need to dispel that first big dichotomy. 

The second one really is equally important, and that is the thinking that energy transformation conflicts with comfortable living. Here again the truth is the other way around, that without decisive de-carbonisation the quality of life and standards of living are under threat.

Maybe I can give one example: Singapore is already experiencing the so-called urban heat island effect from the heavy reliance on air conditioning. And that's the case for several countries in the world. We are at a point when housing blocks and office buildings need to stop discharging hot plumes that heat up the surroundings.

So rather than a trade-off, conservation of air conditioning helps prevent the vicious cycle of even more air conditioning use, even more burning of fossil fuels and even more carbon emissions that in turn aggravates the so-called urban heat island effect. So the logic is clear, but the action is caught up in the immediacy of certain decisions.

And also perhaps the political economy that some people may lose from actions that are good for society, but may not be for a minority of individuals.

David Austin: What are the realities in Singapore and in Asia broadly of implementing these huge infrastructure systems and projects to, to make energy possible?

Vinod Thomas: When we think of renewable energy, relatively clean forms of energy. There is a list, and its applicability varies quite a bit. So we think of Southeast Asia and let's say Singapore in particular, solar, photovoltaic, that remains top item on the list, a strong renewable energy option.

But that along with especially wind, which is another option, they face some severe constraints for Singapore, much less for large countries like India and China. In terms of solar panels also in the case of Singapore, high cloud cover and urban shading, which limit the possibilities. But, even with all of that, if one were to do a benefit cost analysis of the investments in solar, the benefits of investing in solar, but also subsidising the early use of solar to enable that transition, all of those benefits far outweigh the costs. 

And so the point would be that in the case of solar, if the current target is to, let's say, cover about 4 per cent of the needs through solar, I would think that in the big scheme of things, that's a very modest ambition, one could be thinking of 10 per cent fairly soon, 20 per cent by the mid 2020s as well.

In addition solar can also, as Singapore recognises, be imported using difficult mechanisms but nevertheless, undersea cable, et cetera which can be fed in by Australia, Indonesia and so on. 

And these are the kinds of projects that are already under consideration, but speeding them up and putting in the money needed for that would have very high payoffs in the area of renewables. We also should add hydropower, hydropower from Laos, that could be a realistic option, or redoubling efforts to move these areas of concern into a doable list of options would have very high payoffs. There are other aspects as well, in the case of renewables, which need to be in the mix as we look forward.

David Austin: And what about other policy measures that need to be implemented in the mix, a carbon tax for example?

Vinod Thomas: Yes. I think when we think about that, sort of, let me call it the technological solutions, we quickly realise that we need them; they are necessary but they may not automatically deliver the results. And so we ought to be thinking really of a broad based mix of policies. The pricing of carbon, it's not an intangible concept when you think that everything else is priced, almost, and that is what governs our lives.

And so in this case, air is free, pollution has no consequence. Well, until we put a tax on it. And so pricing of the carbon emissions by the polluters and perhaps targeted heavily on the heavy polluters, because that is what matters for the total, becomes a very, very high priority action. 

And Singapore has taken steps in taxing the carbon tax of 25 Singapore dollars a tonne is a very important step that has been taken. Here again, the question would be what would be enough? What would be the right price? At what price will we see the emitters reacting? And my guess would be, and this is more or less a guess, that in a range that we think about, let's say 25, 100 and 150 when the tax is of the order of $45 to $50 a ton, that is probably when we would see strong actions or significant actions from the emitters.

So carbon pricing, within which a tax is one important measure. I think we should also add that technology and pricing are two critical pieces, but so is mindsets and behaviour. 

And so how we look at nature, is it one to be destroyed to maximise economic growth or one to be invested in and nurtured, so we have sustainable growth? And if that mindset were to take place, well, all the pricing and all the technological solutions will be that much easier because people will speak about the value of it and behave accordingly. 

And so I would put as a third item on the list, educational campaigns, reality checks and mobilising of public opinion in favour of perhaps actions that may have been unpopular in the past, for instance, a carbon tax.

So the three combined, technology, the market or pricing mechanisms and a change of mindsets would be a package of actions that has a chance of delivering success.

David Austin: And then which countries in Asia do you think have a conducive policy and regulatory framework that can attract large capital investments in renewable energies, domestic and international investors, to move this forward?

Vinod Thomas: So in the case of this neighbourhood of Singapore, which is Southeast Asia, we think of the grouping of countries in ASEAN and when we think of that group we are facing this dilemma that IMF, in a report dramatised to say that, here is a region, that is arguably facing the greatest climate threat in the world in terms of natural disasters from excess use of carbon by all, and therefore the warming and sea level rise and therefore floods and storms as well as droughts and heat waves.

So faced with that extreme situation, Southeast Asia is also the region that is adding the most carbon emission into the air, not the total amount, but the addition, the increase. That irony needs to be confronted. 

So within that picture that the region has been moving in the wrong direction on switching out of fossil fuels, we have a number of good examples that need to be now scaled up. They may be very specific examples, but the ASEAN ministers taken together have indicated that 23 per cent of the energy needs would be met by renewables. And if you think of the in-store capacity itself it would be about 35 per cent and this to be achieved by 2025. I still think it's a modest goal, but at the same time, a tough one, given the trends that we are seeing.

Within that picture, I think we have examples of regulatory frameworks shifting in the right direction, a bit in Vietnam and Thailand. The Philippines, especially Malaysia and Indonesia, but far from where we need to be. Singapore is a positive example with the carbon tax, on mitigation, as well as steps in adaptation, with more needing to be done.

But especially, in another area that we might also need to be focusing on heavily, which is adaptation to climate change. That is if we rightly emphasise mitigation, all the things that we need to do to switch out of fossil fuels, we also need to realise that the die has already been cast. And so whatever we do now, we are going to see an increasing temperature and disasters for the next several decades. 

In that context, while we must emphasise mitigation, we also need to adapt, which is essentially coping mechanisms. And Singapore would be a leader in that area. So that would be the example from the region I would cite as being very positive. But on adaptation, on mitigation, it is hard to pick a single country because of the picture I painted earlier that this region as a whole needs to make a U-turn, it is not going in the right direction.

And so that can't be an example you want to cite. If you look at regulatory improvements and investments, including by the private sector, that some of the countries in ASEAN that I mentioned are beginning to take. One area of immediate action and low hanging fruit to go all out for the region would be to get rid of all subsidies for fossil fuels right away.

And then selectively also think whether renewables need economically justifiable, socially justifiable subsidies, or you could say encouragement so that the transition would be smoother.

David Austin: So removing the subsidies, you called it low-hanging fruit, but I imagine there's a lot of political resistance to doing something like that or else it would have been done already. Right? Can you tell me more about the political realities of a step like that?

Vinod Thomas: I think there are two aspects to this. One is the direct hit that a minority of producers would take when the subsidies were removed, they got used to it. And, so the producers would have an objection to that. 

But the other, perhaps a more complicated one to deal with, would be the consumers,that people are used to certain necessities having a low enough price that they can afford.

So part of the action would be again mobilisation of opinions and public opinions and mindsets to see that this kind of action might be what is needed for the societal good. But equally the second part would have to be where it does affect low-income people's pocketbooks, I think providing safety nets and support mechanisms for a period of time that you can get away from later. It's perfectly justifiable as well. So we need an architecture of no subsidy within which there is a policy framework to provide safety nets to make that transition possible.

David Austin: How realistic is a prospect of nuclear power as a renewable energy resource in Asia?

Vinod Thomas: So we listed the renewables and went down the list of solar, wind, hydro, et cetera. And we can add to that prospective ones like hydrogen, including sequestration of carbon, and nuclear has to be in that list as well. 

Clearly, historically there has been great hesitation in switching to nuclear, in Singapore, but also elsewhere, both for cost considerations and importantly, for safety concerns.

But the picture is different now and we may be seeing a response, be it in Japan or in Germany, different now than say five years ago. Studies of the 2010s concluded that nuclear technologies were not suitable for Singapore. A newer assessment would show that we need to take into account two or three important differences.

One is that small modular reactors could make nuclear power more viable. Because they use less space, which is very important for Singapore and can be mass produced, that's important and have short lead times. They may reduce if not minimise human error, for example, when it comes to cooling systems, which became a huge concern following the Chernobyl disaster.

So a new approach that uses stronger safety features, especially backup for cooling that could be a game changer. Also nuclear, new technologies for fusion promise that the risk of nuclear meltdown will be much lower if not eliminated and then minimise radioactive waste disposal as well.

These are reasons that include nuclear power in the list of options. And I think, examining them really aggressively and, and positively would be part of the climate solution. But keeping in mind that following this route itself is time consuming. And we're thinking about results on this that go into the decades, not years.