Carbon Pricing – A Penalty or A Boon?
With some three quarters of the world’s primary energy dependent on fossil fuel which has higher carbon intensity, carbon pricing will have direct implications on its variety and quantity. For the same purpose and outcome, such pricing would shift fuel choice from those of “high C’s” to “low C’s” and even “no C’s”. Indeed, the lightening of C’s in the fuel mix is already happening worldwide, driven simply by economics with the increasing availability of affordable gas being the cleanest burning fossil fuel. Technological development, regulatory intervention and scale have also hastened the fast-growing share of the “no C’s” options of renewables which is going to benefit further from carbon pricing.
So, does carbon pricing lead to a one dimensional outcome? Conventional wisdom suggests that most would think twice if a value is attributed to something which previously was perceived to be “free”. A 5p charge for single use plastic bag in the UK that has resulted in a drop of well over 70% handed out is a case in point. Not only has it reduced usage and waste, and some would argue could save marine life as plastic bags account for the vast majority of marine litter, it has also instilled a new ecofriendly habit that is sustainable. The Singapore government recognised that a carbon price can also help improve energy efficiency since users will strive for superior solutions that use less energy for the same output. A win-win outcome. The humble light bulb has often been used as a perfect illustrative example. Not only has it progressed from A (incandescent) to B (halogen), but further to C (CFL) and D (LED), possibly beyond…. delivering the same brightness for less energy and significantly less life cycle cost. Industry specialists and scientists estimated that energy inefficiency and wastage is responsible for a significant portion of avoidable greenhouse gas emissions. Indeed, as presented by IEA’s Executive Director, Dr. Fatih Birol, “Energy efficiency is the one energy resource that all countries possess in abundance”. So for resource lean Singapore, energy efficiency is a major energy option. Looking at it from this perspective, taking a lead in carbon pricing in the region would give Singapore a “first mover” advantage potentially opening up new technology and services which can add significant value to its economy. The recent introduction of mandatory mass flow meters (MFM) for bunkering in Singapore as world’s first was thought to increase cost and drive business elsewhere but the effect appears to be the opposite, attracting record bunker sales underscoring the benefit of sound well implemented “first mover”. Jurong island, as a world scale energy hub houses numerous oil refineries and petrochemicals facilities which have high energy intensity. It is worth noting that even in the absence of carbon pricing, some have made notable improvement in energy efficiency over the years. It is reasonable to expect that further efficiency gains would be delivered going forward. Safety is table stake in industry and generally in any work place such that work processes, methods and reporting have been designed to minimize risk. When implemented well, they become the habitual way of working just like putting on the seat belt when driving – should energy efficiency follow suit?
Far from being a penalty, through better energy efficiency, carbon pricing can bring benefits closer to the community and individual level not only in expense savings but also in the form of higher productivity, new employment opportunities, better air quality hence health and well-being. What price does one attribute to those? Is it possible that JobTech™ would pick up new job opportunities in the market for carbon pricing/energy efficiency related development? At an individual level carbon pricing can become meaningful by tracking one’s carbon footprint that potentially could change your lifestyle, whether it is the way you travel, shop, eat, work, entertain etc. Within a home, artificial intelligence equipment is already available to improve energy efficiency and it may not be long before such equipment and your utilities bill displays and compares your carbon footprint with your typical neighbours’. Carbon pricing coming alive in every home?