Singapore will be importing solar energy from Australia via over 4,000km of cables. - PHOTO: SUN CABLE ENERGY
SINGAPORE (The Straits Times/ANN): Over the past week, the cost of the global transition away from fossil fuels was a key point of discussion during the Singapore International Energy Week, a major energy conference held between Oct 21 and 25.
But what was less talked about then was how these costs would stack up against the costs of doing nothing.
It is undeniable that the global energy transition will come at a cost. Fossil fuels have driven economies for decades, and moving away from this status quo will not come easily or cheaply.
For example, Singapore announced during the event that it had given conditional approval for a company here to start importing solar energy from Australia via more than 4,000km of cables, in a mega project expected to cost US$24 billion (S$31.6 billion).
Then there is also the cost of upgrading the grid infrastructure, since the transmission network has to be girded up to allow the reliable transfer of electricity from various generation sources – whether it is a solar farm in Australia or hydropower dams in Laos – to people’s homes and offices.
At the conference, the head of the world’s largest oil company, Aramco, even said it was “unrealistic” and “too expensive” for developing countries to transition away from fossil fuels, because these countries will require a “staggering amount of front-end capital” to drive the transition.
But focusing solely on the costs of the transition would be missing the big picture, especially with climate impact already being felt here and now.
In late September, Nepal was hit by monsoon floods and severe landslides that claimed more than 200 lives. The floods inundated neighbourhoods and damaged highways and hydropower plants, with damage estimated at US$127 million at least.
Closer to home, northern Philippines is still reeling from Tropical Storm Trami, which displaced more than 150,000 people and killed at least 70 people. Early estimates place damage to agriculture and infrastructure at 291 million pesos (S$6.5 million).
Inaction – or continuing with business as usual, without effort to move away from fossil fuels – will be more costly, in a number of ways.
One, escalating climate change impact.
While Singapore contributes to 0.1 per cent of the world’s greenhouse gas emissions, the Republic is highly vulnerable to impacts such as sea-level rise and extreme heat.
Intense floods and droughts in the region and elsewhere can affect Singapore’s food security. When Malaysia was affected by floods in early 2023, wet markets faced supply disruptions in vegetable imports, with a number of stalls reported to have raised prices of produce.
A recent report by the UN Environment Programme found that current climate policies will lead to catastrophic global warming of up to 3.1 deg C by the end of the century. The world has already warmed by about 1.3 deg C above pre-industrial levels, and the Paris Agreement goal – which seems increasingly out of reach – aims to limit warming to 1.5 deg C.
Two, there are costs in not transitioning as well.
Many governments and financial institutions around the world are responding to the science and tightening their policies, with goals to drive down carbon emissions. For example, more countries are now putting a price on carbon to force firms to reduce their use of fossil fuels, and a growing number of banks too have pledged not to fund coal-fired power plants.
Singapore’s carbon tax rate increased from $5 per tonne of emissions to $25 per tonne from 2024. It will be raised to $45 per tonne in 2026 and 2027, with plans for the rate to hit between $50 and $80 by 2030.
If Singapore is unable to decarbonise its power sector, the country will risk losing companies that are committed to reducing their emissions related to energy use, said Mr Ali Izadi-Najafabadi, Asia-Pacific head at research organisation BloombergNEF.
This means companies that pledged to switch fully to renewable energy under the global RE100 initiative, from Apple to Google, would likely reconsider Singapore as a base of operations.
Third, without taking the leap to shift to greener energy, many benefits – from improved health to job creation – cannot be realised.
A US-Singapore feasibility study on energy connectivity in South-east Asia assessed that building the Asean power grid will not only provide more green electricity, but also create new jobs, reduce air pollution from coal-fired power plants, and pump in significant investments for the energy sector.
These would include investments of US$2 billion annually for research and development, and US$1.4 trillion cumulatively to build electricity generation capacity.
The region’s manufacturing sector would also receive a boost, with greater demand for solar panels, batteries and cables.
Amid the rising cost of living, the idea of rising utility prices is a hard pill to swallow. But we should not ignore the higher costs of inaction, as climate change continues to wreck lives and livelihoods across the globe.
As Dr David Broadstock, energy transition research lead at the NUS Sustainable and Green Finance Institute, said: “The cost of action may seem uncomfortable in the near term, but the cost of inaction is untenable in the long term.” - The Straits Times/ANN
