Excellencies and Distinguished Guests,

Ladies and Gentlemen,

1. Good morning and a very warm welcome to the 16th edition of the Singapore International Energy Week (SIEW).

a. I am pleased that we have more than 11,000 energy leaders, professionals, and youths, from over 80 countries joining us this week.

b. To all our overseas guests who are here today, a special welcome!

Introduction

2. When we gathered here a year ago, the world was deep in the throes of a global energy crisis.

a. The war in Ukraine had disrupted energy supplies worldwide. Some countries even faced difficulties securing the fuel supplies they needed.

b. Many governments were also grappling with skyrocketing gas and electricity prices domestically.

3. While energy markets have somewhat stabilised this year, we have to brace ourselves for further volatilities arising from the conflict in the Middle East. I hope confident that our experience over the past 2 years has helped us to better prepare for the turbulence that may lie ahead.

4. At the same time, the climate crisis remains a serious challenge. The need to reduce our carbon emissions is more urgent with each passing year. The theme of this year’s Energy Week – “Energy Transition Towards A Net Zero World” – could not be more appropriate and timely.

a. A report published by the Intergovernmental Panel on Climate Change in March this year warned that the window is rapidly narrowing if we are to meet the goal of a 1.5-degree Celsius global warming limit.

b. We must redouble our collective efforts to green our energy sources, if we are to have any hope of addressing the climate challenge.

5. Singapore is committed to this global decarbonisation effort.

a. We have set ourselves a target of getting to net zero by 2050.

b. Getting the power sector to net zero will be a key thrust of this endeavour as power generation contributes ~40% of Singapore’s carbon emissions.

c. This will be a complex endeavour for many countries around the world. It is even more so for Singapore, as we have limited options to deploy renewable energy at scale. Unlike other countries, we do not have land for large solar farms, nor the potential for wind power, and neither do we have fast flowing rivers for hydro-electric power.

6. But we have chosen to commit ourselves to this journey not only because climate change poses an existential threat to Singapore, but also because we have a responsibility to do our part in the global climate transition effort. Allow me to share Singapore’s approach to developing a net-zero energy system.

Our Approach to the Energy Transition

Energy security is the foundation of the energy transition

7. As we embark on our journey towards net zero, we must first ensure that we have a stable and secure power system to prevent energy shortages and volatile electricity prices as these can quickly undermine any decarbonisation efforts.

a. We observed this during the recent global energy crisis, when some countries had to resort to refiring coal plants to bring down electricity prices.

b. Others were priced out of global LNG markets by high gas prices and had to burn other fossil fuels just to keep the lights on.

c. The world is likely to experience more episodes of volatility as the energy transition progresses. That is why having secure and stable energy markets is integral to the energy transition effort.

8. The Energy Market Authority (or EMA) has taken active steps to stabilise our electricity market in the wake of the energy crisis. We swiftly implemented crisis management measures in 2021 to safeguard our energy supplies and introduced enhancements to strengthen our market structure.

a. To ensure we have sufficient capacity to meet future electricity demand, EMA introduced a centralised process to facilitate and guide private investments in new generation capacity. EMA launched a Request for Proposal (RFP) for a new Combined Cycle Gas Turbine by end 2027. The RFP has gathered strong interest from the private sector and will close at the end of this month. EMA expects to award the RFP by the end of the year.

b. We have also introduced more stringent regulatory requirements on electricity retailers to ensure that they are more resilient against market volatility and to better protect consumers.

c. In addition, EMA implemented a Temporary Price Cap mechanism to avoid extreme price volatility.

d. These enhancements have brought greater stability to the electricity market.

9. Last year, I mentioned that Singapore would also be studying ways to enhance the resilience of our natural gas supplies.

a. Having secure and reliable supplies of natural gas is existential for us as 95% of Singapore’s electricity is generated using natural gas.

b. However, our experience in recent years has demonstrated that our current gas procurement framework, which relies on individual power generation companies’ procurement strategies, does not provide assurance that the system as a whole, will have enough gas to meet our needs during a crisis when market conditions are uncertain.

c. As global gas market conditions are expected to be more volatile with the energy transition, we need to rethink our approach to gas procurement.

10. Moving forward, we will take a more deliberate and coordinated approach to gas procurement. We will aggregate the demand for gas from the power generation companies and centralise the procurement and supply of gas to the power sector.

a. EMA will consult the industry on the details of the centralised gas procurement framework in the coming months.

b. This will create greater economies of scale which will allow us to negotiate more favourable gas contracting terms, procure gas from diverse sources to reduce concentration risk, and enter into longer-term gas contracts to provide more stable prices and supply.

c. This is a fundamental shift in our approach towards gas procurement, but we believe that this is necessary to create a more stable and secure power system that will ultimately benefit consumers and gencos alike.

11. This stronger foundation will then allow us to push ahead with our energy transition.

Investing in promising low-carbon alternatives

12. As Singapore is alternative energy disadvantaged, we will need to invest in promising low-carbon alternatives to green our power supplies and decarbonise our economy.

a. Our efforts to maximize the deployment of indigenous solar energy and tap on low-carbon energy beyond our shores are important but will not be sufficient to help Singapore get to net zero.

b. We will therefore look seriously at other low-carbon alternatives, including those that may be less technologically mature today, but demonstrate great potential nonetheless.

13. One such example is hydrogen.

a. Global investments in hydrogen have continued to increase, backed by government policies in many countries to accelerate its production and use.

b. Amongst the various hydrogen carriers, ammonia is more technologically ready with an established international supply chain. It also has the potential to be used directly as fuel for power generation and maritime shipping.

14. Last December, the EMA and Maritime and Port Authority of Singapore (MPA) launched an invitation for Expressions of Interest (EOI) for a small-scale commercial project utilising low-carbon ammonia for power generation and bunkering.

a. We received a total of 26 proposals from local and foreign companies. We also saw interest from a good number of upstream ammonia producers and downstream technology providers.

b. I am encouraged by this strong industry interest.

c. The EOI proposals gave us a clearer indication of how this pathfinder project can be designed and implemented.

d. We now have the confidence to take the next step forward.

15. Today, I am pleased to announce that we have shortlisted six consortiums and they will be invited to participate in the next step, which is a Request for Proposal (RFP).

a. Based on the RFP, the Government will identify a lead developer to jointly develop the project.

b. This will be one of the first commercial projects in the world to test and deploy ammonia as a fuel. It is an important milestone for Singapore in oursearch for viable decarbonisation pathways.

c. The learnings from this project will also contribute to the global climate effort.

16. Besides hydrogen, we are also exploring other low-carbon energy sources that are further out on the horizon. For example:

a. We have launched studies to better understand Singapore’s potential to generate electricity from deep geothermal heat;

b. And we are looking into whether biofuels can be more widely adopted across different carbon-intensive sectors.

17. One technology that we have been closely monitoring is nuclear energy.

18. Let me be clear – Singapore has not made any decision to deploy nuclear energy.

a. We conducted a pre-feasibility study on nuclear energy more than 10 years ago, which concluded that nuclear energy technologies available then were not suitable for deployment in Singapore.

b. But we need to build capabilities to understand advanced nuclear energy technologies that are becoming safer and have the potential to be cost competitive, so that we can study the options seriously when these newer technologies have become viable.

c. Over the years, we have been growing our capabilities in nuclear safety, as well as in emergency preparedness and response.

i. We have been engaging international organisations such as the International Atomic Energy Agency (IAEA) to learn from the world’s best.

ii. There has also been growing interest in nuclear energy from countries in our region.

iii. And we are working with our neighbours through ASEAN platforms to facilitate information-sharing and collectively build up the region’s capabilities.

d. We are also building up expertise to understand advanced nuclear technologies and their suitability for Singapore. In particular, Small Modular Reactors (or SMRs) show promise in being safer than conventional large-scale reactors.

i. For example, some SMRs are designed to cool safely and passively without requiring external systems or operator actions during emergencies.

ii. We will deepen our collaboration with countries that have capabilities in SMR technology to strengthen our understanding of these technologies.

19. In short, we must keep our options open and stay abreast of promising industries and technologies.

Energy systems will need to evolve

20. As we prepare for a new energy future where low-carbon energy sources are deployed at scale, our energy systems will need to evolve. Let me share three areas where we need to do so, to ensure that we are able to follow through on our commitments to get to net-zero.

21. First, governments will need to play an active role in planning, coordinating, and facilitating investments across the energy value chain.

a. The energy transition is a highly complex process with significant uncertainties.

b. Different sources of green energy will each have their unique requirements and limitations. To integrate them and optimise the system will be very challenging.

c. In order to decarbonise in a safe and secure way, we must take a whole-of-system approach. This involves taking a long-term perspective, and carefully staging the implementation of new sources of energy.

22. However, this does not mean that the private sector can take a step back.

a. The private sector plays a key role driving innovation and spearheading technological developments in low carbon alternatives.

b. EMA has been and will continue to partner industry players to facilitate investments in low-carbon alternatives.

23. This brings me to the second area for review. Regulators will need to rethink existing market mechanisms to ensure that decarbonisation is commercially sensible.

24. Singapore’s approach towards the power sector has always been to make full use of market forces and foster competition so that our market operates efficiently and responds nimbly to changing conditions.

a. Our wholesale electricity market celebrates its 20th anniversary this year. Over the last two decades, because of market competition, generation companies upgraded their power plants to improve their performance efficiency, switching from fuel-oil plants to more efficient gas-fired turbines. This brought down costs, and the benefits were passed on to our economy and our people.

b. The energy transition will bring about yet another significant shift in the power sector. However, low-carbon technologies are currently more costly than incumbent gas-fired turbines and therefore carry significant investment risk. Each of these low-carbon technologies also have very different cost structures. Some, like renewable electricity imports, are capex-heavy but have little operating costs. Others, like hydrogen, will likely have a cost structure more similar to natural gas-fired turbines.

c. Given this, we will need to review market mechanisms to provide investors with sufficient visibility and certainty, while ensuring that competition remains effective and fit for purpose.

d. Many regulators are grappling with similar issues. Some have introduced capacity payments mechanisms or revenue support schemes to de-risk investments. Others are contemplating even more fundamental changes to the design of their wholesale energy market.

e. EMA will learn from their experiences and work closely with industry stakeholders to develop and implement the reforms that we will need.

25. Third, the energy transition will require us to rethink how we consume electricity and manage demand.

a. Energy transition strategies have typically focused on decarbonising supply. But demand-side management is an integral part of the energy transition as our energy supply cannot increase indefinitely. This is especially so for countries like Singapore.

b. We will need to encourage businesses and individuals to be more energy efficient, reduce energy consumption, and adopt green energy alternatives. All this will require fundamental shifts in the behaviour of every one of us – companies, households and individuals.

c. There are a variety of policy levers available to governments to drive this change:

i. Right pricing of electricity is one important lever to shape responsible consumption of electricity. In Singapore, we do not subsidise the price of electricity so that households and businesses are incentivized to use electricity responsibly.

ii. The carbon tax is another lever which will allow consumers to internalise the cost of carbon emissions in their consumption and investment decisions. The government has announced that we will raise our carbon tax from the current $5 per tonne of CO2 equivalent, to $25 per tonne next year, and to about $50 - $80 by 2030. This will encourage consumers to seriously consider the carbon footprint of the electricity they consume.

d. But these levers alone are not sufficient. We can do more to nudge behaviour. EMA is working closely with industry partners to leverage the use of technology, such as intelligent power grids and smart meters, to help consumers understand their electricity consumption patterns, so that they can adjust and consume less electricity.

26. As we decarbonise our energy system, we must bear in mind that it will not be without cost. For example, importing renewable energy over long distances increases the cost of electricity. Our approach is to retain the right price signals for the economy as a whole, while also extending help to those who need it. In this way, not only will we build a low-carbon energy system, but also an accessible and affordable one.

Our Collective Green Future

27. I’ve spoken today about Singapore’s approach to the energy transition. It will entail changes to how we power our homes and our economy, and how we plan, operate, and regulate the production and consumption of electricity.

28. Each of you here today will have your own set of climate ambitions and plans to green your energy sources, as well as your unique challenges. But if we are to succeed, all of us must work together – governments, businesses, individuals.

a. Governments will need to establish sound policies and market frameworks to drive the domestic decarbonisation agenda;

b. And we must work closely with one another together to set common frameworks for international climate cooperation, facilitate capacity building, and exchange best practices in the deployment of low-carbon technology and market regulation.

c. Businesses will need to partner closely with research and development institutions to develop commercially viable low-carbon solutions and shorten the time to market.

d. All of us, as individuals, will also need to make lifestyle adjustments and reduce energy consumption where possible.

e. This is what the COVID-19 experience has taught us – that if the world comes together, we can overcome existential challenges.

Conclusion

29. To conclude, the energy transition will be a complex and challenging journey. Singapore is committed to doing our part to green our power sources and transform our energy system because we believe that all of us, no matter how big or small, have a responsibility to leave behind a greener and more sustainable world for our children and grandchildren.

30. This is why, every year, we organise the Singapore International Energy Week to bring the energy community together, to network, share ideas and spearhead new initiatives that will allow us to collectively advance our net zero journey. I hope that over the next few days, you will actively share your perspectives, form meaningful partnerships, and identify new opportunities. I wish all of you a fruitful and productive time at this conference. Thank you very much.