Minister of State S. Iswaran spoke about keeping our energy prices competitive, ensuring energy security, and developing the clean energy sector at Monday’s Committee of Supply Debate by the Ministry of Trade and Industry (MTI). The “S” word - Solar and Subsidies, was mentioned in his speech and covered in several newspaper reports. The full speech is available at the MTI website.

In Mr Iswaran’s speech, he explains why the government does not provide subsidies for clean energy and measures such as Feed-in-Tariffs suggested by some NMPs:

Our basic policy tenet is that energy costs should be borne in full by end users. Individuals and industries should adjust their consumption of energy according to its true cost as reflected in its price. We do not subsidise the cost of energy because it will dampen price signals, and create the incentive to over-consume… Our best course of action is to encourage competition and ensure that the market works. Competition will exert downward pressure on prices, and serve to benefit consumers.

As it stands, renewable energies such as solar are still as some members have noted, much more expensive than traditional fossil fuel-based energy. To be consistent with our basic principles, we should not adopt measures which subsidise specific renewable energy types.

… so what we have effectively saying is that we have to subsidise the producers of these renewable energy, for example; solar. This subsidy will in turn be passed on to all consumers of energy so that we can have a solar powered generation. That is not an optimal strategy because what we are effectively doing is that encouraging solar.

The question is why solar when it can be bioenergy, biodiseal and so on. It can be many sources and does not have to be just one, then the question is, why just the energy industry and why do we not subsidise others as well. So, I think we have to be very clear about this and to stick to our principles. When we are allocating our resources, we have our R&D and Test-bedding and this is an area that would largely resonate because this is the key to developing technologies that will bring down the cost of generating alternative energies. We also believe that this approach will give better returns in the long run.

The speech has given us answers and also more questions. 

Although the government is not for subsidies, it is providing $20 million for a Solar Capability Scheme. This fund is to “spur more innovative approaches and capability development, in the architecture, design and system integration of solar panels as part of green buildings. The fund will go towards offsetting part of the installation cost of solar panels for new buildings which attain a certain level of Green Mark standard.” How is this funding different from subsidies?

Is renewable energy expensive or is oil cheap? Is oil cheaper than solar because the oil price does not factor in “contribution to global warming” and other “externalities”? On the issue of subsidies for renewable energy, Authors Ron Pernick and Clint Wilder of the book, The Clean Tech Revolution, think that: “… there is no such thing as subsidy-free energy, and there never has been in the modern world. The history of coal, oil, natural gas, large-scale hydroelectric, and especially nuclear power … makes it clear that all these industries’ growth occurred partly with the direct and indirect financial support of governments that wanted to encourage them. There’s nothing inherently wrong with that, but don’t ask other energy sources to compete on the same playing field without comparable support.”

Why support solar and not other renewable energy? Because Singapore is a sunny island with sufficient sunlight so solar energy is the most viable here? Because we have the research capabilities, supporting industries and infrastructure?

Why support the energy industry and not others? Because of increasing energy prices, ensuring energy security, and growing concerns about global warming?

The government has been putting in efforts to enhance the clean energy sector in Singapore, including attracting clean energy companies to invest and set up facilities, funding research on clean energy and technologies, promoting the use of cleaner natural gas, etc. But if Singapore aspires to be a clean energy hub, we need to do more. Singapore is highly regarded as a clean water hub because of our Four National Taps strategy and the local adoption of NEWater and desalination technology. If we do not have a Four National Switches strategy or local adoption of solar energy or other renewable energy, how can we claim to be a clean energy hub?

These are all questions we are asking and we hope they can be addressed in the government’s roadmap on sustainable development.

“The Government simply cannot make up their minds … So they go on in strange paradox, decided only to be undecided, resolved to be irresolute, adamant for drift, solid for fluidity, all-powerful to be impotent … The era of procrastination, of half-measures, of soothing and baffling expedients, of delays, is coming to its close. In its place we are entering a period of consequences.” - Winston Churchill

Source: MTI. Image credit: Chance Agrella from freerangestock.com.

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