Excerpt of Statements by Senior Minister of State for Trade and Industry and Education S Iswaran at the Committee of Supply Debate

RESEARCH & DEVELOPMENT

R&D for social and environmental needs
Third, R&D will help to address some of Singapore’s pressing challenges. Ms Penny Low has suggested that Government adopt a broader definition of innovation that delivers not only economic outcomes but also solutions that address social concerns. I am assuming the member does not think that the pursuit of economic outcome is inherently wrong in its own terms. This is more about the remit that MTI and its agencies have, which is primarily to focus on economic outcomes. The dichotomy between social and economic in some ways is a false one because most of the commercially viable ideas start by seeking to address a need in the market which is a social one usually. So this is the Government’s approach. We want to encourage research which is geared towards meeting needs that are pressing, but are long-term in nature for the market and society.

We established the $1 billion National Innovation Challenge programme to encourage as Ms Penny Low put it, “systemic innovation” to develop solutions to Singapore’s national challenges. It will not only help solve our problems but also serve to build a better life for Singaporeans, and spawn new industries and business opportunities in the process. The first Challenge, “Energy Resilience for Sustainable Growth”, aims to develop cost-competitive energy solutions for deployment within 20 years to help Singapore improve energy efficiency, reduce carbon emissions, and increase energy options. The Government has also applied the collaborative innovation approach to address longer-term public sector needs. The $450 million Co-Innovation Partnership Programme will help private enterprises to collaborate with the public sector to develop innovative solutions for specific needs in the public sector. Each collaboration can receive up to $1.75 million under the programme. And there is a good pipeline of such projects. For example, the Ministry of Health is exploring ways to use remote technology to monitor diabetic patients. JTC is looking at how we can transform excavated soft material into alternative reclamation fill.

In general, we agree with Mr Wee Siew Kim’s that innovation should be encouraged in as many sectors as possible. We have established grant schemes for test-bedding ventures in areas such as urban solutions, health & wellness, lifestyle and media amongst others. And we will continue to encourage this diversity and vibrancy in our R&D landscape.

ENERGY

We now turn to energy. Even as we pursue growth, we are mindful of the resource challenges that we face. Ms Jessica Tan, Mr Michael Palmer, Mr Liang Eng Hwa, and Ms Indranee Rajah have all raised questions over the impact of the political turmoil in the Middle East and North Africa on our energy prices and security.

Global Market Volatility
It is important that we first recognise that rising energy prices are part of a long-term trend which reflects fundamental demand and supply drivers in the global energy market. Barring major shifts in the global energy supply, energy will become a relatively scarce resource as demand grows, particularly because a resurgent Asia. If there is a global initiative to price the cost of carbon emissions to the environment, this will exert further upward pressure on energy prices. As a small economy almost wholly reliant on imported energy,we cannot be insulated from these global trends.

Against the backdrop of that long term trend, we must also be prepared for greater volatility in energy markets. In 2008/9, the Global Financial Crisis created demand uncertainty and depressed energy prices. Today, the turmoil in the Middle East and North Africa has created supply uncertainty. It does not affect us directly as our energy sources are primarily in our own region. But, oil futures have risen by about 21 per cent since the protests in Egypt began. Not all of these will translate to our electricity prices: the strength of the Singapore dollar, our use of natural gas as our primary fuel and efficient CCGT plants which are very efficient for power generation, and a competitive electricity market will cushion us to some extent. But we cannot be fully shielded from the impact of these increases, if they persist.

Exploring Alternative Fuels
Diversification is key to ensuring that Singapore continues to have secure and competitively priced energy supplies. The Government will, therefore, continue to explore the development of viable alternative fuel sources. We now import gas from Malaysia and Indonesia through pipelines. We are building the LNG, terminal which will provide access to a global gas market. The terminal will come on stream in 2013.

Other options include coal and electricity imports. Coal is relatively abundant, and new technologies can help to reduce its environmental impact, so this is something which we should keep a close watch on. The Economic Strategies Committee recommended electricity imports as another possibility. A competitive proposal might allow us to access energy sources in our region while freeing up valuable land and other resources in Singapore. We are reviewing our regulatory framework to explore this option for the medium-term.

MTI is also leading a multi-agency pre-feasibility study on nuclear energy. The study is looking at key factors such as technological developments, safety and security issues, as well as the economics of nuclear energy. The aim is to inform the Government’s understanding of the risks and possibilities arising from nuclear energy, given the global and regional developments in this space. We cannot rely extensively on alternative energy options such as wind, geothermal or solar to meet our baseload energy requirements due to our natural disadvantages in these areas. But we will augment our fuel mix with these options where it is technically feasible and economically viable. For example, the Government has invested S$31 million in a pilot programme to install solar panels on the roof-tops of some HDB buildings by 2015 to assess their efficacy.

Enhancing Energy Efficiency
While we are somewhat constrained on the supply side, we can help ourselves significantly by using energy more efficiently. We can do more using less energy. The private sector has shown this. For example, since 2000, 3M has undertaken a concerted effort to inculcate in its employees an energy-efficient culture in its manpower team and as a result, they have achieved a 35 per cent improvement in energy efficiency, with a cumulative cost saving of US$1.4billion.
We can aspire to do the same – as households, companies and as a nation as a whole.
The key aspect of managing demand is pricing energy right. Consumers will adjust their behaviour when they appreciate the full cost of energy as reflected in its price. Conversely, subsidising energy will only lead to inefficient use of a scarce and precious resource.

Some households may face difficulties in coping with rising and volatile energy prices. Our approach is to provide targeted assistance to those who need it. In Budget 2011, the Finance Minister has announced $200 million in utilities rebates, which will help Singaporeans cope with high energy prices. To put it in more specific terms, this year, a 1-room household will receive enough in rebates to cover most of its annual electricity bill, while a 3-room household will receive about 5 months’ worth of electricity bills in rebates. So these are significant rebates which are provided in a targeted manner, to those who will need them the most. Since 2007, the Government has provided close to $800 million of such rebates, benefitting about 800,000 households.

Clearly beyond households, we want to encourage energy efficiency amongst all industry players, across sectors, and the Energy Efficiency Programme Office (E2PO) co-ordinates these programmes.

Ms Indranee Rajah asked about the electric vehicle (EV) pilot project. This is another R & D initiative. The project will test if EVs can become a viable mode of transport in Singapore. We are currently developing the charging infrastructure for the pilot. The first charging stations are due to be completed by mid 2011. The first EVs should arrive in Singapore around that time. We will run the pilot for two years, and use the data to evaluate the costs and benefits of EVs.

Source: Energy Market Authority