IACEE REPORT

CHAPTER 1 :
INTRODUCTION

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The 2000 World Competitiveness Yearbook, compiled by the World Economic Forum (WEF), ranked Singapore 25th out of 45 countries in terms of "energy intensity" or the amount of commercial energy consumed per dollar of GDP. This ranking could be contributed by the fact that Singapore is a tropical city-state unlike the higher-ranked countries, which have temperate climates. Singapore depends heavily on air-conditioning to cool its buildings all year round. In temperate countries, heating is usually used only in late autumn and winter, and air-conditioning in summer only during very hot weather. Furthermore, Singapore is an urban city with no rural base.

Although the indicators used for most international rankings do not take into account differences in the structure and the state of development of the individual economies, they serve as a useful gauge of the ability of a nation to utilise energy effectively. Hence, an Inter-Agency Committee on Energy Efficiency (IACEE) was formed to take a critical look at Singapore’s energy consumption. The terms of reference and composition of the Committee are at Annex A.

IMPERATIVES

In a global environment where the economic well-being of nations is increasingly determined by their ability to adapt to keener international competition, excessively high energy expenditure lowers their cost competitiveness. Inefficient use of energy resources is wasteful. It diverts limited economic resources of a nation away from efforts that could further underpin the resilience of the state.

There may be periods of low oil prices like during the 1997-1999 Asian financial crisis. However, such situations are likely to be a temporary and deceptive aberration. Oil and gas are exhaustible resources. Given their relative scarcity and high cost of exploration, it is likely that energy prices will rise in the long run. (Indeed, when the IACEE was first formed, the cost of oil was about US$15 per barrel. It peaked at over US$30 per barrel and it is now fluctuating at about US$25 per barrel.) Political and economic turbulence will also create short-run price shocks that will hit major energy importing countries like Singapore more than those countries with indigenous energy resources. Demand for oil will also be far keener in the coming years with greater economic development worldwide.

Another global trend is the growing international concern about carbon dioxide emission and its effect on the world’s climate. Carbon dioxide is closely correlated to the energy consumption of a nation. The 1998 Kyoto Protocol of the United Nations Framework Convention on Climate Change, to which Singapore is a signatory, established a legally-binding obligation on the developed countries to reduce their emissions of carbon dioxide and other greenhouse gases by an average of 5.2% below 1990 levels by the years 2008-2012. Singapore, though not yet a developed nation, will come under increasing international pressure to contain its CO2 emission, and indirectly its energy consumption.

Given these observations, therefore, there are sufficient grounds for a more critical examination into Singapore’s current energy consumption.

CHAPTER 2 :

FINDINGS

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CURRENT SITUATION

1. Singapore’s energy needs have grown in tandem with its economic growth. Over the period 1980-1995, the annualised growth in energy demand was 11.9%. The average annual growth in GDP over the same period was about 7.6%. The challenge will be to ensure economic growth while minimising the growth in energy demand.

2. Energy consumption in Singapore can be attributed to three main sectors, viz. industries (about 29%), residential and commercial buildings (about 34%), and transport (about 37%1):

A significant amount is consumed by air and sea transport.

Local consumption comes mainly from land transport at about 11% of the transport sector.

a) Industrial/Manufacturing : Many of the players in this sector are, by virtue of the bottom-line focus of their business, already very cost-conscious.

b) Transport : While a significant amount of the energy consumption within the transport sector is consumed by air and sea transport, these sectors are already very efficient as they are subject to competition in the global markets.

c) Buildings : The structure of a building influences to a major extent the energy consumption pattern of its occupants. In the tropical climate of Singapore, much of the electricity consumed in buildings goes towards air-conditioning and refrigeration. In particular, the energy consumption in places of work (i.e. commercial and institutional buildings), which are mostly designed to be fully air-conditioned, represents the lion’s share in this sector.

Table 5

(Source : Power Supply Pte Ltd)

ENERGY LANDSCAPE IN THE FUTURE

3. The current projection by the Public Utilities Board (PUB) shows that Singapore’s overall electricity consumption will increase from 25,858 GWh in 1998 to 41,017 GWh in 2007. This represents an annual increase of 5.3%. The present generating capacity is 5.5 GW and to meet the expected growth in demand, an estimated additional 3.3 GW is needed by the year 2007. The projected capital cost will range from $2.6 billion to $4.1 billion depending on the type of power plant to be installed by generation companies.

4. These projections are reinforced by the following trends :

a. Change in Mix of Residential Housing : Private residential households consume on average three to four times more electricity than an HDB household. To meet the aspirations of many Singaporeans to own private residential apartments, the mix of public-private housing is likely to be increased from the present 82%-18% to 75%-25%. This could lead to 21% increase in residential electricity consumption, assuming the number of households remains unchanged and the average household energy consumption does not increase.

b. Public Housing Profile : Within public housing, the profile is being increasingly skewed towards larger flats:

(Source: HDB)

The shift towards larger HDB flats is likely to lead to a 6% increase by Year 2002 in total electricity consumption by HDB households. This projection assumes that the average monthly electricity consumption of the different flat types remains at 1997 level (Figure 7), and that the HDB housing stock remains at the 1998 level.

(Source: PUB & Power Supply Pte Ltd)

c. Higher Living Standards and Expectations : In 1988, only 19.4% of all households had air-conditioners. By 1997, this had risen to 53.1%. Washing machines, video recorders, etc, are now common appliances. In 1988, the Department of Statistics (DOS) did not deem household ownership of laser/video/CD players, microwave ovens, and vacuum cleaners to be sufficiently important for data to be captured. In 1997, the figures were 47.4%, 38.6% and 65.7%. The telecommunications and information technology age is introducing more and more electrical appliances to the average household. In 1988 only 11.2% of households owned personal computers but this rose to 40.8% in 1997. Singaporeans expect and do adopt a higher living standard and this means a rapidly growing average electricity consumption per household. Figure 7 and Table 8 above shows an electricity consumption growth of 66%-91% for HDB households.

Population Growth : Singapore’s total population in 1997 is 3.6 million. Based on demographic and economic trends, a significantly larger population over 5 million can be expected in the future. Assuming per capita consumption remains constant, an increase of at least 35% can be expected.

Desalination : With the decision to set up desalination plants in Singapore, a critical linkage between water and energy has been established. Energy consumption in Singapore therefore takes on a greater strategic importance. The first phase with a capacity of 30 million gallons of water per day (mgd) will consume energy representing 2.4% of the total energy consumed in 1995. When all the desalination plants with a projected total capacity of 100 mgd are in operation, this will figure will rise to 8% of our total energy consumption in 1995.

5. As the above illustrate, Singapore’s energy needs is expected to grow substantially. Energy cost will constitute a major portion of our import bill. However, if Singapore can use energy more efficiently, we can sharpen our competitive edge and contribute to our economic growth and development and yet comply with our international obligations on carbon dioxide emissions. We can also be more resilient to oil/gas price fluctuations or even disruption in supply. There is, therefore, an economic and environmental imperative to review the state of energy efficiency in Singapore.

APPROACHES IN OTHER COUNTRIES

6. Many countries, especially those in the OECD, have put in great efforts towards energy efficiency. There is a wealth of international programmes, initiatives, studies and projects, and literature on energy efficiency. Two examples are as follows :

a. Japan : Its energy efficiency performance is remarkable. Since the first oil shock in the early seventies, Japan has put in place a comprehensive energy programme that reaches out practically to all sectors of the economy. Though its GNP has increased many folds since 1973, Japan has managed to improve its energy intensity per GNP by 35%. Based on its long-term outlook for energy supply and demand, Japan in 1994 aimed to reduce the projected annual rate of increase in energy consumption from 3% to 1% by the year 2000.

Japan has a number of legislation to back its energy policies. It also has a wide range of minimum energy efficiency standards that covers vehicles, factories, commercial buildings, residential housing, electrical household appliances, office equipment, etc.

b. USA : The USA has since the inception of the Department of Energy in the late seventies written into its statutes the need to come out with a National Energy Plan. The latest NEP describes a comprehensive policy framework and approach towards energy efficiency. The US Federal Government focuses on improving the operations of competitive markets while addressing the market’s inherent limits. The USA has established national minimum energy efficiency standards for a wide range of equipment and facilities. In the case of residential appliances, these are mandatory.

BARRIERS TO ENERGY EFFICIENCY

7. There is no lack of technical measures or solutions to improve energy efficiency. There are numerous examples in all sectors. In many of these cases, it makes good financial sense to adopt or implement such measures. For example, incandescent lamps, though energy inefficient, are still widely used. Many Singapore buildings are over-cooled to the extent that occupants have to put on warm clothing. Better building systems currently available would be able to optimise the air-cooling systems. Many community spaces are so brightly lit at night that a passerby can read a newspaper comfortably without any additional lighting. A more energy efficient alternative may be a system with separate circuits for festive and normal lighting.

However, energy efficiency consciousness is not prevalent in Singapore. There are a number of reasons for this :
a. Cost Structure : Energy costs in many cases constitute only a fraction of the total costs of operation of a private or public sector organisation. An average household in a four room HDB flat with an average income of $1500 incurs only about $50 in electricity charges (PUB to confirm). In the commercial and industrial environment, it is common for management to pay greater attention to the main cost factors affecting their bottom line, viz. land costs, financing expenses, rentals, manpower expenditure, marketing expenditures, etc. Energy costs for many companies make up only a small percentage of operating costs. Particularly in good times, the consumer will be less sensitive to those items that constitute only a small percentage of his expenditure.

b. Long Payback Period : Many energy efficiency measures require capital investments up-front, while the returns are reaped only over a relatively long period of time. For example, building landlords are reluctant to invest in more efficient air-cooling plants because the initial outlay is significant, while the savings from future energy bills may take as long as ten years or more to amortise the investment. When viability and even survival in the short term are of primary importance, few landlords are willing to take such a long-term view.

c. Lack of Awareness and Information : In many organisations, the managers who are concerned with costs control and management are often not the ones who possess knowledge about energy efficiency. Those who are likely to possess knowledge about energy efficiency measures are usually the building and plant managers, who in many organisation structures are not in a position to influence business decisions in a major manner. This was one of the reasons why Japan took the step of requiring large energy consumers to employ trained energy managers.

d. Too Many Players : Often the presence of too many players makes it difficult for energy efficiency measures to be identified and implemented. In the building industry, the developer is primarily interested in maximising the net saleable or lettable area and in the speedy completion of the building. Future operating costs, which are borne by future occupants of the building, are not key considerations. The architect takes the cue from the developer and usually delegates the mechanical design to engineers who work on the basis of designs by the architects - energy efficient possibilities are often neglected through this segmented work method. The electrical and air-conditioning plants are designed by another set of engineers on the manufacturer’s side. The future occupants come in too late to influence the design and construction of the buildings.

CHAPTER 3 :

IACEE RECOMMENDATIONS AND CONCLUSION

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APPROACH TOWARDS ENERGY EFFICIENCY

1. In the Singapore context, where our survival as a nation depends first and foremost on our ability to excel economically, energy efficiency measures should not be pursued to the detriment of our ability to compete in the global market.

2. A distinction has to be made between "energy conservation" and "energy efficiency". More than a question of semantics, these terms embody different approaches. The former term conveys the impression that the use of energy had to be curtailed, that Singaporeans may, in the future, have to accept darker rooms and buildings - perhaps even a lower living standard to conserve energy. The term "energy efficiency", however, represents the simple principle of using less energy to achieve the same or better performance. Energy efficiency measures therefore do not hinder economic growth and the well-being of the country but are instead complementary. Being energy efficient would sharpen Singapore’s competitive edge in a global market and strengthen Singapore’s resilience to energy shortages or disruptions.

3. A great number of recommendations can be enumerated and listed. However, the IACEE is of the view that Singapore’s national interest would be better served if its recommendations are targeted at the strategic level. They should remove obstacles as to why energy efficiency is not being adopted on a widespread basis. There is therefore a need to create an environment in Singapore that is conducive to the identification and adoption of energy efficiency measures; and to ensure that this environment is sustainable.

4. On this basis, the following recommendations, grouped into strategic thrusts, have therefore been identified :

Strengthening the regulatory and institutional framework
Improving the market environment
Using the public sector as the leading edge

STRATEGIC THRUST 1: STRENGTHENING THE REGULATORY AND INSTITUTIONAL FRAMEWORK

Ministries/Agencies to Spearhead IACEE Recommendations under Their Purview

5. If energy efficiency is to be accorded the appropriate level of attention, the various Government agencies must work more closely together and formulate specific plans to achieve specific energy efficiency targets for the areas under their purview. For example, MND/BCA/HDB will formulate action plans relating to the building sector, MTI/PUB/EDB will oversee the plans for the industrial/manufacturing sector and MCIT/LTA will look into plans for the transport sector.

6. It is recommended that the relevant Ministries/agencies spearhead and drive the implementation of specific IACEE recommendations under their purview.

Target and Review Mechanism

7. To ensure that there is constant progress, there is a need to create a mechanism whereby the Government can gauge and monitor the energy efficiency. The various Government agencies should therefore formulate masterplans or programmes to achieve specific energy efficiency targets for the respective segments of the economy. This will require a detailed stocktaking and assessment of how much can be done without affecting the competitive base of Singapore.

8. It is therefore recommended that the relevant Ministries/agencies formulate masterplans to achieve specific energy efficiency targets for areas under their purview.

Development of Standards

Compared to Japan, USA and Europe, Singapore is somewhat lagging in the development of standards for all sectors. The formulation of standards are important because it allows energy consumers to benchmark their performance with some objective yardsticks. Standards also allow the regulatory agencies to calibrate regulations and to compensate for market inefficiencies. Some examples include the following :

Commercial and Institutional Buildings

The design and subsequent construction of such buildings determine to a great extent the electricity consumption of future occupants. In Singapore’s tropical climate, use of much of the domestic and commercial electricity consumption can be attributed to the need or desire to air-condition the living environment.

It is for these reasons that the Government has already in the late 1970s and early 1980s embarked on a regulatory approach towards the design and construction of buildings. Seeing that the last major update was in the early 1980s, a review by the BCA has been in progress to ensure that these regulations are in tune with the latest technical knowledge and developments. While this is timely, there may be a need to do it more frequently given the increasing need for energy efficiency.

It is therefore recommended that MND/BCA review and update the building regulations for commercial and institutional buildings on a more frequent basis. This review should incorporate benchmark performance values that are raised incrementally with each review. The subsequent raising of the benchmark should take into consideration the achievability of the new scores as well as the cost implications.

Residential Buildings

Residential buildings are currently not regulated to the extent that commercial and institutional buildings are. This is because the latter are usually fully air-conditioned, while residential buildings are considered to be ventilated naturally.

However, the widespread use of air-conditioners in residential dwellings invalidates this assumption. With the growing affluence of Singaporeans, their electricity consumption is growing significantly. This is due mainly to residents air-conditioning their homes, with the air-conditioning units being switched on primarily in the evenings and nights, and on weekends.

There is inadequate knowledge on what passive measures in residential buildings could cost-effectively minimise the need for residents to use air-conditioning. Although, there are already ad- hoc examples of these (e.g. HDB has already proceeded with sun-shades for many of their new flats to reduce the amount of direct sunlight into the living area without affecting adversely the ambient brightness), other possible design measures could be adopted and implemented on a wider basis. The experience and standards of countries like Japan and the US are less relevant to Singapore, given our tropical climate.

It is recommended that MND/BCA/HDB, as a first step, commission a study into what are the energy consumption characteristics of present day private and public residential buildings, the underlying trends and the possible design responses. In the second step, MND/BCA/HDB should formulate a set of standards for both private and public residential housing.

Electrical Appliances

Air-conditioners and refrigerators take up the lion’s share of the electricity consumed in residential buildings. However, energy efficiency is not usually top of the mind when consumers purchase such appliances.

The USA and Japan have already introduced minimum energy efficiency standards for many electrical appliances. Labelling schemes (eg. Energy Star) have been introduced. In the case of personal computers, Japan and the US now share a common standard. Through a combination of standards, labelling requirements, and incentives, Japanese and US manufacturers have been pushed into producing a wide range of energy-efficient appliances.

Our Ministry of the Environment (ENV) already operates a voluntary Singapore Green Labelling Scheme. Under this scheme, equipment which meets certain energy efficiency and environmental standards would be allowed to have a Singapore Green Label. A study by ENV has shown that if all our existing domestic refrigerators and air-conditioners were to meet these standards, there would be savings in energy consumption of about 46% for refrigerators and 9% for air-conditioners.

It is recommended ENV accord greater priority to promote voluntary labelling for air-conditioners and refrigerators.

This approach could be accelerated if we were to ride on the US and Japanese efforts (since their far larger markets are a major consideration for manufacturers) and extend the labelling scheme to other appliances using US and Japanese standards where suitable. Given the large number of types of appliances that are being introduced into the consumer market, this will be a more pragmatic approach that will allow the swift introduction of standards for new products.

It is therefore recommended that ENV study the possible adoption of US and Japan standards for electrical appliances so that voluntary green labelling can be expanded as quickly as possible.

Industry/Manufacturing

The case for standards in the manufacturing sector is more complicated. On the one hand, the wide diversity of manufacturing activities makes the development of standards a difficult task; on the other hand, the imposition of standards may place unnecessary and prohibitive costs on the manufacturer. Although there have been some efforts made, especially by the Japanese, a more practical instrument for the manufacturing sector in Singapore is the promotion and adoption of best practices.

As the knowledge base in this area in Singapore is low, it is recommended that MTI/PUB study more closely the experience of countries like the USA and Japan with a view to introducing energy efficiency standards and best practices for the manufacturing sector into Singapore.

Land Transport

The Ministry of Communications and Information Technology and the Land Transport Authority (MCIT/LTA) have ascertained that mass rapid transit transport is among the most energy efficient in the world, partly due to the conscious adoption of energy efficiency measures in the design of the relatively new systems.

However vehicular transport as compared to MRT/LRT systems are inherently far less efficient. As motor vehicles sold in Singapore are in the main manufactured according to Japanese, American and European standards, they are already fuel-efficient. Singapore therefore benefits from the implementation of standards in these countries. However, there are significant developments in the motoring world that will see the commercial introduction of far more energy efficient cars (e.g. those with hybrid motors) in the future.

It is recommended that MCIT/LTA facilitate the introduction of newer and more energy efficient vehicles as soon as it is practicably possible.

Mandatory Energy Audits for Large Energy Consumers

10. While the design codes for the construction of buildings set parameters for energy consumption over the life span of the building, the subsequent operation and maintenance of the usually centralised air-conditioning plants in commercial and institutional buildings are equally important. These plants can typically account for 60% of the electricity bills of the buildings. Badly maintained plants can inflate energy consumption significantly.

11. Savings of up to 30%, and more with payback periods as short as two years, are possible. However such audits have not taken off, for the reasons mentioned earlier. Therefore, it may be advisable to adopt a more focussed approach and identify and subject only buildings with high unit rates of energy consumption to mandatory energy audits.

12. It is therefore recommended that MND/BCA make mandatory energy audits of all buildings with high energy consumption (e.g. those older than five years and with an energy consumption above a minimum amount per unit area. These energy audits should include a cost-benefit analysis of energy efficiency measures that could be implemented.

13. A similar approach can be adopted for large energy consumers in the manufacturing sector. In Japan, large energy consumers in the manufacturing sector are required to employ "energy managers". These energy managers are trained by the Japanese MITI and are required to review their companies’ yearly energy performance and propose measures to reduce the energy consumption. This amounts to a self-audit.

14. It is therefore recommended that MTI/PUB evaluate the possibility of (a) requiring large industrial energy consumers to audit their energy consumption, and/or (b) providing incentives to such consumers to audit and implement energy efficiency measures.

Incorporation of Energy Efficiency as an Objective in Land Transport Policy and Programmes

15. Vehicular transport of persons as compared to rail transport is far more inefficient. A mid-sized car with just the driver consumes as much as five times the energy consumed by a rail system on a per kilometre travelled basis. While improvements can be made to the energy efficiency of motor vehicles (e.g. inculcation of good driving habits, the eventual introduction and promotion of fuel efficient vehicles such as the hybrid cars being tested out by Japanese and American motor companies), the degree of improvement will not match the savings resulting from a switch from private to public transport. This strengthens the justification for a more extensive and efficient public transport system.

16. Although land transport policy does to a significant degree already achieve energy efficiency, impetus would be given to energy efficiency in the transport sector if it is explicitly recognised as a policy objective.

17. It is therefore recommended MCIT/LTA incorporate energy efficiency as a policy objective of land transport policy. In particular, it is recommended that the use of public transport be further encouraged and promoted.

STRATEGIC THRUST 2: IMPROVING THE MARKET ENVIRONMENT

18. The most direct and obvious solution to achieve a breakthrough in energy efficiency is pricing. If energy is priced sufficiently high, the market response will be the adoption of measures to improve energy efficiency. This happened in Japan after the oil shock of the seventies. However, the adoption of such a strategy may not be realistic as it may erode our competitiveness and weaken our economic base.

Pricing Strategy

19. A wholesale electricity market has been put in place to facilitate competition in electricity generation and supply. In addition, the electricity supplier, Power Supply Ltd has on 1 Jan 99 implemented the restructured electricity tariffs to make electricity prices more cost reflective.

20. It is recommended that MTI/PUB monitor and review this with a view to introduce other pricing strategies to discourage heavy consumers of electricity.

Demand-side Management (DSM)

21. At the moment, the absence of sufficient incentives in the market is a barrier to energy efficiency. Utility profits are usually based on the total value of capital invested and the amount of power sold. Often under the regulatory framework for electricity companies (under the CPI-X regime), the generating company is allowed to keep whatever gains in achieving generating efficiency. This, however, creates an implicit financial disincentive against energy efficiency or other investments that can reduce power sales and utility revenues. Utility companies will actually lose revenue and decrease profitability, if they were to promote energy efficiency and reduce demand.

22. A number of countries have therefore been looking into demand side management (DSM) programmes. Instead of merely building up the generating capacity to meet the projected demand, DSM initiatives are aimed at smoothing and reducing demand. Some US states are moving towards a framework where the utility’s profits are not directly dependent on the sales volume of electricity and gas. The utility company derives a profit from promoting energy efficiency. These profits could be funded from the savings that accrue to the state from the greater level of energy efficiency.

23. One limited form of DSM is already being promoted by PUB. Through the pool system, bids are received throughout the day for the supply of electricity – consequently consumers have to pay higher prices for electricity during peak hours. This will eventually moderate the peaks and troughs of demand and reduce the generating capacity that has to be made available during peak hours. However, we have yet to pursue DSM as aggressively as other countries. In Hong Kong, consultants, tasked with the formulation of a DSM programme, estimated that the provision of 700MW of additional generating capacity could be deferred from 1997 to 2004 through the moderation of demand.

24. It is therefore recommended that MTI/PUB commission a study to evaluate the viability of a comprehensive DSM programme in Singapore.

Awareness Creation

25. There is no dearth of information on energy conservation and efficiency. There are many committed groups in Singapore working on energy efficiency or in related areas (e.g. in the tertiary institutions). However, for the market to be more efficient, energy end-consumers must have better information about possible energy efficiency measures. Small and medium sized industrial enterprises are a case in point. They are generally not very aware of what is available in terms of technology and know-how to implement energy efficiency in their operations. It will also help if households know how they fare in energy consumption vis-?vis other households in similar housing types so that those who are heavy electricity consumers will know that there is a room for energy efficiency improvements.

26. It is therefore recommended that MTI/PUB require power supply companies (eg. Power Supply Pte Ltd) to include indicators prominently in the electricity bills so that consumers are made aware of where they stand in energy efficiency:

27. For residential housing, the bill could include a table of average energy consumption values for 3-room, 4-room, 5-room flats, so that the consumer can choose the appropriate figures (these could be the values in Figure 7 above). For commercial/institutional buildings, the indicator could be the energy consumption per unit floor area. These values can be worked out by BCA with the assistance of URA and PUB. The bills could also indicate charts of the household consumption so that the household could monitor whether its energy consumption is rising or falling.

28. Once consumers are aware of their energy consumption, they must have access to information about how they can use more energy efficient methods. Residents concerned about their high household consumption can for example, be told to avoid incandescent lamps. Building management can also be given essential information and advice and/or directed to energy consulting companies.

29. In addition to current educational and promotional efforts, it is recommended that MTI/PUB make accessible a repository of relevant and applicable energy conservation and efficiency information. These can be done through an Internet site, service call number or customer calls.

R&D and Introduction of New Technologies into the Market

30. The inefficiency of the market in Singapore is partly due to its size. New technology and expertise from other countries can be "customised" by local researchers but there will be barriers to the introduction of these technologies. For example, "super" windows that cut out heat while letting in the light are rare and expensive in Singapore. This is because of the lack of familiarity with it and consequently the absence of a local market for any distributor – a larger local market would narrow the differential between normal and such special windows.

31. It is therefore recommended that the MTI/PUB review and formulate, in consultation with MOF, IRAS, EDB, ENV, BCA and PSB, financial incentive schemes to facilitate the introduction of such technologies and products in Singapore; and look into the viability of setting up an R&D centre or institute.

STRATEGIC THRUST 3 : USING THE PUBLIC SECTOR AS THE LEADING EDGE

32. The public sector by virtue of its size is well-positioned to be a role model for energy efficiency measures that are viable. In 1997, the energy consumption of the public sector constituted 6.3% of total electricity consumption, or 14.4% of the building sector. Any improvement in the energy efficiency of the public sector will make a significant contribution to our national performance.

Energy Audits for Public Sector Buildings

33. It is recommended that MND/BCA evaluate the energy efficiency of public sector buildings annually and band them into three groups, e.g. top 25%, median group of 50%, and the bottom group of 25%. (Banding is preferred to ranking as the present data does not allow a precise evaluation of the energy efficiency performance of a building.)

34. Over time, this evaluation can be improved, and ranking can be considered at a later stage. For the present time, a rough indication of how a particular building fares in comparison to other similar buildings would be useful to the landlord government agency. The annual energy efficiency evaluation will be sent to the Heads/CEOs of the respective government agency for greater accountability.

Performance Contracts

35. One alternative procurement method that has been proven to be effective in achieving energy efficiency in the US is performance contracting. Under this arrangement, energy efficiency improvements are funded by energy service companies (ESCO). These companies, in the simplest form of the contract, pay all the up-front costs and receive over a fixed period of time a share of the cost savings resulting from these improvements. Not only do building owners enjoy savings in running cost, they are also spared the difficulties and risk of sourcing for funds to upgrade and replace their existing building plants.

36. Without taking a long term view, such energy efficiency measures will not be financially feasible. There is still not enough emphasis on life-cycle-costing study in the evaluation of projects. Performance contracting will create greater awareness of the fact that relying on short term low cost solutions may end up costing much more overall when running costs are also factored in. This form of contracting is still relatively new in Singapore. The lack of familiarity with this method restricts the wider use of this procurement method.

37. To accelerate this development, it is therefore recommended that MND/BCA look into performance contracting so that public sector agencies whose (a) building plants are due for replacement and/or (b) building energy performance falls under the bottom 25% group, can improve their building energy efficiency. To facilitate this, the BCA can work with the MOF on a standard form of contract for performance contracting.

HDB as Forerunner

38. HDB, as the largest developer of residential apartments, holds great influence through its design and procurement exercises. It could through the incorporation of more energy efficiency measures in its building programmes pave the way for injection of expertise and new technology into new residential buildings in Singapore. HDB has, as a matter of course, been already pursuing energy efficiency and has implemented several initiatives. However, to accelerate the incorporation of energy efficiency standards, HDB should lead in the incorporation of such measures that would set the benchmark for the private sector.

39. It is therefore recommended that MND/HDB set energy efficiency as a top priority in public housing. The improvements in newer precincts could be used to develop new benchmarks for not only the public but also the private housing sector.

OTHER AREAS

40. Two areas, which require special mention are solar energy and district cooling systems. Solar energy is viable in buildings where heated water is needed. However, for the generation of electricity, the capital costs of photo-voltaic (PV) cells have not reached a level that justifies its wider adoption. These costs could fall faster than expected with the concerted R&D efforts in US and Europe to bring forward the commercial viability of PV cells. In Singapore, the Land & Estate Office (LEO) of MINDEF is currently studying the feasibility of using PV cells as the building envelope in addition to its role of generating electricity. LEO’s efforts could reduce the installation costs of PV cells further and accelerate its commercial viability in Singapore. This is a good example of how the public sector can take the lead in the push for energy efficiency measures.

41. District cooling systems (DCS) is a promising solution for high-density urban areas where air-conditioning is a major consumer of electricity. It is already being implemented for the Changi Business Park that the Jurong Town Corporation (JTC) is developing. The $120 million DCS-Changi is expected to lead to savings in operating cost (up to $32 million over 20 years on electrical charges), energy usage (40% in terms of total installed capacity as compared to individual air-con systems) and building space (as much as 4% of total building floor space). When fully developed, it will cater to the air-conditioning needs of some 60 buildings with a total gross floor area of over one million sqm at the 66-ha Changi Business Park. DCS will also be implemented for the New Downtown in Marina to service about 1.25 million sqm of gross floor area.

CONCLUSION

42. The specific recommendations of the Committee are summarised in Annex B. There is much to be done to improve our energy efficiency and greater and more focused efforts need to be put in. While the change in mindset towards energy efficiency requires a quantum shift, energy efficiency measures require a continuous and disciplined application of small incremental efforts.

ANNEX A

INTER-AGENCY COMMITTEE ON ENERGY EFFICIENCY

(A) : Terms Of Reference

Review current energy usage and project future energy needs and supply.
Benchmark our energy consumption efficiency against other cities of the world.
Establish the impact of building regulations, energy pricing policies and other energy-related policies on energy demand and supply as well as on land resource planning.
Recommend policy measure to improve efficiency of energy consumption.
(B) : Composition

(B) : Composition

INTER-AGENCY COMMITTEE ON ENERGY EFFICIENCY

Mr Koo Tsai Kee (Chairman)
Senior Parliamentary Secretary
Ministry of National Development

Mr Low Puk Yeong (Deputy Chairman)
Deputy Secretary
Ministry of National Development

Members :

ANNEX B

SUMMARY OF IACEE’S RECOMMENDATIONS