Energy Conservation Bill

3.33 pm

Order for Second Reading read.

Dr Vivian Balakrishnan: Mr Speaker, Sir, I beg to move, "That the Bill be now read a Second time." The Energy Conservation Bill, or EC in short, in order to save energy on our part, seeks to introduce mandatory energy management practices for large energy users in the industry and transport sectors, and to consolidate legislation on energy efficiency under one Act.

Sir, we are entering a future of high resource prices and increased economic and environmental risk. The exploitation of low-priced natural resources has underpinned much of our global economic growth in the 20th century. However, there is now soaring global demand for resources due to rapid economic development in emerging markets. Furthermore, the cost and difficulty of finding and extracting new sources have also been increasing progressively.

According to a 2011 McKinsey study on resource productivity, the past 10 years have wiped out, in real terms, all price declines that occurred in the previous century. Old input-driven business models that benefitted from low resource prices will confront a test of survival. Consequently, private and public sector institutions need to make resource productivity a higher priority and prepare for a resource-constrained future.

In a global economy that faces greater resource scarcity, companies, consumers and countries that break with old patterns and take the lead on resource efficiency will strengthen their competitive and economic position. This is certainly true for energy.

Singapore imports all our energy needs to fuel our economy. The more we grow, the more we need to think of conserving energy and using it efficiently. Otherwise, we will pursue an ultimately unsustainable growth path. Today, countries face a stark choice – to compete aggressively for finite resources – this is not a viable option for a small city state with no natural resources like ours – or to advance towards a more energy-efficient economy and more sustainable pathways to prosperity.

For Singapore to continue being prosperous and secure, we must learn how to get more power, more mobility, more lighting, heating and cooling from less energy. We must minimise wastage. We need to focus the minds of corporations and citizens on building and achieving breakthroughs in energy efficiency through more rigorous energy management practices. And this has to be a national effort.

Thus far, Singapore's efforts on improving energy efficiency have been focused on raising awareness, on building capabilities and incentivising the adoption of energy- efficient practices. Much more can be done. Findings from industry consultations and benchmarking studies carried out by MEWR and NEA show that energy management varies substantially among companies in Singapore, with some managing their consumption better than others.

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Mandating energy management practices under the Energy Conservation Act will focus management attention of large energy consuming businesses on proper energy management. It will complement existing incentive schemes and capability building programmes, such as the Grant for Energy Efficient Technologies and the Singapore Certified Energy Manager Training Grant. The resulting best practices, technologies and processes will subsequently cascade down the economic chain to smaller enterprises. And similar energy management practices are already mandated in countries, such as Japan, South Korea and China.

Sir, let me highlight the key features of this Bill. First, the respective Ministers in charge of the industry and transport sectors will be empowered to gazette the corporations or class of corporations that have to comply with the energy management practices set out in the Act. We intend, as a start, to require all large energy users in the industry and transport sectors that consume more than 15 gigawatt-hours of energy equivalent each year, or 54 terajoules of energy, to first appoint an energy manager; second, to monitor and report energy use and greenhouse gas emissions; and third, to submit energy efficiency improvement plans. Large energy users in the industry and transport sectors were consulted by MEWR, MOT, NEA and EDB on the energy management practices to be mandated. In December 2011, a draft of this Bill was released for consultation and subsequently revised to incorporate the feedback received. MEWR and MOT, together with our statutory boards will continue to engage stakeholders on the implementation details of this Bill.

Second, the Mandatory Energy Labelling Scheme (MELS) and the Minimum Energy Performance Standards (MEPS) for household appliances, as well as the Fuel Economy Labelling Scheme (FELS) for passenger cars and light goods vehicles under the Environmental Protection and Management Act (EPMA) are consolidated under this Energy Conservation Bill. Energy-efficiency related measures for the building sector will continue to be administered under the Building Control Act for now. However, the energy efficiency-related legislation under the Building Control Act will subsequently be incorporated into the Energy Conservation Act. Consolidating all legislation on energy efficiency in the industry, transport and household sectors under this Bill over time will enable a more coordinated approach to mandating energy efficiency.

Third, the Energy Conservation Act will be jointly administered by MEWR and MOT. The Minister for the Environment and Water Resources will oversee the measures for the industry and household sectors, while the Minister for Transport will oversee the transport sector measures under this Act.

Energy conservation is an area where we can all make a profound impact. It is a global issue. The policies of governments, the operating decisions of local and multinational corporations and international institutions would all play a role.

However, the decisions of individuals count, too. Collectively, the everyday choices that we make at home, in the office, our mode of transport – each of these decisions add up. We can make decisions on energy through the products we buy, how we make them, how we use them, as well as what we do in our own spare time. By moving and acting together, we can all make a difference.

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This Bill reflects our collective commitment to commence a process that will transform our approach to the use of energy and other resources. It provides a legislative framework to shape more rational energy choices in industry, transport and households, and to encourage a more conscientious consciousness of the energy we consume. It is an important step towards ensuring that we are prepared for an energy-efficient future and sustainable development. Sir, I beg to move.

Question proposed.

Mr Speaker: Order. Before we continue the debate, I propose to take a break. I suspend the Sitting and will take the Chair again at 4.05 pm.

Sitting accordingly suspended

at 3.43 pm until 4.05 pm.

Sitting resumed at 4.05 pm

[ Mr Speaker in the Chair]

ENERGY CONSERVATION BILL

Debate resumed.

Dr Teo Ho Pin: Mr Speaker, Sir, I rise in support of the Bill. Sir, I wish to declare my interest as the Vice-Chairman of the Singapore Environment Council. I have five points to make on the Bill.

First, growth of cities. Rapid urbanisation and the rising affluence of people have increased demand for energy, causing severe pollution problems in many cities. Today, global cities are struggling to develop sustainable solutions to meet growing energy demands and solve pollution problems. As a small country with no natural resources, Singapore faces similar challenges.

Over the years, Singapore has developed into a densely built-up environment, with massive expansions to our economy. As a result, Singaporeans have become more affluent and consume more, leading to an increase in energy consumption. These trends pose significant challenges for Singapore in balancing our economic growth and energy security while providing a sustainable and liveable environment for our people.

Second, Singapore's carbon footprint. Sir, in a recent newspaper report by TODAY on 6 March 2012, Singapore was highlighted by the World Wildlife Fund (WWF) as "a top carbon culprit in Asia-Pacific". The business and industrial sectors were identified as major contributors to our high carbon footprint. In fact, the building sector is responsible for 15% of the country's carbon footprint.

According to the Energy Data and Modelling Centre handbook of Energy & Economic statistics in Japan (2010), Singapore has the fifth highest CO 2 emission per capita, after USA, Australia, Canada, and Taiwan. We emitted 11.92 ton-carbon/person in 2007. Sir, although such emission measurements disadvantage countries with small populations, such as Singapore, it is a fact that Singapore is contributing to increasing amounts of greenhouse gas emissions.

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Sir, the WWF's remark serves as a timely wake-up call for Singapore to reduce our carbon footprint. We should not be defensive but should instead be progressive and take concrete actions to reduce greenhouse gas emissions. To do that, we need a robust structure to manage the demand and supply of energy in Singapore.

Third, Japan's Energy Conservation Framework. Sir, the proposed Energy Conservation Bill will help Singapore develop a framework to legislate, implement and enforce energy conservation policies and measures more effectively. At this point, I wish to share the success of Japan's Energy Conservation laws and policies. Over the last 40 years, Japan has implemented a comprehensive set of energy conservation measures, such as formulation of energy conservation laws, financial support for energy conservation equipment and systems, development of energy conservation technologies, and extensive public education on energy conservation. These measures have diversified Japan's energy sources, reduced energy demand in many sectors, and built an energy-conserving culture among its people.

Fourth, regulating the business sector. Sir, Singapore can also learn from Japan to reduce energy consumption in the industrial sector, residential sector, business sector and transportation sector and implement various energy saving measures. The proposed Bill has provided an energy conservation framework for the industrial, domestic and transportation sectors. However, it fails to address the business sector, especially with regard to energy conservation policies and measures, for the operation of buildings.

Sir, buildings have high energy consumption and are responsible for a significant amount of our greenhouse gas emissions. In Singapore, many buildings in the business sector, such as offices, commercial buildings, hotels and hospitals, consume a lot of energy. Although the Building and Construction Authority (BCA) is encouraging the Green Mark scheme for the construction of new buildings and retrofitted buildings, BCA does not monitor the energy consumption of buildings.

Thus, there may be inefficient electrical and mechanical appliances, IT and security systems, and lighting systems in many buildings that waste energy, contributing to more greenhouse gas emissions. Sir, I am glad that the Minister has mentioned that the Building and Control Act, part of it, that is, the energy conservation portion, will be incorporated into the proposed Energy Conservation Bill. May I ask the Minister when will this be done?

Fifth, energy savings in domestic sector. Sir, I support Division 1 of Part III of the Bill which prescribes for the labelling of certain goods which consume electricity or fuel, and the prescription of minimum energy efficiency standard for such goods. This information will help consumers purchase more energy-efficient appliances. However, having energy-efficient appliances does not directly translate to low energy consumption. Thus, we need to inculcate green habits among Singaporeans in order to further reduce energy consumption.

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Sir, the Government has been educating the public on energy conservation for many years. However, it seems that many building users, especially in offices and commercial buildings, have not fully embraced energy-saving habits. This could be partly due to a lack of ownership. We need to constantly identify and highlight high energy consumption appliances and devices to Singaporeans and various building users. At the same time, we must set up monitoring mechanisms to help them track their energy saving efforts. This will encourage better ownership among Singaporeans and various building users.

Sir, the lack of green values among Singaporeans and building users may pose significant barriers to the effective implementation of the energy labelling scheme. I wish to ask the Minister if the Ministry has any plans to further encourage our people to reduce the purchase of energy or fuel consuming appliances, and also reduce consumption of energy through energy saving habits.

Sir, to further increase awareness on energy conservation among Singaporeans, more educational activities and publicity events should be organised. In Japan, the government has established "Energy conservation day" on the 1st of every month, "Energy conservation month" in February and "General check-up day for energy conservation" on 1 August and December. We should organise more regular activities to reach out to our community, and develop a green culture among Singaporeans.

Sixth, effectiveness of energy manager. Clause 30 of the Bill requires a registered corporation to appoint an Energy Manager who will assist the firm to comply with energy management practices. This practice is similar to Japan's energy conservation law. However, I am concerned that the Energy Manager in Singapore may not be as effective as the Energy Manager in Japan due to cultural differences.

First, the Energy Manager in Singapore has limited mandate to implement the energy efficiency improvement plan. This may be so when introducing new energy management practices in different departments in a firm, or installing new energy-efficient devices or appliances. The energy efficiency improvement plan may also face resistance or not receive top priority when introduced to different departments. These problems are commonly encountered in the implementation of ISO 9000 Quality Assurance System in companies.

Very often, the Quality Service Manager (QSM) faces difficulties in getting their colleagues and sometimes their bosses to comply with quality procedures. To overcome such problems, I suggest that we should instead appoint External Energy Auditors to help firms implement energy efficiency management practices. The use of External Energy Auditors will facilitate the sharing of best practices, thus benefiting more firms in energy conservation, while in-house Energy Managers may have limited expertise and experience and may find it difficult to provide innovative solutions for continual energy conservation. Sir, in Japan, the Energy Conservation Centre Japan provides FOC (free of charge) energy audit services for firms. This service has benefited thousands of companies over the years.

Sir, in 2006 and 2007, Japan launched the New National Energy Strategy and Basic Energy Plan respectively to conserve energy for the next 20 years. Likewise, I propose that Singapore should also formulate a National Energy Strategy Master Plan to provide a roadmap to guide Ministries, Government agencies, industries, businesses and our people to conserve energy.

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Sir, together, we can work towards a cleaner, greener and more sustainable Singapore in the future.

4.15 pm

Assoc Prof Fatimah Lateef (Marine Parade): Sir, it is time for Singapore to have this Bill. It is also time for us to formalise and legislate certain practices and requirements. It also shows we are fulfilling our global responsibilities with some of the new measures that are going to be undertaken. This Bill is also necessary in our move towards achieving our pledge to reduce greenhouse gas emissions by 16% by the year 2020.

I have a few issues to discuss. One, on the requirements for corporations to perform energy reporting, record-keeping and submission of energy improvement plans, will there be some form of training provided to the relevant personnel to be on par with these submissions? Will there be specific training available for them for the so-called "energy manager"? If so, which funds can the companies utilitise for this, and can the post-secondary education funds be used by these employees who are going to be trained? Certainly, this will also likely be a new job scope for a lot of companies and, no doubt, it will be a move towards job creation.

Also on the same matter, Sir, now that we are starting to legislate, will we be having more relevant courses available at our institutions of higher learning or even at WDA? Currently, there is a course conducted by the National Environment Agency, that is, the Singapore Certified Energy Manager Programme. Is this course sufficient for the required training, or do we need to supplement and enhance the available course?

Two, this Bill is targeted towards the larger energy users in industries, consuming more than 15 gigawatt hours of energy per year. This is equivalent to energy consumed by some 3,000 4-room flats. This is a good starting point. However, studies done at the Danish Institute of Energy Authority has shown that companies can substantially reduce their energy consumption and cost by implementing such programmes. And, on average, typically they can reduce their energy consumption between 10% and 15 %. So, I hope we can study some of these models.

How about the inclusion of other companies, like our SMEs? We have many SMEs contributing significantly to our economy and if we add their total energy consumption, it might come up to something quite substantial. SMEs may have unique energy demands and requirements and face different issues from bigger companies. This move will certainly help companies to be more energy efficient and energy conscious. After all, energy conservation and reducing climate change is everyone's and every company's responsibility, I feel. Countries, such as the United Kingdom and France, do have energy policies for their SMEs; perhaps we can study from these models.

Three, what else and how else are we stepping up education of the public as well as the industries? Will we be able to send relevant staff and personnel to study and share best practices from other countries like Japan, Denmark and South Korea where there are indeed good practices on energy-efficient usage? For the sales personnel in Singapore, we will also need to perform training for them as they will be the ones who can promote sales of various energy-saving household appliances and equipment.

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Four, can we have an update on the development of the proposed web-based system planned to support online submissions from corporations? Is this in its early phase of implementation already?

Five, let me now turn to air-conditioning, something many of us cannot do without. It is one of the major contributors to our energy consumption. This is dependent a lot on the temperature set and, interestingly, the temperature set has effects on productivity. Studies have found that for work requiring focus and high concentration, temperatures should be set between 22 and 23 degrees Celsius. For jobs involving innovation and creativity, it has been recommended that a temperature of about 24 to 25 degrees, a little bit higher, is sufficient. Now, the temperature set in offices also depends on the climate origin of the people and the workers there. It has been shown that tropically acclimatised persons prefer lower temperature, whereas those workers who come from temperate or other cooler climates prefer a warmer temperature. Thus, companies must know how to choose smart air-conditioning systems and set the appropriate temperatures. Some recommendations and guidelines from the Ministry will also be useful in this area.

Six, Singapore is one of the countries that is actively promoting Green Buildings. There is a "Zero Energy Building" in Singapore, in case Members did not know, run by the BCA. Now, to build a Green Building, there must be a green concept plan, a construction stage with active and passive phases, green promoting tenants who will then realise the economic incentives it can bring. How are we doing in reaching the target set that 80% of our buildings must be green-marked by the year 2030?

Seven, Singapore has also set a target to improve our energy intensity by some 35% by the year 2030, from the 2005 levels. This has also been documented in the Sustainable Singapore Blueprint of 2009. Can I ask the Minister how are we doing now in 2012, enroute towards 2030? Sir, I support the Bill.

4.20 pm

Mr Yee Jenn Jong: Mr Speaker, the Energy Conservation Bill aims to bring about a 35% improvement in our energy intensity by 2030 and to improve the energy performance of our companies in the industrial and transport sectors. Sir, I welcome this Bill.

As a developed nation, we should be more energy efficient, both for the purpose of allowing our companies to become globally competitive as well as to signal our commitment to good use of scarce global resources. This Bill sets out the minimum energy management standards. These include the appointment of energy managers, reporting of energy use, and submission of energy efficiency improvement plans for large users of energy. I noted that the Government recognises that these are "minimum" standards, which imply that it is aware that more needs to be done and companies can be encouraged to do more. I would like to point out some implementation matters for consideration, as well as to offer suggestions on what more can be done.

First is in the area of energy management practices. We are generally supportive of making energy management plans mandatory for heavy energy users. There are, however, potential issues concerning governance that we anticipate with the proposed energy management practices. This Bill gives extensive flexibility to the Director-General and to the Minister to subsequently introduce by-laws, regulations and standards via Gazette. The Minister is empowered to gazette by-laws, but no guidance has been given so far. It is left to the subsequent discretion of the Director-General. Therefore, I would like to ask the Minister to give more indications of the by-laws, regulations and standards the Ministry intends to gazette, so that Parliament can debate this. What guidelines does the Ministry intend to use? Can the Minister share the timeframe guidance on when the by-laws may be gazetted? I believe these are necessary to prevent inconsistency in the implementation and enforcement of the proposed Bill.

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Drawing a parallel from the practices in the building industry, there are the Building Control Act (BCA) and the Building Control Regulations (BCR). The BCA and the BCR have been in use for more than 20 years in Singapore and are very detailed. Does the Minister anticipate that the by-laws, regulations and standards of this Bill will take a form like that of BCA and BCR?

Second is in the area of energy managers that large companies must now employ, and auditors to monitor for compliance. We noted that there have been recent programmes which are supported by E2Singapore and EDB to train auditors and energy managers. How many have been trained and how sufficient are these programmes to ensure that there will be sufficient qualified officers to fulfil our needs to implement this Bill? Are there guidelines on the qualifications and experience of such energy managers?

Third, I would like to cover an area I believe will be increasingly important for both Singapore and for the world, which is renewable energy. I think a gap in this Bill is that it does not seek to promote renewable energy explicitly. A comprehensive energy conservation effort must include renewable energy as a component. South Korea is aiming for an 11% share of renewables in total energy consumption by 2030. Another heavy energy consuming country, Belgium, is aiming for 12% share of renewables for electricity suppliers in 2012. Japan, the energy intensity of which is comparable to the EU, is aiming for 10% by 2020. Denmark, already a leading energy-efficient country in the world, is aiming for 13% by 2020.

According to statistics from Singapore's Energy Market Authority, in 2010, 79% of electricity in Singapore is produced from natural gas; 19% is from petroleum products, that is, fuel oil and diesel, but only under 3% is from renewables. This gap is made more pronounced by the fact that our National Climate Strategy commits Singapore "to do our part in the international effort to address climate change". We have promised to play our part by "improving the energy efficiency of our major energy sectors, namely, power generation, industries, transport, buildings and households" and "to the global research effort on climate change and energy technologies", particularly in solar energy and green buildings. The Strategy states, "The objective of our research efforts ... is to improve the current state of technology, and to bring down production costs to a level that would make large-scale adoption commercially viable". The Government is conscious of the need to signal to the international community our national commitment to the international climate change effort. The fact sheet in this Bill concludes, "Establishing energy efficient standards across sectors under an Energy Conservation Act will also send a strong signal to external parties that Singapore is serious in undertaking mitigation actions to meet its international obligations".

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Therefore, I would like to know the progress of our development in using more renewable energy. What are our current plans to significantly increase the use of renewables? I would like the Government to be more proactive to signal to the international community of our commitment to international efforts to address climate change by setting a target of renewables in total energy consumption to be achieved by a specific year. Using the four benchmark countries' target as reference, how far can we push for a target of, say, 10% of renewables in total energy consumption by 2030?

Lastly, I would like to cover another area which I feel can be promoted more aggressively to drive energy conservation practices, which is, having an integrated system of financial incentives and disincentives. A comprehensive energy conservation policy, especially for a liberalised energy market such as in Singapore, should include such a financial system to support volunteer agreements with corporations on energy efficiency targets. In terms of financial systems, the developed world can be divided into three zones: EU and UK, AAC (America, Australia, Canada) and Asia, namely, Japan, Korea and Singapore. AAC offers both financial assistance to promote energy management and tax incentives to encourage achievement of energy efficiency targets. EU and UK use carbon emission market "cap and trade" to promote energy efficiency, but individual countries use a variety of other instruments, including financial assistance, tax incentives and green taxation. Asian countries, including Singapore, use only financial assistance.

We can look more aggressively at using tax and cash incentives to encourage the achievement of energy efficiency targets set for different industrial sectors in consultation with stakeholders. Currently, the energy efficiency initiatives of E2Singapore are mainly support schemes for implementing programmes. Only the Green Mark Scheme gives out cash incentives for hitting targets. I am interested to know how effective Green Mark has been, and if the effectiveness of all schemes has been indexed and tracked. I am also interested to know the utilisation rate of existing schemes listed in E2Singapore and if the Minister thinks this has been effective in promoting energy efficiency.

Calling current assistance schemes as "incentives" is also a misnomer as they do not really measure actual achievement of targets. Besides current support schemes, I hope the Ministry can look at providing real incentives for hitting energy efficiency targets. My colleague, the hon Member Gerald Giam, will elaborate further on suggested taxation and incentive schemes that can be considered.

In summary, I support the Bill in its intent to bring about a more energy-efficient Singapore. I hope the implementation issues and other suggestions that I have raised can be considered by the Minister to more aggressively set the pace for Singapore to be a global leader in energy conservation and energy technology.

4.31 pm

Mr Gerald Giam Yean Song (Non-Constituency Member): Mr Speaker, as an industrialised economy which consumes its fair share of energy, Singapore must play its part to reduce its carbon footprint and combat climate change. One way of doing this is to be more efficient in the use of our limited energy resources. Doing so is not only environmentally friendly, but it is also economically beneficial to our companies.

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The introduction of the Energy Conservation Bill (EC) is a welcome development to signal our nation's commitment to improving energy efficiency. The key objectives of the Bill are to give the practice of energy management greater focus within companies that are large energy consumers, and to build industry capability in energy management. This is expected to help reduce Singapore's energy intensity by 35% by 2030, from 2005 levels. Improving the energy performance of companies will make them more competitive in the global economy. The Bill is also expected to complement existing schemes and capability-building programmes which provide support for companies that invest in improving their energy efficiency.

I would like to ask the Minister how the Government arrived at its 35% target for reduction in energy intensity. Is this meant to be a stretch target that will need measures like the EC in order to achieve, or is this likely to be achievable with the improvements in technology expected over the next 20 years, even without an EC?

South Korea aims to cut its energy intensity by 46% between 2007 and 2030. Both our countries are highly industrialised economies that are dependent on external sources of energy. Both are large energy consumers. Why are we not being as ambitious as the South Koreans?

The Bill establishes the framework for the energy labelling of certain "registrable" goods. Energy labelling is currently targeted at only household electrical appliances. Only refrigerators, air-conditioners and clothes dryers now require energy labels to be affixed on them.

I would like to suggest that energy labelling would be a more effective tool to achieve energy conservation, if it were expanded beyond household appliances to equipment used by industry and businesses. This is because the industrial, commerce and services sectors consume 71.9% of all electricity in Singapore, while households consume only 16.7%.

Common business machines, such as computers, monitors, printers and photocopiers, should be gazetted as registrable goods. The energy efficiency rating of these machines could be better integrated into the energy management systems of companies. For example, as part of its energy efficiency improvement plan, a company could aim to increase its proportion of energy-efficient computers by, say, 25% within five years.

The proposed regulations will require companies that consume more than 15 gigawatt hours (GWh) of energy annually to maintain an energy management system. These include keeping records and reporting on their energy use, submitting energy efficiency improvement plans to the Government, and appointing a qualified energy manager. However, the vast majority of companies will not come under the radar of the EC and, hence, will not be required to implement these energy management systems.

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Could the Government consider drawing up an "Energy Efficiency Certification" scheme under which all Singapore companies can voluntarily apply to be assessed on their energy efficiency practices?

The Energy Efficiency Certification could complement the existing Energy Efficiency Improvement Assistance Scheme (EASe) by providing an incentive for companies to follow through the energy services company's suggestions for improvement. They will also have an added incentive to apply for EASe, as they can get rewarded if the appraisal is positive. I will explain more about the possible tax incentives later.

The Energy Efficiency Certification scheme would be similar in structure to the People Developer (PD) Certification scheme, which is used to assess a company's training management practices. Like the PD Certification, companies attaining the Energy Efficiency Certification could be given public recognition of their excellent energy management practices.

This could help create a culture of good energy practices throughout companies in Singapore, not just a few large energy consumers. Would the Minister agree that the more companies that implement programmes to improve their energy efficiency, the greater the cumulative benefits to the nation's economy? Since improving energy efficiency will reduce companies' electricity bills and, hence, improve their profitability, it should be in their business interest to improve energy efficiency. We need to make it even greater business sense for them to do so.

I would like to build on Mr Yee Jenn Jong's suggestion for tax incentives to be extended to companies which adopt good energy management practices. The EC requires registrable corporations to submit their energy efficiency improvement plans and targets, but makes no requirement for them to achieve their targets

Firstly, I would like to propose that tax rebates be extended to companies which achieve their energy efficiency improvement targets. Secondly, if the Energy Efficiency Certification scheme, which I suggested earlier, is introduced, then companies which attain the Certification could also be given tax rebates as an incentive. Thirdly, disincentives could be introduced for companies which use energy or electricity inefficiently and, hence, consume more.

Currently, large energy consumers enjoy several benefits which smaller consumers and households do not. These include contestability of their electricity suppliers, lower electricity tariffs and much lower off-peak period tariffs. In short, there are currently limited financial disincentives for them to reduce their electricity use.

I would like to add to a suggestion made in this House in 2008 by Ms Sylvia Lim, to introduce tiered electricity tariffs, such that those who consume more electricity pay more for additional units at a higher rate. Ms Lim's suggestion is even more relevant today, given the push for energy conservation. Introducing tiered tariffs could result in large energy consumers paying a higher bill, and smaller consumers paying less, while remaining revenue-neutral overall. The price mechanism will impact large energy consumers the most. It will, therefore, force them to innovate and improve their energy efficiency, in ways that an energy management framework alone cannot.

In summary, Sir, I support the introduction of the energy management framework in the EC. And I propose that this can be implemented by, firstly, tax incentives for companies which meet their energy efficiency improvement targets; secondly, disincentives for high usage of electricity, like a higher tariff for large users; thirdly, an Energy Efficiency Certification scheme that extends to all companies, not just the biggest energy consumers; fourthly, energy labelling of business equipment; and, lastly, aligning energy labelling with companies' energy management systems.

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If these complementary measures are in place, I believe Singapore can aim for a more aggressive reduction in our energy intensity over the next 20 years. More importantly, these measures will contribute towards creating a stronger culture of energy efficiency in Singapore and encourage large and small companies to innovate and invest in this area. This will improve these companies' economic competitiveness, while at the same time preserving our environment for generations to come.

4.40 pm

Mrs Lina Chiam: Mr Speaker, Sir, the Energy Conservation Bill is a good move that will enable the Government to monitor energy consumption and improve energy efficiency in our large-scale industrial and transport sectors. It also shows that Singapore is taking its international responsibilities in tackling climate change concerns seriously, in line with other developed countries.

I have three questions for the Minister. The first concerns the reporting requirements for the companies under this Bill. I understood then that this issue was raised during a consultation exercise on the Bill in December 2011. I find it surprising that the detailed reporting requirements are still not finalised, and that the consultative exercise on these will only be completed by the end of June 2012. Would the Minister be able to share more details of the reporting requirements at this moment?

The second concerns the Energy Efficiency (EE) improvement plan targets that the companies are required to submit. Since this Bill does not require companies to meet their EE improvement targets, but are strongly encouraged to develop robust cost-effective plans with the intention of implementing them, the provision seems to be a weak instrument. I understand that this Bill is modelled on similar ones in places like the European Union and Japan, and I suspect that they are more stringent on companies meeting their EE improvement targets. This Bill does not cover SMEs, but rather MNCs, which can afford to invest more effort and resources to meeting their EE improvement targets. My question, therefore, to the Minister is, does the Government plan to establish mandatory EE targets in the future?

Third, the Bill currently covers companies which consume more than 15 gigawatt hours (GWh) of energy per year. This would generally affect only MNCs. Does the Government plan to lower the qualification threshold and, hence, include SMEs in this Bill in future, in line with some other countries? Such a move is certainly a laudable one in improving energy efficiency in Singapore, and should be supported. However, it may put the resources and efforts of some SMEs at a strain, for it to meet the reporting requirements, without any substantial cost savings from improvements in their energy performance.

4.42 pm

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Mr R Dhinakaran (Nominated Member): Mr Speaker, Sir, I fully endorse the objectives of this Energy Conservation Bill. It is vital that we maximise our resources in a rigorous and systematic way. Targeting a 35% improvement in energy intensity from 2005 to 2030 is a significant goal. This is comparable with the European Commission Energy Efficiency Plan, which targets a 20% saving in Energy Consumption from 2007 to 2020. However, the latest projections indicate the Euro zone will only achieve 9% savings by 2020, largely due to the lack of awareness amongst citizens and the energy issue not being high on the national agenda. Hence, it is important to bring more focus into our new Bill by improving its scope and defining measurable quantitative objectives for energy conservation.

Moving to the specifics of our current Bill, I refer to Part III of the Act, which is "Energy Conservation Measures for Domestic and Industry Sectors" (sections 27 to 29). Large energy users are to: report energy consumption, energy production and greenhouse gas emissions; keep relevant records; and prepare and submit an energy improvement plan.

It would be more efficient and more in line with free market principles to implement an energy tax or a carbon tax on large users. Carbon and energy taxes are currently in legislation in Denmark, France, the Netherlands and Switzerland. China is also planning to introduce carbon tax by 2015. I note with particular interest the Denmark model in which the carbon tax can be offset by a tax refund for implementing energy efficient initiatives. It would be good to explore possibilities of implementing a similar carbon tax structure in Singapore progressively, with the current Bill serving as a starting point for such future initiatives. Ultimately, businesses should face the true social and environmental cost of their energy usage via a price mechanism.

Another important area of the Bill is the impact on the transport operators. Part IV of the Act is on "Energy Conservation Measures For Transport Sector". Through section 47, it obligates the transport operators to report energy consumption, energy production and greenhouse gas emissions. Through section 49, it requires the preparation and submission of an energy improvement plan. Through section 62, it empowers the Transport Minister to specify minimum fuel economy standards for motor vehicles. This would lead to increased overhaul and fleet maintenance costs, and increased compliance costs of energy reporting and record-keeping.

It must be emphasised that the incremental costs of compliance must be offset against the gains in energy efficiency rather than passing to the consumers. Further, it should be mandated that the surplus savings from energy efficiency above the compliance costs must be passed on to the commuters through fare reductions, in order to achieve holistic gains from energy efficiency.

Singapore, limited by nature, has been using fossil fuels for producing much of its electricity. A large portion of electricity consumption is by export-oriented business, with domestic consumption being rather small. The three oil refineries, for instance, consume 20% of the total power consumed in Singapore. Together with major pharmaceutical and wafer fabrication facilities, they make a significant impact on our total consumption. Our focus in the current Bill is on these large users of energy only.

Energy savings in these sectors are either by controlling wastage of energy or by radical technological improvements. The quantum of savings by controlling wastage alone may not be significant enough to achieve our ambitious target of 35%. Further, the technological improvements within a specified timeline are also beyond our control. Therefore, it will be prudent to include in the scope the secondary users of energy as well.

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The Bill should additionally emphasise measures that will shape the habits of Singaporeans. This will be more relevant towards building a culture and society which respects the scarcity and dearness of energy and attempts to make more judicious and conscious use. Singapore, being a small country, and based on effective and efficient centralised planned amenities, has a far higher chance of succeeding in efforts relating to secondary consumption of energy. We must make legislative efforts to bring energy saving habits amongst Singaporeans so that, over time, the national culture and habits change.

Some thoughts towards this are: (a) mandatory tapping of solar energy in every building in Singapore, residential and commercial alike; (b) mandatory use of light sensors in all public lighting to ensure maximum and progressive use of daylight. Today, with the timer-based system, we see lights on in the evenings well before sunlight fades away; (c) commercial and residential buildings must be designed to have higher ceilings, windows and ventilators to allow better natural flow of air and more daylight; (d) include compulsory education to minimise and reduce the need for air-conditioned environment with emphasis on health besides energy savings; (e) introduce markings on all cooling equipment on ideal healthy temperature at 25 degrees centigrade, thereby curbing the tendency to over-cool ambient temperature. Lastly, encourage use of new technology and materials for treatment of exterior walls of buildings for better insulation and reduced demand for air conditioning.

While we are discussing the Energy Conservation Bill, I wish to briefly highlight a positive spin off from this effort which could be a long-term opportunity for Singapore and Singaporeans. Green economy is the future. Energy efficiency, compliance methods, science and enforcement technologies are areas where specific skills will be needed. In the process of introducing the Bill, we should explore developing training courses in our institutes and polytechnics which will help people qualify in this area. It will also generate job opportunities for Singaporeans as it has done in other countries, like the United Kingdom.

To summarise, Sir, the Bill presently empowers the enforcing authority and establishes the rules and regulations for large energy users to follow and conserve energy. In order to make the Bill more effective, it must define measurable quantitative objectives for the energy conservation besides increasing the scope to include secondary users of energy. In conclusion, I support the objectives of this Bill, and I look forward to an energy-efficient future.

4.51 pm

Ms Faizah Jamal (Nominated Member): Mr Speaker, I applaud the Ministry of the Environment and Water Resources for introducing this Bill as part of its pledge to work towards enhancing the country's energy efficiency and dealing with climate change issues in its long-term goal of creating a sustainable, adequate society, as stated in the Addendum to the President's Address in October last year.

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Making it mandatory for the relevant large energy users in the private sector to report energy use and submit energy efficiency improvement plans, gives a strong signal of the seriousness on the part of the Government in dealing with the issue beyond providing incentives for the big players.

However, I have a concern which I do not see addressed in the Bill. This relates to the question of public disclosure. It is unclear from the Bill whether there is a requirement, mandatory or otherwise, for public disclosure of the information either on the part of the relevant large energy users or the Government.

With due respect, I would question why this is so, especially given the very public nature of the kinds of activities and the size of the industry players targeted in the Bill and the consequences of these activities on public health, public safety and the environment at large.

Apart from the mandatory reporting I referred to above, I also want to highlight Part V, clause 65(1) which reads: "The Director–General may, from time to time, undertake investigations or surveys of the levels of energy consumption, energy production or greenhouse gas emissions for the purposes of (a) assessing the impact on the environment of certain industries or activities; or (b) advising the Minister or other public bodies concerning energy or environmental policies. In clause 65(2), the Director–General may require relevant parties to furnish the required information. There is no mention of whether the public, stakeholders and other interested citizens shall have access to this information.

Sir, regretfully, Singapore still does not have a legal obligation on public authorities and regulators to provide environment related information to stakeholders and other interested persons, much less a mandatory Environment Impact Assessment (EIA) and public access to such an EIA.

While I am hopeful that this will change, with regard to this Bill, I recommend that the Government set up a publicly available data repository regarding energy and greenhouse gas data as well as public access to the information relating to clause 65 that I mentioned above.

I have two reasons for this. First, public scrutiny will offer an additional incentive for companies to reduce their environment impact. When the public is environmentally aware of ethical and environmental practices and more critical of unethical corporate activities, there is much companies can gain when they are motivated to be more socially responsible. And, second, it is very clear that Singaporeans are also more critical of the Government and are demanding greater consultancy and accountability in public policy-making and policy enforcement. From the time that this Bill was first mooted, much has changed in public perception of the Government. Demands for public engagement are getting louder and cannot be ignored. A public data repository will go a long way to ensure more openness and transparency.

Sir, in the addendum to the President's Address aforementioned, the Ministry of the Environment and Water Resources also had this to say, "We will explore how we can develop a more robust framework on environment reporting by business and make environment information more open to the public. We will consult more closely with the public on our policies, by developing more channels of communication." I trust that what I have said is simply a reminder of this commitment.

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4.55 pm

Assoc Prof Dr Muhammad Faishal Ibrahim (Nee Soon): Mr Speaker, Sir, the mandating of energy management practices proposed by the Bill is a timely move in the right direction for Singapore in its quest to minimise energy wastage, improve productivity and play its part in contributing towards the realisation of our goals of reducing CHG emissions by 16% by 2020.

Sir, the electricity that powers our businesses and our homes, the fuel that powers our cars and machineries contribute towards carbon emissions and pollution. As the world population grows to seven billion and inching towards 10 billion in the near future, we need to review our strategies and policies towards how we use energy and regulate a framework which will phase out technologies and practices that will be harmful to the environment and promote the development of sustainable technology that is environmentally friendly and which is efficient and clean.

As Singapore's economy powers itself alongside other developed nations in the world, it is imperative that it puts in place systems, structures and programmes for its companies to invest in efficient energy management and benchmarking practices. We would also have to be creative in ensuring that our energy usage habits and processes are sustainable in meeting the demands of the 21st Century economy. I believe that this Bill will play its part in laying the necessary framework to cultivate such a culture and changing mindset shift needed for our companies, especially the SMEs in their quest to realise efficient, environmentally friendly energy management production capabilities and operational practices. Although Singapore is small compared to the rest of the world, I am convinced that we can still make the difference.

Mr Speaker, Sir, while I support the Bill, I would like to clarify a few issues with the Minister. Sir, while most companies would welcome the change and agree that this is a move in the right direction, there will also be those that have yet to cultivate such processes within their operational systems. These companies may find this mindset and operational changes challenging especially if the expectations of the new regulations of the Bill would require a restructuring and transformation in their operation and practices. I would like to urge the Government to allow for a transition period for these entities so that they could focus more attention on examining issues relating to their energy consumption and production as well as greenhouse gas emissions generated by their operations.

To facilitate this transition, I would like to call the Government to adopt a humane perspective in allowing companies to coherently infuse into such a framework by providing the relevant assistance and support. They could be in the form of guidance and advice on management practices as well as providing grants for the expected costs some of these companies may incur in its journey towards realising an efficient energy management culture.

Mr Speaker, Sir, I highlight some of these transition issues because the Bill would empower the Director-General to conduct surveys, audit and inspect companies to ensure compliance and impose punitive measures if they do not. Companies that sell products and services or operate in a way that flout the regulations may be adversely affected by this Bill. For those without the knowledge would have to hire staff to ensure compliance within the company and incur additional manpower costs. New operational procedures would also have to be devised. Additional operating hours would have to be put in place to manage the requirements of an efficient management culture.

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Perhaps, the Ministry can help to establish a body to help companies to make the transition, help them pool resources together for sharing of expertise and knowledge in this area and to generate cost savings through economies of scale as they build their energy conservation improvement plans.

Secondly, I would like to ask the Minister on how the Bill will affect businesses, particularly our SMEs. How will the additional costs, such as the registration fees and fees for renewal of registration, the need to provide free of charge to the Director-General samples of the registrable goods for the purpose of testing and analysis as well as the need to prepare reports, such as the Energy Improvement Plans, affect the cost of operations of the businesses? How will the Ministry assist those companies affected by the Bill to comply with these requirements?

In addition, I would like to know how the Ministry will evaluate the impact of this Bill on the cost structure to businesses and whether it may result in the cost being passed on to end users and our consumers? I would also like to know what will happen to those companies that have great difficulties in meeting the requirements of the Bill.

My third issue relates to manpower needs and training. Sir, the Bill requires the employment of an Energy Manager and possibly few other executives to support the requirements of the Bill. In addition, with the Bill, I would expect the growth of consultancy services related to the energy production and efficiency.

With the above needs, I would like to ask the Minister if there are adequate manpower provisions to meet the needs in implementing an effective platform for such a Bill. How does the Ministry intend to beef up the expertise and manpower in this area and how will our local polytechnics and universities support this sector of the industry? I hope that this will open up more employment opportunities for Singaporeans.

Finally, to manage this transition, businesses will also need to adjust to a new paradigm where social costs of pollution and energy inefficiencies are weighed in by consumers and Government alike. They have to transform and reinvent themselves to build products and services that use energy efficiently and are friendly to the environment. This is a journey that all types of businesses must take to remain relevant in a world facing energy shortages due to the growing demand from the ever increasing population and economic activities. I would like to urge the Ministry to continuously engage and encourage companies to reinvent themselves to operate under the new operational environment.

In conclusion, I believe there is a need for inclusivity in ensuring that this Bill, in its essence and spirit, is infused in the economic structure of Singapore. Regulations alone will not suffice but has to be complemented, supported and guided by the Government and its people to ensure that all stakeholders within our society are able to manage this transition effectively. Mr Speaker, Sir, on this note, I support the Bill.

5.03 pm

Dr Vivian Balakrishnan: Mr Speaker, Sir, let me thank all the eight speakers who have spoken. I must admit to being surprised that so many of you have spoken. However, I am gratified that every single speaker has supported this Bill, bipartisan support, as well as the Nominated Members of Parliament. So, this is a good sign. Let me start by reiterating our principles behind what we are trying to do.

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First, this Bill is just a first step. It is not in its final form yet. Another review would be due in 2015. This is a first step that is designed to facilitate and enhance our nascent capabilities in this area.

Second, we believe that we have to work closely with all stakeholders, and I do not just mean across the House at the political level, but, indeed, with all industry stakeholders as well.

The third point is that we do not want to unnecessarily inflate costs because ultimately if we do things prematurely for ideological reasons, pursue technologies which are not yet mature, we will inflate costs and costs will have to be borne by consumers.

The fourth point is that even whilst we do not want to unnecessarily inflate costs, we do want to ensure that we have right pricing in our economy. In particular, this means that we do not subsidise the price of electricity in Singapore. From time to time, there are political kerfuffles every time the energy tariffs have been revised when oil prices change. But the more important point is you do not distort the economy and resource allocation by mispricing precious resources and in this particular case, is the price of energy.

The fifth point is that I agree with Members of this House that we want to provide Singaporeans with an opportunity to make an informed choice, and that is where things like energy labelling and other schemes which Members have suggested in their earlier speeches are relevant.

Finally, having said that we should not prematurely rush into technology which is not yet mature, we should nevertheless pre-position ourselves to be a useful test bed for promising technologies which may have applications later on when they become more mature or when they enjoy economies of scale.

So, this is a statement of the principles, the guiding philosophy behind what we are trying to do in our energy conservation.

Let me now address the points that Members have raised in particular. First, I want to thank Dr Teo Ho Pin for referring to the recent news article which cited the World Wildlife Fund (WWF) having ranked Singapore as the top carbon emitter per capita in the Asia-Pacific. The methodology that the WWF used in its report differs significantly from the methodology that is officially adopted by the United Nations Framework Convention on Climate Change (UNFCCC). It is important for us to remember that it is the UNFCCC which is the international authority on climate change issues.

The key difference between the methodology adopted by these two organisations lies in the treatment of goods imported and consumed in a particular country. The WWF methodology attributes the carbon emission from such goods to the importing country. By contrast, the UNFCCC attributes the emissions to the country in which the goods are produced. The UNFCCC treatment is internationally recognised because it is not practical to hold the importing country responsible for the emissions in the production of the goods overseas because this is beyond our control.

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The use of per capita indicators to measure carbon emissions is also not appropriate as this naturally disadvantages a small, densely populated city state like Singapore. A better and more direct measurement of Singapore's performance or carbon footprint would be the carbon dioxide emission per dollar of GDP. Based on this indicator, Singapore is ranked amongst the lowest carbon dioxide emitters per dollar GDP internationally. We ranked 123 out of 137 countries. This is one lead table when you want to be lowly ranked. This ranking is done by the International Energy Agency.

Singapore's absolute house gas emission is also very low. It accounts for less than 0.2% of the global total. Nonetheless, Singapore is committed to reducing our carbon emissions by 16% below business as usual by 2020, if hopefully there is a global agreement on climate change.

I am glad that Mr Yee supports our efforts to encourage greater use of renewable energy in Singapore. Unfortunately, let me share some of our constraints in this area. We do not have large rivers in Singapore. So hydroelectricity is not a viable option. We do not have volcanoes. So geo-thermal energy is not an option as it is in other tectonically active countries. Solar and wind farms require large tracts of lands which we do not have. A recent report authored by Stewart Brand estimated that you need land about the size of the entire island of Singapore in order to generate one gigawatt of wind energy. To put this in context, it means even if the entire Singapore was converted into a wind farm, you would produce only about 10% of the installed capacity that we have. It is not possible. Even if we were to cover every roof top and every surface with photovoltaic panels using current technology, we estimated it could provide maybe about 12% to 14% of electricity needs.

Similarly, our gentle winds and the fact that we do not have typhoons and hurricanes, which is a good thing, also mean that the same characteristics that have made Singapore a safe harbour also make wind, tidal and these other renewable sources not viable in our context.

I have taken some pains to explain all these so that you understand that it would be wrong to prematurely and simplistically set a target for renewable energy in Singapore. We are an alternative energy disadvantaged country. Some people say we are not even a country, we are a city state. So, you need to understand this basic strategic fundamental constraint because otherwise if you just simplistically copy what other larger countries in very different circumstances do, you will end up imposing an impossible burden on Singaporeans, Singapore enterprises and businesses. That would be counter-productive.

Assoc Prof Fatimah and Mr Yee have also asked about our progress in achieving a sustainable Singapore blueprint targets for energy intensity and green mark buildings. Here, I have some good news. Under the "Sustainable Singapore Blueprint" which was published in 2009, Singapore was supposed to pursue a less energy intensive growth trajectory. Our target was to improve our energy intensity by 35% compared from 2005 levels, and to achieve this by 2030. I am pleased to inform the House that our energy intensity has already improved by some 16% since 2005 levels. This we achieved in 2010.

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Mr Giam has also asked whether the 35% improvement in energy intensity is a stretch target. It is a stretch target. Paradoxically, the fact that we had done well in the past makes further improvements more difficult. Let me give Members an example of that. We already have a very energy efficient fuel mix as far as the generation of electricity is concerned. More than 80% comes from natural gas. We also have limited access to alternative energy sources, as I have explained earlier. Nevertheless, we have committed to achieving this stretch target and a working group under the Inter-Ministerial Committee on Climate Change has been established to study in a practical and reasonable way how we can achieve this target. But I want to caution that this would not be an easy target to achieve.

In order to reach our targets, we would need to implement cost-effective energy efficiency measures, but there are market barriers. For instance, lack of information, lack of capability and these deficiencies exist in many companies; in fact, in most companies currently. The Energy Conservation Bill addresses some of these barriers by establishing a legislative framework that would require companies to build up this capability in energy management and to cultivate a practice of systematic monitoring measurement of energy consumption and greenhouse gas emissions.

The Sustainable Singapore Blueprint (SSB) also sets a target of 80% of our buildings achieving the Green Mark status by 2030. Efforts towards achieving this has been guided by the Building and Construction Authority (BCA) and it has set out specific initiatives under six key strategic thrusts: first, by taking a lead in the public sector, that means we have to lead by example; second, to spur the private sector to follow in our footsteps; third, to further the development of green building technology; fourth, building industry capabilities through training; fifth, to profile Singapore and to raise awareness of its capabilities; and, sixth, to impose minimum standards. Through BCA's Green Mark rating scheme, buildings are assessed as environmentally sustainable if they meet the stipulated criteria on energy and water efficiency, indoor environmental quality and environmental protection.

As of March this year, we have more than 1,000 Green Mark projects which represent about 14% of our building stock in terms of floor area. At this rate, we are on track to meet the 80% target by 2030.

Dr Teo is right that BCA does not currently monitor the energy consumption of each and every single building. This gap will be addressed when MND amends the Building Control Act later this year to introduce some new energy efficiency measures for the building sector. So, for example, utilities suppliers and buildings, excluding industrial buildings and dwelling units, will be required to submit annual electricity consumption data and basic building information such as gross floor area. As mentioned in my speech earlier, the energy efficiency related specifications under the BCA Act will be incorporated into the Energy Conservation Act subsequently. We will do this in step so the next review will be in 2015. If we do so, it will be after 2015. But do not mistake this as tardiness or as unwillingness to move forward in parallel.

I was intrigued by Mr Dhinakaran's speech when he suggested the introduction of carbon pricing as a means to incentivise companies to reduce emissions and to enhance energy efficiency. In very few places do you get a corporate leader asking for higher taxes. I agree that there is a need to price externalities, and carbon emission is one obvious case of an externality that currently is not priced. But we also need to encourage our industries to take a long-term view and a sustainable growth path. So this is, and I am sure Mr Dhinakaran will agree with me, a very complex area. It needs careful study, given our needs circumstances and our competitive position. In terms of natural endowments, as I have explained earlier, we would always be alternative energy disadvantaged compared to almost any other country in the world.

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It is also worth Members of this House bearing in mind our total trade is three times our GDP. That means our companies, every day, every year, are engaged in a global fight for survival. The progress of negotiations on a global agreement to tackle climate change will therefore be a key factor in this decision-making process because we do not want to prematurely disadvantage the viability of our companies. I would also give the assurance that we will consult carefully and widely all stakeholders for their inputs and I welcome Mr Dhinakaran's participation in this in his capacity as a corporate leader in Singapore. So, let us not rush this and I hope he agrees with me on that.

Dr Teo shared with us Japan's successful energy laws and policies. And he is right. Japan is a leader in energy efficiency and conservation. And that is why, to a large extent, our Bill is also being modelled up with Japan's energy efficiency related legislation.

Assoc Prof Fatimah asked about the assistance that will be rendered to companies and manpower training to meet the requirements. In 2010, the Government actively engaged industry players to seek feedback on energy management practices and the Energy Conservation Bill was subsequently published for public consultation in December 2011. We refined the Bill in response to public feedback, and the NEA and the statutory boards under the MOT are currently conducting another round of consultations with stakeholders in affected sectors on the detailed reporting requirements of the Act. I hope Mrs Lina Chiam would be more patient. This is again a very odd situation where the Opposition is asking the Government not to take time to consult all stakeholders. Be a bit more patient where in any case, we expect to wrap this process up by June of this year – three months from now.

In order to reduce the reporting burden, the circumstances of the company are borne in mind. The proposed requirements are not overly prescriptive and these will be reviewed and evolved over time as industry needs and as our circumstances and performance change. Companies affected by the Act will receive training on the use of an online system for them to submit information that is required by the Act. We will try to make this as simple as income tax submissions, which I think are due in a few days. The online system is also currently under development and it will be ready by next year.

We are preparing the industry early by introducing programmes. Mr Yee asked about the progress of our training efforts. The Singapore Certified Energy Manager (SCEM) Programme was launched in 2008 and co-administered by the NEA and the Institution of Engineers Singapore in order to equip facility and building managers, engineers, technicians and others who intend to pursue a career as energy professionals. They need to have the technical skills and the competencies in order to manage these services within their organisations. And we will continue to refine the SCEM syllabus to ensure its robustness and its relevance over time.

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We have an SCEM training grant. This is a co-funding scheme administered by the NEA to promote the programme. And NEA has, so far, approved grants for 800 people. We intend to support the training of 1,000 energy managers by 2013.

Dr Teo and Assoc Prof Faishal have also quite rightly pointed out the Singapore companies may lack sufficient expertise and energy management at this point in time. Dr Teo suggested that companies appoint external energy auditors to help them implement energy efficiency management practices. This is a good idea and it can complement our efforts. We have started by requiring large energy users to appoint and train their own in-house energy managers. This is to ensure that energy management capabilities and practices are internalised to cultivate a culture of continuously seeking energy efficiency improvement within that company itself. It is better that this be "organic" and in-house to the company, and then you supplement that by seeking expertise outside the company.

The energy manager within the company needs to be entrusted with mission critical processes, access to equipment and have access to key operational information on the company. Assoc Prof Faishal suggested that the establishment of a dedicated body to help companies make the transition and to build up the necessary manpower to support the requirements of the ECA. I am glad to inform him that aside from supporting training through the SCEM, NEA and partner agencies will provide advice and exercise oversight of the progress made in energy management by the companies. Concurrently, we hope to facilitate the entry of more reputable international energy service companies which can provide the external energy services. Over time, we hope that there will be a good number of locally trained and experienced energy managers built up in Singapore.

I thank Assoc Prof Faishal for his suggestion to pool together resources by sharing expertise and knowledge in area of energy efficiencies in order to achieve economies of scale. The Energy Efficiency National Partnership (EENP) Programme which was introduced in April 2010 is an industry-focused voluntary programme to support companies in their energy efficiency efforts and to share best practices. This is a key platform. It will help companies build up the necessary capabilities and prepare them for the onset of the ECA. A total of 107 companies have joined the EENP as partners as of March 2012. Companies can also tap the Grant for Energy Efficient Technologies scheme to meet their energy efficiency improvement plans. This scheme aims to incentivise owners and operators of industrial facilities to invest in energy-efficient equipment and technologies. So far, NEA has approved about 31 projects worth $66 million by 28 companies. Each project is estimated to generate about $168 million in energy cost savings over the lifespan of the equipment purchased.

In addition to the above programmes, Energy Efficiency Improvement Assistance Scheme (EASe) encourages companies in the manufacturing and building sectors to carry out detailed studies on their energy consumption – these are known as energy appraisals – and to identify potential areas for improvement. According to the appraisal reports submitted by companies under the EASe, conducting energy appraisals makes economic senses – each dollar spent on energy appraisal typically generates $5-$10 in annual savings.

Dr Teo suggested having more educational activities and publicity events. And I want to assure Dr Teo that my Ministry and the various partners have been promoting energy efficiency more widely through green-themed activities. Some of the activities in more recent memory will include the Earth Hour – just two weeks ago; the Youth Environment Day later on this month; the Singapore International Water Week and the World City Summit in July this year. We have the President's Award for the environment due in September as well as Clean and Green Singapore in November. So there is no shortage of campaign platforms. But we need to make these messages more effective and more relevant.

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Members have also suggested several other areas to be covered under the Act. For instance, increasing the coverage to include SMEs – I believe Assoc Prof Fatimah and Mrs Lina Chiam suggested that. Mr Dhinakaran wanted to include secondary users as well. Then, there were suggestions for an introduction of an Energy Efficiency Certification Scheme and enhancement of the Mandatory Labelling Scheme for industrial equipment – I believe Mr Gerald Giam was proposing this. And, of course, Ms Faizah Jamal suggested to having greater public disclosure of environmental information. All these are good ideas worth studying but let us approach this step by step.

Currently, the Bill only includes large energy users defined as those using more than 15 gigawatt-hours. These are large energy users, which collectively account for the lion share of energy consumption in Singapore. We go after the big animals first. But this is just a first step and the Government will consider expanding the coverage of the Act when we review this Act in 2015.

In terms of public disclosure of environment-related information, we are working towards greater transparency. An example is the Singapore Exchange which adopted precisely such an approach in August 2010 by encouraging listed companies to engage in sustainability reporting, specifically by making the details of the company's environmental, economic and social impact publicly available. As this is a new Act, we want to give industries time to adjust and we will progressively move towards additional measures and a more transparent regime when we review the Act. For now, our focus will be ensuring that the information submitted will be robust and will be accurate and provide us with a better understanding of the current landscape. This will allow us to stand a better chance of designing better and more targeted measures to improve energy efficiency in Singapore. I think we need to beware of being overly intrusive and forcing companies to reveal commercially sensitive data which they will naturally be reluctant to. So, with this approach, build on trust, in order to build a relationship and to improve their performance without being unnecessarily intrusive or anti-competitive will, I believe, be a more useful and relevant approach at this point in time.

As I mentioned in my speech earlier, it goes beyond companies too. Every individual makes a choice in everyday decisions and all these add up to the stake and the way we use energy in Singapore.

Dr Teo asked if there are any plans to further encourage our people to reduce the purchase of energy or fuel consuming appliances and to reduce their consumption through energy-saving habits. Members may be aware that MEWR is carrying out a behavioural study to better understand and shape the behaviour of consumers towards greater energy efficiency. Ultimately, we want to create a system where it makes economic sense – do the right thing for the environment and for Singapore's future. It can become a virtuous cycle and not a zero-sum game between the industry and the environment. That is ultimately what we are trying to achieve with this Bill.

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Mr Yee Jenn Jong: I agree with the Minister that solar energy is the main option available to Singapore. The others that we have tried include bio-gas and waste which is quite minimal given the limitations. I understand the Government has been significantly funding solar research with EDB also funding solar and alternative energy research. The question I would like to ask is: if not 10% for KPIs, what other KPIs can we set for all these investments that we are currently putting into solar energy and other alternative energy?

Dr Vivian Balakrishnan: He is right. We have been promoting research and development as well as early prototyping of systems including solar technology in Singapore. For instance, there is an HDB precinct, I believe, in Punggol, where we are evaluating the system, the performance of the system and the economic implications of such a system. But the point right now is that, even as of today, the electron that you get from a photovoltaic cell is more expensive than an electron you get from the grid. So Members have to be very careful that whilst we want to do the right thing, we want to be more green, you got to be careful not, in your zeal, to impose costs onto consumers. And that is why we are taking a technology agnostic approach. And we are taking a very careful approach in the rollout of all these new technologies and green renewable sources of energy. We do not want to add on costs to people.

I do not want to politicise this but, if you take the summation of yours and Mr Giam's speeches, you have a position where the Workers' Party is in fact asking me to raise taxes for high energy uses, to set standards for the use of renewable energy modalities which will impose higher costs to our people and I am somewhat surprised that you have been so enthusiastic that you are prepared to do that. I just want to add that, as a Government, other times when Ms Sylvia Lim gives me "heat" on prices of utilities, so this is an area in which I want to be very careful on. So, we want to do the right thing. We want to encourage the research and development. We are prepared to test-bed new technologies but we are not going to prematurely roll out technologies when they are not economically viable and when they will increase costs to consumers.

Similarly, on your suggestion during your speech on having tiered tariffs for electricity, that in effect penalises big consumers. You need to understand that in the case of Singapore, our energy and electricity costs are not subsidised. So, what all people are paying, whether you are a small or large consumer, you are paying market price for it. I would rather make it worth their while to invest in capability and technology to conserve energy, and therefore to make business sense rather than to impose taxes in the name of ideology or in an effort to look green, but actually impose a burden on our stakeholders and our industrial sector. So, this is one of those situations where I understand where you are coming from. I appreciate your support for this Bill. I am just asking for a little bit of careful analysis and not to be over-enthusiastic and lead down the road of unintended consequences. We are not actually that far different in our intention to ensure that Singapore becomes a leader in energy efficiency.

Dr Teo Ho Pin: Sir, I wish to find out from the Minister's response to my proposal to develop a national energy strategy master plan. Today, we know the direction but I think there is no road map to help all the stakeholders to move towards the same objective. I think it is important that we provide a road map so that all stakeholders know exactly what to do to achieve the desired outcome.

Dr Vivian Balakrishnan: That is a fair suggestion and it will involve multiple Ministries. On the energy supply side, obviously the Ministry of Trade and Industry; on my side, as far as conservation and energy efficiency is concerned; for transport the Ministry of Transport and the larger scope of our commitment side our international commitments for greenhouse gas emissions under the National Climate Change Secretariat that is chaired by Deputy Prime Minister Teo. Over the next few months and year, we will have to be more explicit in describing our overall strategies so that people – the lay of the land – understand our constraints and the opportunities, and what each of us will have to do. But for now, I hope my statement of the principles of the philosophy behind our efforts will be one which Members of this House, across both all the Parties, I hope, can support.

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Mr Gerald Giam Yean Song: Sir, I would like to clarify my points just now about the taxes or the new taxes that the Minister is suggesting I suggested. I suggested two tax rebates actually for companies which achieve their energy efficiency targets as well as those who have attained their energy efficiency certification that they will be assessed under. So, even though the tiered tariffs might result in some high energy users paying a bit more for their energy, this could be returned to the companies through the tax rebates. And, in fact, the tiered tariffs that will be imposed on the higher energy users could serve as a further incentive for them to reduce their overall bill which would benefit them overall economically.

Dr Vivian Balakrishnan: I am being a bit more constrained because I am acutely aware that he is supporting the Bill. But actually there is a fundamental difference in approach here and I cannot help wondering whether you have calibrated your position with the Workers' Party, in particular as a whole. So, let us go back to basics.

Our electricity price in Singapore is not a subsidised price. There is a market. The market sets the price. Everybody pays for it. For the big consumers, they are in a position to bargain to take advantage of the contracts which are available. But the point is these are all market prices. We are not subsidising them.

If I take your proposal to add another levy on top of the market price, it is a real burden on our industry sector. And if you say let us only target the big consumers, then you can start playing games by having a big company decide it has got multiple subsidiary units and qualifying for the lower rate. All these are regulatory games which I believe are counter-productive. The key point is to have right pricing for energy. It makes sense for everybody to save energy to reduce their consumption and to invest in more energy efficient equipment. But right now there are some barriers to that – lack of knowledge, or the fact that sometimes the split incentives between owners and users of a facility, or a building, or because the payback period is too long. Businesses, for instance, might be prepared to invest in technology that can pay back in three years, they may not be prepared to invest in technology that takes six years to pay back.

So, our approach right now, rather than play games with tax or additional levies, is to focus on building up capability, building up access to information. And in the case of technology that takes too long a period to pay back, for instance, the GREET scheme in which we co-fund equipment that will lead to greater energy efficiency for the company. Our co-funding in effect reduces the payback period to a level in which the company is willing to go for. By making these measures carefully and slowly, we are enhancing capability, building up knowledge and, more important, I am enhancing the competitiveness of our companies in Singapore. I think this is a better and safer way of promoting energy efficiency and conservation. Not by saddling our companies with additional levies and taxes as what you have proposed. So, I do not want to be overly robust to engage in an overly politicised debate with you. But I just want to hasten to add that you got to be very careful about the unintended consequences of your proposal.

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I have just been reminded that we do have U-save grants and the reason we do that is so that we can have a system in which energy and water is right priced but yet low income families can afford it, by giving them in effect cold, hard cash which they can then decide how to spend and how efficiently they use precious resources like water and energy.

So, what we have is a unique system. In many other countries, just in our own neighbourhood, they are unable to stop subsidies for fuel oil, for cooking oil, for energy. The logical thing is to actually remove subsidies and then target assistance to low-income families who need access to these essentials in life. But if you do not have a government and a civil service that is capable of planning things rationally and of directing assistance in a targeted way without worry of corruption, you cannot get out of this subsidy trap.

We are in a very fortunate position in Singapore to be able to right price, to market price essentials and yet ensure that even the lowest income family has access to water, energy and other essentials in life. So, it is a complete package that you have to look at. That is why be very careful when we try to emulate or copy other people who may be in very different circumstances, from the environmental, social, political and economic perspective.

Question put, and agreed to.

Bill accordingly read a Second time and committed to a Committee of the whole House.

The House immediately resolved itself into a Committee on the Bill. – [ Dr Vivian Balakrishnan ].

Bill considered in Committee; reported without amendment; read a Third time and passed.