I don't quite agree that all we need to do is to grow the green stuff and leave the rest behind. It doesn't work in Asia. It probably works in Europe or America, but it doesn't work in Asia. You take the coal fleet for instance. 60-70% of Asia's electricity comes from coal-fired power plants.
From 80% when I started to do what I do.
But you've got to phase down or phase out the coal fleet. Then that's what China has been doing. It's not just about building the renewables. It is easy enough to build solar panels or wind farms. You can get the capital for that. But if you left the existing coal fleet in Asia as they are, and remember energy demand is growing and is expected to double by 2050 in Asia. So, if you leave that behind, that is going to eat up the bulk of your carbon budget remaining that's available to the world.
So, let me challenge that. Hello. I'm Michael Liebreich, and this is Cleaning Up. And I'm in Singapore for Ecosperity Week. This episode is the first of a number that we're recording on Southeast Asia. My guest today is Singapore's Ambassador for Climate Action. He's also senior advisor to the Prime Minister's office on all things climate-related. For many years, he was a governor of Singapore's central bank and has also been the permanent secretary for trade. Please welcome Ambassador Ravi Menon to Cleaning Up. Ambassador Ravi, thank you so much for taking time out of a busy schedule during Ecosperity Week here in Singapore to talk to us.
Likewise, Michael. Thanks for taking the time. Happy to be here.
Good. So, let's start where we always start with you explaining in your own words the short version of who you are and what you do.
So, shortly after I retired from the Monetary Authority of Singapore as a managing director, which is a central bank in Singapore, I was offered to take up a position of ambassador for climate action. It was a newly created role. So, I had the great pleasure of actually discussing with my government colleagues to write up the job description as to what I wanted to do. There is already an existing architecture. We have a chief climate negotiator as a career diplomat. And then of course, we have a ministerial track where the minister for sustainability leads our climate negotiations. So, we carved out a space where I thought where they thought I could be useful, which was to sit at the intersection of public and private partnerships to drive thematic climate priorities, quite apart from the negotiations. So, I have no part in the COP negotiations. There's a well-oiled machinery that's doing that. So, I do stuff like carbon markets, blended finance, discussions about grids, adaptation and resilience financing and programs. Anything that involves governments and private sector coming together to advance the climate agenda. Most of it is external facing, working with other countries and climate leaders in other countries. I also have a role domestically as senior advisor to the National Climate Change Secretariat, which sits under the Prime Minister's office and coordinates climate policies across government. So, I think it's a real blessing that we have such a thing like the National Climate Change Secretariat because in my conversations with people in other countries, one of the big problems is the coordination challenge. Because climate touches every facet of life, every government agency. And because we have this coordinating mechanism with a small but highly effective secretariat, which sits in the Prime Minister's office. That's been very useful. So, I was also appointed senior advisor to that secretariat to help some of the domestic transition work.
So, I knew you were senior advisor to the PM's office, but it's to the climate piece.
Yes, it's the climate piece. I'm not the advisor to the Prime Minister.
So, everything you do now has this climate lens on it. Is that right?
Yeah, government appointments.
And then I do some stuff on the private sector.
Okay. So, there's a few fascinating touch points with previous guests. Rachel Kite, of course, who's the special envoy of the UK with a somewhat similar role. The institutional touchpoints are quite different because of the climate change committee, whereas we don't have that Prime Minister's office. But also central bankers. So, I think you are our fourth either current or former central banker. Illustrious colleagues, Mark Carney, Pierre Wunch. So, you're in good company. You said that you were at the monetary authority. You were the central banker. What were you doing before then? So, what is your background before then? Do you come out of is it kind of econometrics and finance or was there always some kind of an environmental or energy industry angle
Well, I started life in economics. So, I started life at the Monetary Authority of Singapore, fresh out of school as an economist doing economic research analysis. Yes, econometrics, forecasting, macro models, stuff like that, exchange rate policies. Did that for about 10 years. And then started to move around to other areas of central banking beyond monetary policy and economic analysis. And then I went over to the broader public service. Where I served in the Ministry of Finance as Deputy Secretary and there I did fiscal policy. It's still an extension of my economics finance background, but it gets into a lot more of the work of the ministries and then subsequently the Ministry of Trade and Industry where I did trade, industry, energy, R&D and that's when I started having touch points with energy policy and energy strategies. And that was also when we were getting Singapore was organizing itself on its climate action agenda. And so I started getting into that space. Then I came back to the Monetary Authority of Singapore as managing director.
So, I remembered who the fourth central bank. It wasn't actually the central banker, but he was and that is Professor Ma Jun.
The sort of in some ways the father of the originator of a lot of China's climate finance.
Wonderful chap. I just saw him this morning.
He's in Singapore. Oh gosh. Now, I've missed him on this trip, I think. Singapore is just a really interesting case study because you know very committed to climate action, I think it's fair to say, but with a very specific, let's call it geography and economy. Being physically very small, very dependent for energy on imports. So, it's quite constrained in what Singapore can do itself on climate action, but with enormous ambitions and enormous influence regionally, which is why I'm here for instance.
Yes, Singapore is a city-state, about the size of, smaller than greater London. And we account for 0.1% of global emissions, so we're not going to make the difference. But we have always been very committed to the multilateral global order. Not sure if it exists anymore, but to the extent it did and we benefited tremendously from that, whether it's trade, finance, or other areas. And so as part of, we're an active participant in COP and the Paris Agreement. And so we take those commitments seriously. And it's not a matter of how small you are or how big you are, every one of us has to do his part. And so I think that's the basis for our ambition on climate, net zero by 2050, just like the rest. We also know that it's not enough that we decarbonize, we got to help the world decarbonize, or at least Asia decarbonize. And we have some unique strengths as a business, logistics, financial, and technological hub that and because we're so connected that we can play a role in facilitating Asia's own transition towards lower carbon future. So those are the prongs of our approach to climate. First, decarbonize ourselves and then help the region, at least, to decarbonize. We have no doubt quite formidable challenges, because imagine a city trying to be net zero. Countries can because they have space to do stuff we don't have. So we call ourselves alternate energy disadvantaged. Yes, the sun shines here, we're in the tropics, but even if you blanketed all the rooftops with solar panels, we're not going to, you know, that's not going to account for the bulk of our solar for our electricity needs.
And we're recording this on a day when
When it's gloomy, yeah. It's raining.
On the film, they will see that it is raining. So, that's the Marina Sands, very iconic view, which you can barely see, because it's been raining pretty hard at the moment. You can see it.
But that illustrates one point though. The sun is one thing, cloud cover is another. The solar insolation into Singapore is actually weaker than say in countries like India or Australia, where you look up, it's blue skies. Here, cloud cover is quite dense. And I think you'll see this as a feature in many tropical countries. So, because of the density of the clouds, actually the effective solar power that you get is lower.
If we just take a quick overview of the challenge domestically, we'll talk about the international influence and so on in a second, but you've got all the usual things of buildings with air conditioning. You've got some small, mid-size manufacturing. I've actually just been out today to visit a noodle factory, so I know you've got some of that, sort of SME manufacturing.
You've got a lot of transport, airport, so aviation fuel. You've also got a big refinery sector.
How will you get to net zero 2050 with that lot? Because as you say, it's not like you're going to have wind turbines. There's a conversation about nuclear, but I don't know how keen people are given the small land area on nuclear, and the solar is limited. So, what are you going to do?
Yeah, good question. And we have the disadvantages of small size that the city has. And also the disadvantages of a country with a large manufacturing base. So, it's not often that you have a city-state with a large manufacturing base. Manufacturing is about 20% of GDP. And we have a sizable oil refining and petrochemical industry within that manufacturing which is highly carbon intensive.
Right. So, what is the plan?
Okay, so that's the problem. What's the solution or what's the proposed approach?
We have defined our approach as comprising three transitions that we need to make as a country by 2050. We call it first the energy transition, second the carbon transition, third the economic transition. So, the energy transition is about greening the grid. So, this is about electricity usage, mostly in industry, fair amount in buildings and residential houses, commercial space. So, greening the grid is one priority. Then there's the carbon transition which is the non-electricity related emissions, mostly in industry, heating, cooling, all manner of industrial chemical processes which give rise to emissions. And that is quite separate from greening the grid. And then third is the economic transition which is we envisage that the economy has to fundamentally restructure. In fact, the global economy has to fundamentally restructure. And some have called it potentially as big as the industrial revolution of 200 years ago. The scale and scope that's required and so we are looking to an economic transition of restructuring which is two-pronged. One is to grow the green sectors of the economy which are currently small and then to green what is brown which are never going to become green but 80% of global GDP is brown. And so progressively greening it that's the process and then to build up the skill sets so that people can move into new jobs. So it's an approach that touches on all three. Now the most difficult is the energy transition. Because as you say with limited capacity for solar where are we going to green it from? I think there are a few options. One is to maximize solar. We've just raised our solar targets and there is active debate going on as to whether we can keep pushing that. I hope with improved technologies that we can do that.
So solar at the moment is what a couple of percent?
Solar is just 2% I think we're looking at going up to 6 to 8%. Some of us believe it could be in the mid-teens if you really push the frontiers of technology and there are interesting developments taking place in terms of materials, efficiency improvements but there is a physical limit to efficiency in solar panels. So I think if you can get close to those efficiency boundaries we could get quite a bit more.
On that I actually I suspect you can get further not because solar output can become larger. By the way you know we're sitting here with a view over at least a part of Singapore. I can't see a single solar panel. So there's definitely more that can be done but also you used a number which I'm going to if I can if I may respectfully challenge which is you know you said 80% of the global economy is fossil-based. It's actually 80% of the supply of energy is fossil-based. If you actually look at the economy, the global economy, all the things we do, heating, lighting, mobility, aviation, everything. If you look at it from what the economy delivers, it's actually 70%. And the reason is differential in efficiencies. For instance, if you electrify all your transport, then your primary energy goes down and therefore your solar percentage in a sense just goes up automatically. So, you may get to a higher percentage, but I mean 15 or 20% would be some kind of limit, I suspect, there. Just in terms of land area.
I don't know enough to say whether we can go beyond 15 or towards 20. But that's the kind of challenge we need to post ourselves.
Okay. But that's a no regrets approach, right? Because we've got some area and you're not using it yet, as we say. Okay.
Yeah. No, when you get to 8%, you should be seeing panels everywhere. Yeah, that's the maxed out and then we got to go beyond that. So, solar is one part of the equation. The other part of the equation is renewable energy imports. So, I do believe that the world needs to transit to a paradigm just as in an earlier era we traded goods and services for mutual prosperity and gain, we need to look at trading of green electrons. And this is already happening to some extent in Europe.
Interconnections across countries because you have deficit countries. In fact, it's not deficit countries, deficit regions and surplus regions for renewable energy. And if you can get them to trade and have unified grids, which is the ASEAN power grid project, but we can't wait till that's in place because that's going to take a couple of decades. And so, we have already been negotiating terms for importing electricity. And we've already started to import a small amount of electricity through the Laos-Cambodia line that goes through Malaysia to Singapore.
Can I ask, what is the current status with Sun Cable? Because that was the one that kind of exploded on the scene. Everybody was very excited. Australia to Singapore, thousands of kilometers. Is that ever likely to happen?
So, that's still on the table. I think we've actually got some kind of implicit agreement with Australia. They are keen to sell it to us, but it is exorbitant to lay subsea cables all the way from Australia to Singapore. So, I think recently I was in India. Some of them were saying, 'Why don't we also lay a line from the east coast of India, which is producing renewable energy, across the Bay of Bengal?' Yes, there are all kinds of possibilities. But it's the analogy to what I said earlier on, the trading goods and services. You need to create a multilateral network, a framework, before this can happen.
So, I agree. I was actually an investor in Xlinks, which is Morocco to the UK. So, I think we will do all of those long-distance HVDC subsea cables. Not all. There's one that's being proposed from the UK to the northeast of the US.
4,000 km, 15% losses, an enormous advantage trading across time zones, which is very, very lucrative. If you could imagine
But you need to do multiple. You can't have any one link providing too much. And when you say exorbitant, if you say exorbitant, I say oil price shock or gas price shock. So, what are you comparing to?
Yeah. Well, it really depends on the current crisis and how much that is going to shape our views of future fossil fuel prices, especially if you factor in resilience risks and so on.
If they get priced in properly.
Priced in which is a question. Yeah.
Yeah. And history shows that they get priced in for short periods of time, but after some passage of time people forget and they take the easy way out. I mean, we've seen this movie before. It's a bad movie. We saw it in 1973. We saw it in 1982. We saw it in 2022. And each time yes, there was some response. Some countries started doing the right things. 73 forced Japan to do some things. 2022 is forcing Europe to do some things. Let's see how this goes. That's a fascinating conversation about how much history says, how much memory there is in the system. Yes. Because each crisis there has been a memory, but it's only been in the last couple of crises, the Russian invasion of Ukraine and this one where there's been a large-scale alternative to oil and gas. Is this the first time we can really do something that's not exorbitant to use your word. But let's come back to you were talking about importing green electrons. What about importing green molecules? Is that also on the plan?
That is. There are pilots that we are using. Ammonia is one of the options that we are because ammonia carries hydrogen and it can also be combusted for fuel. So we have a pilot that does both for bunkering and for combustion. The trick with these pilots is that it demonstrates that it works, but once you start scaling it, does it still hold the economics? Does it hold?
I lured you into talking about hydrogen. When we met outside, we agreed that we maybe should skirt around that subject because when you use the word exorbitant, when you're talking ammonia for power production at $400 per megawatt hour if you tried to generate from ammonia.
But there's other green molecules and I'm struck by the relationship between Singapore and Malaysia in particular. Malaysia could make a lot of green gas, of green natural gas, biogas. We have a figure in Europe, 45% of the gas that is used in Denmark is biogas from its agricultural sector because they've been incredibly consistent in investing and producing that gas. That has not yet happened here in Asia.
Yes, it is. So, that's the other area we are looking at closely beyond solar and electricity imports is biofuels. It's a whole family of fuels there. Biogas is one of them and the larger notion is the value of the bioeconomy as a whole. Because there'll be a whole range of activities around this and Asia, Southeast Asia has a lot of this. Agricultural waste and waste to energy projects are happening quite a bit. So, I think that's very much on the table. We've also got pilots in the biofuel space and cooperation agreements with other countries, but we need to be conscious of where the bio comes from. It's not a result of deforestation. It's not a result of wasteful agricultural practices. That is genuine waste.
Wasteful or cutting down primary rainforest of course.
So, I think we have to be careful about where it comes from, but also we should be much more careful where it's going to because the biofuels I'm very aware of the economics of electric vehicles.
Yes. It's one of my long-term special subjects and I actually so much so that I'm actually building a heavy goods vehicle charging business in Europe for Pragma Charge.
Because you can already beat the economics of diesel let alone biodiesel today with limited or no subsidies.
No, using electric electricity. Even at some of the European countries electricity costs.
And so right now I would venture that almost every single liter of biofuels that we produce, most of it almost all of it goes into land transportation.
