Q. Let's talk about cities. That's one area in which we could make quite a difference in terms of developing smart cities or high-density cities, rather than American-style urban sprawl, where a lot of energy gets wasted in transport.
MHAISALKAR Cities are an incredibly important area simply because by 2050, 70 per cent of the world population will be in cities. Cities today take up 2 per cent of the land area but use most of the global energy and account for the bulk of the CO2. Singapore is an ideal mega-city in the tropics and if we can get a handle on how to reduce our CO2 emissions, the solutions that we develop could be exported to every part of the world.
I also want to pick up the issue of energy efficiency. This has two components. One is industrial energy efficiency, or process energy efficiency, and that is a very challenging task that only large companies will be able to undertake themselves.
Now, the opportunity we have from a city's perspective is energy efficiency in buildings, energy efficiency in public spaces. If you take, for example, a 10-storey building and if you raise the temperature of the air-conditioning to 25 deg C, coupled with other simple energy efficiency measures, it would reduce the energy consumption in that building by 10 per cent in terms of kilowatt hours. The amount of impact that we can have by tackling two of the major factors in buildings - air-conditioning and lighting - is enormous. And for a city like Singapore, the contribution of energy efficiency measures would be much higher than every renewable solution that we can introduce.
Q. One degree will save you 10 per cent on your energy bill?
MHAISALKAR Yes, correct.
Q. So, why is that not happening? Why aren't building owners rushing to raise their thermometers?
MHAISALKAR The biggest factor goes back to user behaviour. Very often, if I'm paying the electricity bill, I'm willing to take a closer look at it. But in an office where you have a thousand people, it is not my problem whether the lights are on or whether the air-conditioning is not optimised. So this is also a question of behavioural economics: How do we incentivise individuals to save energy? CHEAM Actually, it is already happening, in Singapore especially so. Singapore has come a long way in terms of greening the infrastructure and the buildings, and many of the buildings here are already green-marked (certified by the Building and Construction Authority as environmentally friendly) and the Government has legislated minimum energy efficiency standards. And when you talk about exporting solutions, Singapore is already doing that. You have companies which are exporting urban solutions in a more holistic sense, infrastructure solutions, whether it's masterplanning, architecture and building, but selling that Singapore brand of efficiency and design to cities in the Middle East, cities in China and even cities in Africa.
Q. But our buildings are still overcooled, which is not very energy-efficient.
CHEAM Yes, I agree. There are some hotels that do better than others. And some of the older hotels have that problem because they haven't retrofitted their energy systems. The new ones have very efficient air-conditioning.
Q. Does it come back to pricing? Because managements paid a lot more attention to efficiency when oil prices were high. But now that the price has come down, is there less of an incentive to do so?
YEO Pricing is one factor, but the other big one is consumer behaviour. Singaporeans focus a lot on prices, but in a lot of other countries, consumers do not mind paying a premium to be green and they are very much more energy efficient-conscious. For example, keeping your switches on standby mode consumes a lot of power. I think that's an area NEA (the National Environment Agency) is working with the (industry-focused) Energy Efficiency National Partnership to push a lot more awareness among businesses as well as the consumers on this front. That's an area that needs to be further strengthened. MHAISALKAR We need to start the discussion on user behaviour in our primary schools, in our secondary schools. I think it will take maybe a decade for us to accept that we could come to an office in a short-sleeved shirt and not wear a jacket.
Q. The Japanese and the Koreans have already done that, with their Cool Biz (government campaign) drives, which push people to dress more comfortably for warmer environments.
MHAISALKAR I think from a ground-up effort, it may take a decade. We need to start with our kids and encouraging the kids to really not be over-reliant on air-conditioning and spend more time outdoors. But from a corporate perspective, I think efforts in terms of energy efficiency would be spearheaded by the management.
Q. When I talk about pricing, I am really heading up to the big question of carbon pricing. Do you think some sort of carbon pricing is going to be necessary?
CHEAM Yes. It's been in the discussions globally as well as nationally in a lot of regions for a long time. And the thing is, there's not going to be a one-size-fits-all solution and you are going to see a lot of regions and countries adopting what works for them. In some instances, it's going to be cap and trade, in some other instances it's going to be a carbon price. But I think most businesses, Shell included, have already had a shadow carbon price for some time. So businesses know that the carbon price is coming and I think it's inevitable. So whoever prepares for it will be the leader.