Commentary: Singapore's oil and gas sector should embrace transition to a green future with confidence
SINGAPORE: The global free energy transition is gaining stride.
This transition will open up new opportunities in emerging growth industries in Singapore and trigger transformation for many sectors.
Value pools volition shift, creating economic opportunities for the nation. As an example, the transition from internal combustion engines to electric vehicles (EV) and battery manufacturing is an obvious opportunity.
Positive steps can already be seen in Hyundai's recently announced Usa$400million investment to build an EV manufacturing facility in Singapore, capable of manufacturing 30,000 electric vehicles a year when completed at the end of 2022.
Singapore's Keppel Corporation, the world'south largest rig-builder, also recently announced that it will be pivoting from its rig business to make clean energy.
READ: Commentary: Keppel's get out of rig business may accept bigger implications for Singapore's offshore and marine sector
Tin OIL AND GAS TRANSFORM?
However, the oil and gas industry faces significant pressures to transform — with over a century of operational history, and investments in global infrastructure and stock of assets in the trillions of dollars.
This is an industry with investment lifecycles often stretching over multiple decades. Decisions made at present have significant financial affect for many years to come.
In the face of the free energy transition, oil and gas companies will need to transform their businesses.
A successful pin volition require decarbonisation of existing avails while leveraging new and emerging technologies. It will also necessitate investment in new growth, partially financed by the operation of conventional assets.
Early on moves in this arena can exist seen by the likes of Vanquish, BP, and Total all pivoting towards renewable and green energy opportunities.
The industry'southward traditional strengths in complex project delivery, deep technical and technology expertise, and operational experience in challenging environments can provide a competitive border to abound through transition.
For example, with decades of offshore oil and gas evolution experience, the industry is well-placed to compete in offshore wind power, as evidenced by many oil and gas players investing in this space.
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The industry'south technical expertise and legacy gas infrastructure places information technology in an advantaged position to calibration hydrogen as a source of clean energy.
Oil and gas companies are also well-placed to scale large and circuitous carbon capture, utilisation, and storage (CCUS) projects, peculiarly when carbon dioxide tin can be stored in depleted oil and gas reservoirs.
As, it is well-positioned to collaborate and innovative across sectors on alternative low-carbon fuels for transport and side by side technologies with the industry's deep agreement and awarding of new technologies.
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Building ON EXISTING SKILLS AND CAPABILITIES
In the long-run, oil and gas companies demand to embrace a multi-applied science approach for a successful transition.
As they movement towards low-carbon technologies, there will exist a shift in the types of skills and capabilities the industry needs.
Fortunately, oil and gas is an industry with a legacy of attracting deep technical expertise and talent.
Harsh and remote environments have required remarkable engineering prowess to access, develop, and process oil and gas resources, such as deep-water developments in waters up to 3km deep.
While the free energy transition drives a shift away from oil and gas, it also represents opportunities for expert manufacture talent. These skilled professionals can be redeployed in adjacent loftier-growth sectors such equally depression-carbon energies.
Every bit an example, avant-garde technical talent will be valuable in areas such as hydrogen production.
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Here there is a need to overcome technical challenges to economically produce, store, and safely ship hydrogen to meet long-term demand.
Advanced mechanical, electrical, chemical, process, and instrument engineers from oil and gas represent existing talent with the skills that can be retrained and redeployed into building and operating the infrastructure required for a future hydrogen economy.
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Redeploying oil and gas professionals to engage their skills in the emerging light-green economy addresses both the short-term need for talent in sustainable technologies and the long-term challenges of changing workforce demand in this key regional manufacture.
As an example, Shell has partnered with the Singapore Crush Employees' Union (SSEU) to set a council focussed on retraining and upskilling employees for future roles as the company transitions its core business to be net-zilch by 2050, aiming to cut its emissions in Singapore by effectually a third by 2030.
More broadly, creating a sustainable landscape of long-term talent volition require an finish-to-cease approach.
This begins with childhood education to increase awareness of environmental responsibilities and develop the foundations to actively address them as career opportunities in future years.
Such an educational foundation will enable local industry to scale and embrace the necessary technologies as function of this energy transition while providing the backbone to design novel solutions that empower us to accomplish Singapore'southward green transition ambitions.
Managing a jobs transition while balancing needs for existing manufacture talent against new technology talent will exist critical.
This period of transformation will also create challenges for profitability, as investments required for long-term growth that reflect the energy transition could negatively touch short-term profitability.
MAKING THE Correct MOVES IN SINGAPORE
Regime will play a crucial role in leading a successful transition. Cross-sector likewise every bit sector-specific policies volition be needed to drive effective change.
Policies which help shape and steer the behaviour of businesses and consumers towards greener products and services will as well be an important enabler. Contempo enhancements to Singapore's Energy Conservation Act are valuable steps forth this journey.
Mandatory energy management practices introduced in 2022 ensure companies must monitor, manage, and mitigate energy loss and greenhouse gas (GHG) emissions, saving 250 kilo-tonnes of carbon dioxide equivalent (tCO2e) from 2022 to 2018.
Recently introduced enhancements fix more stringent efficiency requirements for h2o-cooled chilled h2o systems in industrial facilities, a system which accounts for effectually 16 per cent of electricity consumed in these facilities.
On Mon (Feb 1), Minister for Sustainability and the Environs Grace Fu revealed in parliament that Singapore will launch a Green Plan that would be a major policy priority for the government in the coming years, with more details shared by Deputy Prime number Minister Heng Swee Keat during his Budget speech on Feb 16.
Therefore, the regime remains an of import catalyst to enable markets to evangelize on this transition. Pricing carbon and other externalities into investment and purchasing decisions is i-way governments tin do this.
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Carbon pricing is expected to grow in importance over the coming decade, as sustainability considerations inform purchasing decisions, investments, and potential pricing measures.
This will not only assist indicate the economic system to deepen investment in low-carbon sectors just offering a framework that could be applied across the region.
Today, carbon taxes in Singapore - applied merely to high-emissions companies with GHG emissions over 2,000 tCO2e annually and priced at S$5 per tonne of emissions - are largely a mechanism to signal the path of travel for the future.
Based on current estimates and experience from other countries, carbon pricing will demand to gradually rise to a range of United states of america$50 to U.s.$80 to spur investments into emerging low-carbon technologies needed for a comprehensive climate transition.
Countries in the European union, such as France, Norway and Finland, are now pricing carbon in the The states$twoscore to US$70 range.
SINGAPORE CAN MAKE A Departure
In the longer term, Singapore is well-positioned to assistance establish a feasible carbon showtime trading marketplace for the region.
Singapore is in a unique identify when it comes to this global energy transition. Its ain carbon emissions are relatively inconsequential at but 0.1 per cent of global emissions, yet its reputation as a respected global partner offers an opportunity to steer regional and global cooperation.
The nation'due south success as a global finance hub offers a valuable pathway to regional investment.
The Boston Consulting Grouping estimates that in Southeast Asia, up to 70 per cent of a 2 degrees Celsius path can exist achieved with positive economic returns to the region at an investment rate of about 2 per cent of regional Gdp into sectors such as energy, transport and infrastructure.
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Financing from individual and public sector sources volition need to be mobilised to achieve this transformation. Singapore could be a pivotal partner in attracting, informing, and facilitating required investments.
These investments could include a shared commitment to promising new technologies and edifice collaborative regional opportunities. Information technology could include establishing market conditions to scale climate transition financing, with Singapore as a hub facilitating and encouraging green investment.
The Monetary Authority of Singapore (MAS) recently introduced ecology risk direction guidelines for banks, edifice ecology concerns into future investment and operational decisions.
The MAS has too appear information technology volition invest US$2 billion in green investment funds in order to drive positive climate action. These are by no ways exhaustive examples of climate-focused investment in Singapore.
If Singapore is to build an effective depression-carbon future, we must invest in the skills, and the opportunities, together. That is the path to ensuring a more climate-positive hereafter for the nation, and its economy.
Listen to Pulitzer prize-winning writer Dan Yergin reveal China'due south calculations with going green and embracing electric vehicles on The Climate Conversations podcast:
Dave Sivaprasad is a Managing director & Partner and Ocean leader for Climate Activeness at Boston Consulting Group.
Source: https://cnalifestyle.channelnewsasia.com/commentary/commentary-singapores-oil-and-gas-sector-should-embrace-transition-green-future-confidence-300016
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