Singapore’s Energy Conservation Act – What It Means For Companies
By Shar Ghadialy
Nobel Peace Prize winner, Al Gore, in his award-winning documentary on climate change, ‘An Inconvenient Truth’, said: “It takes time to connect the dots, I know that. But I also know that there can be a day of reckoning when you wish you had connected the dots more quickly.”
With Singapore’s energy portfolio comprising almost entirely of hydrocarbon-based fuel, rising levels of national energy consumption year on year, electricity tariffs pegged to fluctuating fuel prices, and the buildup of carbon emissions, there aren’t many dots left to connect. It’s quite evident that we need to rein in our energy consumption levels sooner than later if we are to keep it from running away to unsustainable levels.
Realisation of this inconvenient truth had set in a long while ago for Singapore. Singapore reduced its energy intensity by 15% from 1990 to 2005 and by 8% from 2005 to 2009. This is no mean feat by any standards, and is a direct fallout of the many prudent energy efficiency measures, policies and market incentives undertaken as a concerted effort by the government.
The commitment towards a sustainable and clean future continues. Singapore now aims to reduce its energy intensity by 35%from its 2005 levels by 2030. It has also pledged to cut back on carbon emissions by 16% from 2020 business-as-usual levels, provided that there is a legally binding global deal. How will Singapore continue to stay on track and meet such ambitious targets?
While Singapore’s policy of not subsidising energy costs for consumers already provides enough market incentive to be more energy efficient, more is needed to induce efficient usage of energy for large energy consumers. Singapore’s industrial sector accounts for nearly 60% of her total energy consumption. Clearly there is room for significant improvement in this sector that could go a long way in helping Singapore achieve the long-term energy targets that she has set for herself.
In a bid to address this and achieve Singapore’s long term energy targets, the Energy Conservation Act was passed in Parliament and took effect in April 2013. The Energy Conservation Act (ECA) aims at providing an impetus to large industrial consumers to increase their energy efficiency and reduce the impact of their greenhouse gas emissions.
What does this mean in the wider context of the country? Increased economic competitiveness and greater energy security. As Minister for the Environment and Water Resources, Dr Vivian Balakrishnan, rightly sums it up: “We need to focus the minds of corporations and citizens on building and achieving breakthroughs in energy efficiency through more rigorous energy management practices. Otherwise, we will pursue an ultimately unsustainable growth path.”
What exactly does all this mean for the companies? The short of it is that the ECA changes the way companies manage their energy consumption and usage. Under the Act, companies consuming more than 15 gigawatt-hours or 54 terajoules per calendar year (equivalent to 600,000 televisions operating five hours a day annually) are required to implement a three-pronged mandate – appoint an energy manager, monitor and report energy usage and greenhouse emissions, and submit energy efficiency plans. Nearly 170 companies are impacted by this legislation.
Two such companies in Singapore with facilities that fall under the ECA are Panasonic Asia Pacific (two factories – Panasonic Appliances and Refrigeration Devices Singapore and Panasonic Industrial Devices Singapore), and Asia Pacific Breweries (Singapore). Green Business Singapore spoke to both companies recently to understand their thoughts on the ECA and the necessary efforts taken over the past year since the Act came into effect.
The Human Element
An effective energy management strategy is almost always implemented with a holistic approach looking at the enterprise as a whole. All departments and employees should have a role to play in its implementation. Energy efficiency culture eventually evolves and matures to become part of the ethos of the organisation.
While operational processes and equipment are the usual targets of energy efficiency measures, the people element is often overlooked or neglected. More companies should pay greater attention to the “softer” aspects of the changes required. Employees need to understand their role in energy management and sometimes nudged along towards embracing the company’s energy efficiency culture.
Mr Tatsuyuki Nonaka, Director, Environment & External Affairs Group, Panasonic Asia Pacific, explains: “Panasonic employees are encouraged to actively participate in programmes promoting energy efficiency. The Green Factory Challenge (GFC) was introduced in 2011 to promote group-wide learning and horizontal expansion of exemplary factory activities which focus on resource recycling, chemical substance management and carbon emissions reduction.
GFC encourages Panasonic factories located in the Asia Pacific, Middle East and Africa region to identify operational gaps and strengthen conservation efforts by proposing feasible green initiatives which can be implemented within the factory itself, and used as a case study for other Panasonic manufacturing facilities to adapt and roll out.
This year, Panasonic Appliances and Refrigeration Devices Singapore (PAPRDSG) won the GFC Special Award for its innovative effort in introducing efficiency by converting two of its boilers to operate on any fuel. This contributes to significant improvements of Panasonic’s environmental performance, particularly in the carbon emissions reduction category.”
Mr Nonaka also shares another initiative: “The 10% Energy and Water Challenge was introduced to encourage Panasonic employees to inculcate and continue their green habits at home with family and friends.During the challenge period, employees are required to monitor, manage and reduce household electricity and water consumption by 10%. Those who qualify stand to win Panasonic vouchers which can be used to purchase Panasonic energy efficient appliances.”
In addition, employees participate regularly in internal environmental audits to ensure they are up-to-date with the company’s environmental requirements, and applicable environmental laws and regulations mandated by the government.
Asia Pacific Breweries (Singapore) (APB Singapore), also has employee-oriented programs in place to help employees understand their role in energy management and nudge them towards embracing energy efficiency.
Mr Andre van Schuijlenburg, Head of Supply Chain, APB Singapore, shares: “Staff at APB Singapore are instrumental in upholding energy efficiency standards, it is a shared responsibility that involves the entire team. In order to integrate sustainability into the company’s way of working, we strive to cultivate the “Brewing a Better Future” mindset and capabilities in employees through the Sustainability Academy that offers inspirational learning opportunities.
At the Academy, staff can gain a better understanding of the drivers behind the company’s sustainability ambition, the programs that have been put in place to deliver and to test our knowledge to ensure understanding.
The “Brewing a Better Future” mindset is driven by the management team, where energy efficiency is an important KPI for all Managers in the Supply Chain team. We also have a dedicated pool of energy champions who will drive and implement energy saving projects and programs at APB Singapore. Each year, the energy champion from APB Singapore joins the regional Energy Champion Workshop to build new knowledge and promote sharing of best practices in energy efficiency.”
Energy Manager – Roles and Responsibilities
With the mandate to appoint an energy manager and periodically monitor and report energy efficiency, there might be a need for organisational restructuring or assignment of new roles and responsibilities for some organisations.
As Mr Andre, APB Singapore, noted: “With the implementation of the ECA, an Energy Manager has been assigned to adhere to the stipulations of the Act. The appointed Energy Manager has attended and completed the requisite courses and programs. Duties taken on by the Energy Manager include reporting on efforts made to sustain savings, in line with targets and plans.
The appointment of the Energy Manager is an extension of duties for our appointed “Energy Champion”. As part of the Heineken Group, we adopt the Total Productivity Management (TPM) process in APB Singapore. The TPM has a strong focus on energy consumption and its conservation.”
Mr Nonaka, Panasonic Asia Pacific, shares: “As a global manufacturer and an active contributing member of society, Panasonic believes in integrating environmental contributions with business growth.
The company incorporates green technology in its manufacturing operations to minimise environmental impact, focusing on resource recycling, chemical substance management, biodiversity conservation and reduction of carbon emissions. Energy managers, together with a team of engineers, are appointed in the factories to oversee energy use in manufacturing operations, as well as spearhead energy efficiency and environmental conservation efforts.
Hence, in compliance with ECA, no organisational restructuring was required. Existing energy managers are sent for training conducted by the Institution of Engineers, Singapore, to upgrade their knowledge and know-how.”
Energy Efficiency – Initiatives, Measures and Monitoring
A number of energy efficiency programmes and initiatives have been put in place to reduce energy consumption and increase energy efficiency. Investments have also been made in equipment and new processes established, demonstrating a serious commitment to improving energy efficiency.
Mr Nonaka elaborates: “In achieving energy efficiency and reducing energy consumption, Panasonic works towards surpassing internal targets through implementation of various green initiatives. Metres and gauges which monitor energy performance of each production line within the facility ensure optimum energy usage and eliminate wastage.
Some of the other projects that PAPRDSG has implemented include introduction of inverter and temperature control systems for water pumps and cooling towers, and implementation of high efficiency inverter and centrifugal air compressors.
PAPRDSG also converted two of its boilers to multi fuel burners to introduce flexibility and efficiency into the factory operation. Multi fuel burners enable the facility to operate on both diesel and biodiesel. A cleaner energy source such as the biodiesel reduces the need to burn scarce fossil fuel, and lowers carbon dioxide emissions. In addition, energy efficient light bulbs (LEDs) are used within the factory premises to further reduce electricity consumption.”
Mr Andre adds: “Achieving energy efficiency means striking a balance between operational efficiency and being friendly to the environment. It is APB Singapore’s business priority to embed and integrate sustainability in our daily operations. Being energy efficient translates into improved efficiency and productivity for APB Singapore as a whole, creating social and business value via the triple bottom-line criteria. We invest wholeheartedly in energy management systems and energy efficiency measures.”
Some examples of extra initiatives by APB Singapore include: an “Air Leak Day” carried out once a quarter in the packaging hall, where teams of 10 staff do a comb of the shop floor to spot potential air leaks, thus lessening energy losses; and meters are used to capture energy usage at various points across the manufacturing floor, which allows them to identify potential problem areas and cut down wastages.
Monitoring is key to the success of an energy efficiency improvement program. Without a robust energy monitoring plan in place, no tangible benefits can be accrued. It is imperative to have established energy baselines that are tracked closely for consumption. Energy targets and KPIs also must be set to assess the performance of the energy efficiency measures undertaken.
Mr Nonaka points out: “Typically, manufacturing facilities are able to monitor and manage energy consumption of the entire business unit. Panasonic also utilises metres and gauges to visualise energy consumption of individual equipment in the factory. This enables factories to calculate how much energy each equipment is consuming in relation to the overall operation process, and effectively single out and implement measurable reduction initiatives where required.”
Mr Andre shares: “We employ an in-house energy monitoring system that closely tracks utility usage. It churns out a daily utility consumption report. Specific to our business, we monitor 3 areas closely – electricity, thermal energy and water usage. We have 3-year targets set and KPIs around energy efficiency are built into our overall KPIs for the company.”
Challenges and Benefits
Both Panasonic Asia Pacific and APB Singapore do not foresee any major challenges in meeting the requirements laid down under the ECA. They view the ECA as aligned with their existing energy management efforts.
Mr Andre shares: “We do not foresee any issue with compliance with the ECA. On some levels, our in-house initiatives around energy efficiency are matched closely to that of the ECA. That said, challenges in general will exist and for us would be two-fold: technical and human. In terms of technical barriers, it is challenging to find energy efficient solutions that are also cost efficient. We are constantly looking out for innovative solutions.
Energy management is not just about investing in the right technology, it is also a joint effort across the entire company which requires buy-in at all levels. Sustainability efforts are driven by the management, who acknowledge that it is a key requirement of being a world-class brewery and a logical business decision. They are responsible for inculcating the right habits and attitude in our staff and constantly reminding them to be vigilant about energy use daily (e.g. switching off the lights after a meeting).”
Mr Nonaka notes: “Green manufacturing practices have been in place in both Panasonic factories before the ECA was implemented. As such, the Act serves as added encouragement and positive affirmation of the company’s efforts in embodying environmental sustainability in all aspects of its business. With the ECA, Panasonic will continue to ensure its energy managers are kept abreast of the developments and requirements of Singapore’s fast changing energy landscape.”
In terms of seeing benefits from meeting the ECA requirements, Mr Andre notes: “This is the first year of implementation of the ECA. We are confident that adopting the requirements set out in the Act, will help us improve ourselves further in the area of energy conservation.”
Mr Nonaka adds: “Societal contribution is at the core of the company’s business philosophy here in Panasonic. In conserving energy, be it through operational achievements or energy efficient initiatives, both factories under ECA have reaped cost benefits.”
The Road Ahead
The ECA legislation is only the first step, albeit a significant one, before evolving towards more targeted measures based on the data collected as part of its compliance. As more companies like Panasonic Asia Pacific and APB Singapore report energy data under the Act, more meaningful analysis can be drawn from the data to track energy consumption trends.
To help companies lacking in the necessary resources to build capability and prepare for meeting the ECA requirements, the National Environment Agency (NEA) set up a dedicated centre in 2010. The Energy Efficiency Promotion Centre (EEPC) is aimed at assisting companies on ECA matters and providing general advice and guidance.
Not only does EEPC provide a forum to link up companies with knowledge partners and energy efficiency experts, it also provides advice on several incentives and grants to support companies in their energy efficiency measures.
Energy Efficiency Improvement Assistance Scheme (EASe), Design for Efficiency Scheme (DfE), Grant for Energy Efficient Technologies (GREET) and Singapore Certified Energy Manager (SCEM) Training Grant are some of the grants and incentives on offer to name a few. NEA co-funds companies on energy management training programs for factory energy managers and also the training cost for the Singapore Certified Energy Manager (SCEM) course.
With such an extensive support framework coupled with the government’s firm commitment to the ECA, this landmark Act seems well poised for success. Much will hinge on the human element involved in the changes undertaken to meet ECA requirements. Whether the ECA manages to hold up to its promise and whether companies manage to promote a self-sustaining culture of energy consciousness, remains to be seen.
It is still early days but the die has been cast as companies and their employees prepare and work towards their quest of building a more energy efficient and greener future for themselves and Singapore.