Speech by Minister for the Environment and Water Resources Dr Vivian Balakrishnan at the Creating Climate Wealth Summit

Great fortunes will be made or lost at moments of inflexion, and our world is going through several inflexion points even as we speak.

Sometime in the last one or two weeks, the world’s atmospheric carbon dioxide level reached 400 parts per million. When did the world last have that level of carbon dioxide in the atmosphere? For that, you would have to go back somewhere between two to even five million years ago.

The next question: two million years ago, when carbon dioxide was at the same level as it is today, what was the temperature like? It was much, much warmer. And what do you think the sea level was like, two million years ago, at this level of carbon dioxide in the atmosphere? Again, it is hard to be precise, but the estimates range somewhere between 10 to 20 metres higher than where it currently is.

To put this in our current context, all of you are actually sitting on chairs in a building built on reclaimed land. All this was under water 40 years ago. But more importantly, all the land we have reclaimed –probably about a third of our island –would be below water given the sea level two million years ago at today’s level of carbon dioxide. That just tells us that anyone who denies the existence of climate change - anyone who says this is not going to happen, and it is all academic hocus-pocus designed in such a way that some of you in this room will be able to make fortunes, is sadly mistaken.

The next inflexion point is human beings, who have not been around for three million years. Our existence as a species is much shorter than that. For the first time in human history, we now have seven billion of us, and that is not just it - more than half of all human beings now live in cities. This has never happened before.

The third inflexion point is that the age of cheap, natural resources which could be literally just scraped off the ground, whether you wanted coal, iron or all the other metals, is coming to an end. The fourth inflexion point is - if you look into the case of Singapore - that more than half of our water is imported. Increasingly, the solution for Singapore is the use of reverse osmosis to either desalinate water or recycle used water. Today, as we speak, our desalination capacity would be about 10 per cent, and for reverse osmosis or recycling, it would be about 30 per cent. But if you go to 2061, which is the day our agreement with Malaysia ends, 25 per cent will be desalination and 55 per cent will be recycled water.

What this means is that we may have - or we may think we have - solved the water challenge. But you realise –anyone of you in business will realise –that we are now in the age that energy equals water, because with reverse osmosis, as long as you have got an energy source and are willing to pay for that energy, you can generate as much water as you need. But this only emphasises the point that there is a very tight, and increasingly tight, nexus between water, food and energy. So, those of you who are looking for a crisis will know that there will be a crisis somewhere in this nexus. In fact, there are likely to be several crises, and each crisis also then presents a market opportunity. These are the four inflexion points I want to leave with you to suggest that great fortunes are going to be made or lost, and it is probably sooner rather than later.

I wanted to spend a little more time to give you some perspective of how the Singapore government approaches this. Singapore is a small, barren rock. But on this barren rock, we have five million people and we have got to make a living, to make enough money, so that we can buy everything we need –food, water, clothes, resources, services –from the world market.

Our vision is for Singapore to be a climate-resilient global city that is well positioned for green growth, a working example, a proof of concept, that there is a virtuous cycle between environmental sustainability and economic development. It is not a trade-off, but a virtuous cycle, and there will be many opportunities for companies both local and global to create value from the businesses in this context.

Now, these sorts of words sound plausible and attractive, but the reason I submit - I hope you believe me when I say this - is we do this because we have no choice. If we had lots of natural resources; if we were not a low-lying island; if we had lots of land; and our people could simply live and wait for the grass to grow and crops to be harvested, we would not have had to do all these things. But as a small, barren, low-lying island, when we say we need to be climate-resilient, it is real. When we say we need to be a global city, open to serve people and companies from all over the world, it is real. We had no other choice, when we say that there is a virtuous cycle between environmental sustainability and business.

Let me give you a real-life example. Some of our competitor cities in the world do not have blue skies. They have pollution. It is the key reason why many people move their children and families to Singapore. In the past, we could attract companies by offering cheap land, low taxes, security, a hardworking and disciplined workforce, and less industrial unrest. But increasingly, it is not about companies. It is about talent and ideas, and talent and ideas are encapsulated in human minds.

The key then, to economic survival, is to create a living environment which is compellingly attractive –somewhere where you would “stash” your kids and wife in. You may spend more than half of your time on the plane anyway, but this is home base, where your kids are and where they will be educated, where your bank is, and where some part of your value chain and your assets are going to be stashed. I provide a home base for your headquarters as you explore Asia and the rest of the world. I say this because I want you to understand that this is not just a trite marketing campaign, but that the vision I have spelt out is one which we have carefully thought through, and we intend to make it work because we need it for our own survival.

Let me give you a few other examples of some quirks in our public policy. We do not believe in subsidising consumption, so everything we consume –food, water, clothes, drugs, medication –is priced at the international market price. Why do we do this? It is not because we are market fundamentalists, but because we know that in a resource-constrained world, getting the price right is essential. If you get the price right, then you send the correct signals for conservation and efficiency, and equally importantly, send the signals to investors who are willing to invest for the long term in the factories, products and services that they are going to service and sell to the rest of the world. So, getting the price right is important.

Another aspect is transparency. As the world goes through these gut wrenching changes, people are beginning to feel a sense of crisis and want to know what is happening. Citizens will increasingly demand transparency. Even if governments do not provide it, it is now very easy for a citizen to produce his own meter to measure pollution in the air and pollutants in the water. So, rather than being antagonistic, we might as well embrace the age of transparency. Governments have to provide all the information that people have the right to know anyway.

The purpose of providing information goes beyond merely credibility of the government. It also enables people to make informed choices. What products are they going to purchase? What services do they want to utilise? Which is the most sustainable, safe or ethical mode of consumption? Increasingly, and sometimes ironically, we find that younger people are more green-conscious than the older generation. Perhaps because instinctively, younger people understand that they have a bigger stake in the future - an uncertain future, and therefore demand to know what is the true footprint of whatever product or service that is being produced or consumed.

Another example is that we do not believe government alone can be the solution. We also need academic research, development and technology. But, quite frankly, most of the technology that we need has been invented, if you think as far as the challenges we are going to face in climate change. The question then is, why has this not been implemented, disseminated and rolled out? That is because we have really ended up in a triangular ‘no man’s zone’ between governments on one hand, technology and its potential on the other, and business interest.

Climate change, unfortunately, is the perfect example of being trapped in the ‘no man’s land’ of this triangle. Governments all over the world need to win elections. It is not that politicians are stupid. Most politicians, or all politicians, actually know what the right thing to do is. The difficult thing is to do the right thing and win the next election, which means all politicians, unfortunately, are very tempted to focus on the short term and the local. Even if you devise optimal solutions, these are local optimisations rather than global ones. Nobody wins an election for saving the world; you might win an election for saving your district or your neighbourhood. So, this short-term, myopic focus creates paralysis.

On the other hand, for businesses, the bottom-line is the bottom-line. You have got to make money or you are out of business. If rules are not clear and not going to be consistently applied for the long term, you will not dare make the investments needed, or take bets on the future which are necessary, if we are going to take technology which is already available in order to solve a real-world problem on a planetary scale.

I always find it very ironic, that in the past two years that I have been involved in the climate change negotiations, that the climate change negotiators have an enormous carbon footprint. We spend so much time travelling all over the world, generating lots and lots of hot air, but with no solution in sight. You do not know whether to laugh or to cry about it, but somehow, we are going to need a breakthrough. My pessimistic view is that, perhaps we are going to need a major and global environmental disaster before voters wake up and demand action from the politicians to solve the global problem. We all know about Hurricane Sandy and what its impact was. Some of you here may have been through it.

In dealing with the impact of climate change, there are two dimensions to it. One is mitigation, the other one is adaptation. Mitigation is: how do we reduce carbon dioxide in the atmosphere so that there will be less impact on all of us? Adaptation is: when this place is under water, how do we adapt and continue to live and make a living?

The ironic thing is that mitigation is going to cost us a lot because quite frankly, it is still cheaper to scrape coal off the ground and burn it then it is to invest in a solar panel or a windmill. It is still cheaper to do the wrong thing, and we make it worse by subsidising fossil fuels. If we cannot even get the subsidies off the table, it is almost pointless talking about incentives to do the right thing.

We need to get our basics right. Yes, mitigation is going to cost us a quite a lot in the short term, but guess what - the cost of adapting to a climate-damaged world is going to be far off the scale of the cost of mitigation. But even so, because there is this local short-term local versus global long-term problem, we still cannot get our heads around it and we cannot generate the political consensus for us to do the right thing. So, it may be that we are going to need a major environmental disaster before we will wake up and force us to do the right thing. I hope that good sense will prevail, good science will be believed, and goodwill and good faith will be characteristics of our negotiating process. Anyway, watch this space and see whether we generate anything by 2015.

Finally, let me just say a few words on energy efficiency. In Singapore, because we are so small, even if we were to put a solar panel on every rooftop, the maximum level we will generate is perhaps about 10 to 12 per cent of our electricity needs. This is a safe place –there are no earthquakes and we are not sitting on top of a volcano –but this also means I cannot get geothermal energy. This is also a very safe harbour –we do not have typhoons and hurricanes. Therefore, it means we do not have much access to wind energy.

So, unfortunately, in the case of Singapore, 99 per cent of our energy comes from fossil fuels, primarily natural gas. The other one per cent comes from incinerating all our garbage. The reason we incinerate our garbage is not really primarily focused on energy, but because we ran of space for landfill - but that is another story. The point I am making is that in the case of Singapore, energy efficiency is, at this point in time, the only game in town. Given that every joule and every kilowatt-hour is generated from imported energy, we have to conserve and be as efficient as possible.

In the areas of industry, transport and buildings, we have passed legislation and put in place regulations to incentivise companies to pay attention to energy efficiency. We provide seed funding and access to technology. We make sure that everyone, the big players, has a plan for energy efficiency. They have to appoint someone who will take charge of that, generate the plans, submit the data to government, and allow peer review, benchmarking and comparability. These are areas which we are working on, and I put it to you that we need to focus on these in order to promote energy efficiency, because at this point in time, it is all that we can do as far as mitigation is concerned.

For adaptation, we have to have long-term plans to deal with what we anticipate to be sea-level rises. For instance, I said this was reclaimed land. When we reclaimed land in the past, it had got to be at least 1.25 metres above the highest recorded tide ever. Last year, we changed the regulations to add another metre to that. That is going to be enormously expensive because that means we have to add a lot more sand to build up the platform levels. Some people will say you are wasting a lot of money buying this extra sand. Well, I will put it to you this way –I think this is called sand banking. If we do not need it, we will have extra sand to put up more buildings. If we do need it because sea levels are rising, then we bought ourselves some time.

The point I want to leave with you is that in Singapore, we are trying to build a working model of future –a future in a climate-damaged world; a future with many more people; a future where cities are the main game in town; a future where energy, food and water are interlinked; and a future filled with many crises and therefore, by definition, many opportunities for many of you in this room.

I hope I have given you some food for thought, and hopefully some sense of crises, opportunities and also perhaps, hope. Thank you all, very much.

Source: Ministry of the Environment and Water Resources