Q: In the Budget 2020 announcement on 18-February 2020, Deputy Prime Minister and Minister for Finance Heng Swee Keat has set out a date to phase out internal combustion engine vehicles by 2040, paving the way for greater adoption of electric vehicles in the intervening years. What do you see as the main challenges lying ahead for implementing this ambitious target?
A: Car ownership is a very personal choice noting the myriad models that exist in the market, therefore consumer acceptance of electric vehicles as their choice is the first decision point, after that accessibility to charging infrastructure, reliability of the vehicle’s performance, battery warranty period, cost of purchase, cost of ownership, and their sense of responsibility towards fighting climate change; in that order of importance, are the main challenges to achieving this ambitious target.
Q: Incentives to move more drivers towards vehicles operating on cleaner energy have been announced, including extension of the Vehicular Emissions Scheme (VES) to light commercial vehicles, rebates for early adoption and the revision of road taxes for qualifying vehicles.
Can you elaborate on this and share with our readers what the current incentives are? How does the Vehicle Emissions Scheme (VES) for light, commercial vehicles work? What kind of rebates for early implementation are available? What is needed in terms of a revision of road taxes for qualifying vehicles?
A: There is an opportunity to be innovative with our future road tax schemes. The new tax scheme could be a function of usage i.e., using technology, road taxes will vary for the same two vehicles based on their usage on the road. This can be tied to the new ERP system using the tracking technology and therefore encouraging more prudent use of vehicles and equitable road taxation.
Dr Kuttan pointed to the following web links for a complete description of the VES, including the scheme for commercial vehicles:
▪ One Motoring - Vehicle Emission Schemes
▪ LTA & NEA - New Commercial Vehicle Emissions Scheme and Enhanced Early Turnover Scheme
Q: Looking at the small size of the city state in comparison to its neighbours, what impact and what benefit do you expect to result from the electrification of road transportation, for the consumer and the environment? How will it affect the private and commercial cross-border traffic with Malaysia?
A: Our densely built up city and neighbourhoods will see lower road side emissions of harmful substances. Those waiting at bus stops and taxi stands together with exercise enthusiasts will be breathing cleaner air. Noise levels will also come own drastically in the neighbourhood allowing the presence of nature to be more experienced i.e., birds chirping, and the reduction of noise related stress.
With regards to cross border traffic movement with Malaysia, it would very much depend on the cooperation between the two countries to have the same standards on their installed charging infrastructure. Failing which, private owners may need to rent non-electric cars for their trips into Malaysia depending on how far and how long they plan to travel. Similarly, commercial vehicles will need to adjust accordingly.
However, depending on the penetration rate, this also provides an opportunity for petrol and diesel supplying companies to diversify their business model and set up charging infrastructure at current sites to capture the revenue share of electricity sales.
Q: In this long-range plan between now and 2040 internal combustion engines will still represent the lion share of vehicles used for commercial and private transportation. Singapore has already implemented the by far highest emission standards in South-East Asia, well beyond requirements seen in Malaysia and, in particular, in Indonesia. We understand that Europe is looking into clean, conventional transportation fuels as possible means to remain presently relevant in the total energy mix. What is your view and opinion on this?
A: Actually, any car purchased from 2031 onwards, I anticipate will not have 10-year COEs if there are no ICEs on the road beyond 2040, so there could be changes announced to the COE scheme as we know it in and around 2028. This implies that we have about 10 years to set things up for a potential increase in uptake of electric vehicles, although some may move sooner than later if the availability of charging infrastructure is addressed. Note that we already have more charging infrastructure than electric cars on the road, accessibility is the main drawback.
Every country needs to decide on its role in relation to the fight against climate change and providing cleaner and safer air in the environment their citizens live. Our higher standards would mean there are no environment-based restrictions for Singapore cars entering Malaysia. The benefits of cleaner air in our neighbourhoods will have a positive impact on our health and wellbeing and hence healthcare cost especially for lung related illnesses like emphysema and asthma. Having the right standards and policies for the right purpose and outcomes is key.
Q: Till date, consumer acceptance of EVs remains limited, mainly caused by the high acquisition cost of most new energy vehicles. We have seen EV registration rates plummeting in China during the 2nd half of 2019 when subsidies and other financial incentives were removed. When do you expect that the production of electric vehicles will become more competitive and what do you think is needed in terms of government aids to bridge the existing cost gap?
A: The primary cost associated with electric vehicles is the battery cost. In 2015 it was about 60% of the cost, with batteries at $209/kwh. The tipping point, where EV cost will be competitive with ICE is around $100/kwh which most experts anticipate will happen between 2023 and 2025. The cost reduction will not stop there and will continue to fall like the cost of PV solar as technology improves and scale of production increases.
I don’t think the government should aid to close the cost gap, but it should level the playing field between the ICE and EV.
Cost of production is different from sale price, where margins for the companies and taxes plays a big role in the final price to consumers. Singapore sale price points for cars between the cheapest and the most expensive can accommodate sale prices of most if not all EV models in the world today. It is really the consumer’s decision on whether they want to buy an EV and what kind of budget they are able to afford at any point of time. There are leasing schemes as well to take advantage of and one must also note that the cost of ownership is much lower than ICE, with less mechanical wear and tear and the price of electricity per km versus petrol per km.
Dr Kuttan referred to the following link for further details, including his commentaries on the topic:
▪ BloombergNEF - Battery Pack Prices Fall As Market Ramps Up With Market Average At $156/kWh In 2019
▪ SEAS White Papaers
▪ The Bussiness Times - Level the playing field for adopters of electric vehicles in Singapore
▪ Channel News Asia - Commentary: Why Singapore is ripe for an electric vehicle revolution
Q: Battery life, recharging time and lack of recharging stations are other topics always emerging when analysing and commenting on the rather slow commercial evolution and market penetration of electric vehicles. Singapore’s government has set forth a goal of creating 28,000 charging points, a significant infrastructure surge from the 1,600 today.
Please, be so kind and share your opinion on this as far as technical developments in general are concerned, but also as far as Singapore’s response to overcome those arguments is concerned.
A: Innovation and technology improvement of battery, battery systems, charging infrastructure is well on the way across the world and will let private sector with researchers drive the momentum around those developments. These developments range from new chemistries to new power electronics development that try to push the performance envelopes (speed, endurance, reliability, sustainability, cost) on both batteries and charging infrastructure.
Singapore’s role is therefore limited to local companies and researchers in this domain and if they are indeed at the cutting edge of development. The Singapore government through different funding agencies has supported some of the more noteworthy works at the universities, polytechnics and research institutes.
A more significant role the Singapore government can play in is creating the platform to increase the availability of charging infrastructure which has already been announced and to ensure consumer accessibility (location and ease of transactions) through proper distribution planning and the deployment of a single platform across different charging infrastructure providers (to be developed).
Dr Kuttan referred to his published commentaries for further details:
▪ Channel News Asia - Commentary: Where are all the electric vehicle charging points?
Q: Picking the battery life issue up from the previous question, other concerns are related to e-waste disposal, its management and regulations. What – in your opinion – needs to be done in Singapore to address these issues?
A: The Minster for the Environment and Water Resources a few years ago announced the priority for handling electronic waste. The Nanyang Technological University and the French Alternative Energies and Atomic Energy Commission (CEA) are actively doing research in this area.
We also need industry and public to be disciplined about separating our electronic waste at source and the government to support that effort through dedicated collection points. This has already started but anecdotally Singaporeans are generally ill disciplined when it comes to making the effort to segregate waste. If we are unable to do this, then new ventures to address this problem will fail. A case in point was IUT Global, which went bankrupt because the effort to segregate at source was poorly supported by consumers, about a decade ago.
Singapore’s recycling rate is only at 61% as of 2019, up from 40% in 2000. We need to do better as a Nation that is compact and technologically advance.
Q: Looking at it from the pragmatic side, how would Singapore in your opinion best implement the government’s plan? Would you suggest a 2-tier approach between commercial and privately-used vehicles? Would you recommend to target the conventional transportation market by different engine/fuel types?
A: I don’t see the need for a two-tier approach between private and commercial, these can run concurrently as they are different market segments. Furthermore, the electrification of the commercial segment will depend the availability of the models in the market place. We already have busses, and minivans however both require different charging infrastructure.
We need to convince the consumer that the economics of using (cost/km) and maintaining an EV is better than an equivalent ICE operating on Singapore roads (city and highway). We don’t have a local market study based on current technology. We could pool the data from current user of EVs (taxi, private cars, commercial cars) to support such a study.
Early announcements of potential sites where the charging infrastructure will be erected is also useful for consumers to consider the benefits of EV ownership.
An online tool kit to calculate the benefits using average daily distance travelled, cost of electricity and petrol / diesel, distance from closest charging infrastructure at home or at work, required frequency of charging, and total cost of ownership comparison etc could be developed to help in the decision making. This would be useful.
We should already initiate the development and trial of a single access platform for all different charging infrastructure providers, with their distinct backend business model. This will raise the utilisation of the infrastructure and improve the returns on investment.
We should also re-look at the COE structure at its next revision, to include a separate EV / GreenTech category to drive and track the adoption rate and the consumer’s penchant for EVs. This will allow for better planning the installation and distribution of charging infrastructure; without undermining the National “Car Lite” policy.
Q: We would like to thank you very much for the opportunity to talk to you and for sharing your views with our readers. Are there any other points, not covered by our questions, which you deem important for our readers to consider?
A: We must embrace the fight against climate change as an existential issue. In doing so, then the cost of survival and building a sustainable society not just for ourselves but for our generations to come, is put in proper perspective. The cost of not doing anything is too high. Our motivation if correct will see us through the cost-price and behavioural barriers.
Therefore, the adoption and use of electrification and decarbonisation technologies in our transport sector and society is not just about waiting to use a cheaper new technology, it is more about how do we change our behaviour and leverage these new technologies in the fight against the ills of climate change today.
The economics of adoption should then be based on our desire to eradicate the wanton wastage of limited resources. Ultimately, when it comes to moving around in Singapore, we need to also consider better use of one of the world’s most efficient and integrated public transport systems in the world, right here in our own country; which is moving towards full electrification in the near future.
Dr Sanjay C Kuttan
Chairman Sustainable Infrastructure Committee
Sustainable Energy Association Singapore
Dr Sanjay Chittarajan Kuttan is currently the Executive Director of the Singapore Maritime Institute, a recent appointment after more than 2 years as a Programme Director at the Energy Research Institute at the Nanyang Technological University (ERI@N) managing the Smart Multi Energy System project. Prior to that, Sanjay has held various positions across his career since 1994 both in private and public sector. His roles in the private sector range from line management (AP Technical Response Manager at ExxonMobil Asia Pacific, 10 years), business development (Business Development Manager at Mobil Oil Australia, 2 years); policy and programme management (Energy Market Authority, 2 years) to management consulting (Petroleum Practice Expert/Engagement Manager at McKinsey & Company, 4 years) and business leadership (Managing Director, Clean Technology Centre and Country manager, DNVGL - Energy, 5 years). In management consulting, he was primarily involved in the oil and gas sector covering refining operational improvements, fuels and lubes retail strategy and corporate performance culture transformation. At DNVGL, which was prior to joining ERI@N, he was engaged in Smart grids and power systems, renewables and grid integration, energy efficiency, electricity markets and energy policy. Before that he was the Director of Industry Development at the Energy Market Authority a Statutory Board under the Ministry of Trade and Industry (MTI). There he was in charge of three key clean technology projects embarked by the Authority i.e., Intelligent Energy System Pilot (aka Smart Grid), the Electric Vehicle Test bed and the Pulau Ubin Renewable energy project; and represented EMA at the Energy Efficiency Program Office and the Clean Energy Program Office.
He also supported the Ministry of National Development on two working groups i.e., Punggol Eco Town, Sustainable Urban Living. He is currently a council member of the Sustainable Energy Association of Singapore (7 years) and advisory committee of Stamford Primary School (12 years). In 2019 he started a 2year term with MTI’s Pro-Enterprise Panel and 1year term on Disciplinary Standing Sub-Committee (DSC) of Singapore Athletics Association. He served 3 years as council member on the Singapore Chapter for the World Business Council for Sustainable Development until 2015 and 8 years on the advisory committee to the School of Electrical Engineering at the Ngee Ann Polytechnic until 2018.
Sanjay graduated from the National University of Singapore with doctorate in Pharmacology in 1993 after receiving this honours degree in Biochemistry from the same university in 1988. He was a research fellow at the Institute of Molecular and Cell Biology before joining the private sector at ExxonMobil in 1994.
In 2011, during his time with the Energy Market Authority, he was part of two different teams that received the MTI Award (Borderless) for the Implementation of Electric Vehicle Charging Infrastructure in Singapore Phase 1: Design and Development and MTI Award (Innovation) for the Development of TR25 EV Charging System Standard. He also received in 2012 and 2017 the Ministry of Education’s Service to Education Award for his service to Stamford Primary School, where he continues to serve. During his career, he was also selected by ExxonMobil in 2001 and DNVGL in 2013 to join the leadership programs conducted by INSEAD. In 2009, he was also selected to join the 9th Government Leadership Program following the nomination by the Energy Market Authority.