A push to go greener faster

THIS WEEK'S TOPIC: What's the impact of rising energy prices for your organisation?

Lawrence Loh Director, Centre for Governance and Sustainability NUS Business School Rising energy prices particularly from fossil fuels is a timely wakeup call. Businesses should fundamentally always reevaluate their energy mixes. It is not about oil prices - it is about staying sustainable for the business and making the world sustainable. We will need renewable energy from all possible sources especially the natural elements - sun, wind, water. We need critical masses of demand so that suppliers will have the economies of scale. It is a small step for each business but it will be a giant leap for economic viability. Yes, oil prices are rising. Why not take this opportunity to be sustainable? Let's all make a virtue out of necessity.

Alvin Ng VP and General Manager, Digital Solutions, Asia Pacific Johnson Controls Soaring energy prices are adding pressure to companies already grappling with multiple challenges including inflation and Covid. However, on the bright side, it is also pushing businesses to accelerate transitioning to cleaner sources of energy as well as improving energy efficiency. For the built environment, there are existing cost-effective solutions to counter rising energy prices, and we see increasing interest in such solutions - for example, through digitalisation and artificial intelligence to optimise energy use. The business case for clean energy and energy efficiency is getting more compelling.

Kevin McGuigan VP and MD, 3M SE Asia Region and Country Leader, Singapore With two local manufacturing plants, rising energy prices affect our business significantly. We manage rising costs by optimising systems that track plant performance, monitoring energy usage, and investing in sustainable, self-generated sources of energy. For example, in 2018, we installed a 2.2-megawatt rooftop solar system at our Tuas plant. It generates an annual average of 2,400 MWh of electricity, equivalent to powering 506 four-room HDB flats. In fact, thanks to these factors, we managed to lower electricity costs in our Tuas plant slightly in 2021 compared to 2020. More importantly, it keeps us on track to reach 50 per cent renewable electricity use ahead of our 2025 target

Anderson Tanoto Managing Director RGE Group Rising energy costs create a great opportunity for leaders to push through structural transformational changes in the energy utilisation of their businesses. A higher fossil energy cost results in a quicker return of investment on capital expenditure for renewable energy sources eg solar and biomass boilers. Bracell's new generation pulp mill is designed to be fossil fuel-free, with natural gas replaced by bio-gas produced from scraps of wood and bio-mass. While the bio-mass reactor requires capital expenditure at current sky-high gas prices, the payback period has been reduced by half. The impetus to rapidly invest in a more sustainable source of energy is not only good for the environment, it is good for the business.

Tan Wee Hsien Chief Executive Officer MCL Land The rising energy prices will certainly send ripples through the markets we operate in and increase the running costs of our developments. Our parent group Hongkong Land and ourselves make a conscious effort to focus on long-term sustainability solutions to ensure business continuity, along with energy savings for our customers, buyers and the wider community. We have implemented a suite of energy-saving features within our developments such as motion sensors to control lighting that serve common areas, solar photovoltaic systems to reduce energy consumption in future projects, as well as passive facade design that encourages natural daylighting and ventilation thus reducing overall heat gain. We are also on track to further digitalise our operations to monitor energy consumption and optimise operational efficiency in real-time. The silver lining - the volatility of the energy market could help propel more organisations and individuals to innovate and seek greener and more sustainable energy solutions.

David Kuo Co-founder The Smart Investor There is no easy way to escape rising energy prices. Energy is such a vital resource that, even if it might not be a major overhead component, it will inevitably find its way into higher utility bills, higher transportation fees and higher operational costs. Consequently, every business, whether big or small, must be aware of its impact on the bottom line. Inflation is a hidden cost. Some might even say it is a hidden tax. But businesses should not throw up their hands in defeat. The key to dealing with inflation is to be able to raise prices without losing market share to competitors, which means developing products and services with unique-selling propositions.

Maren Schweizer Chief Executive Officer Schweizer World Group The dynamic in increased energy cost threatens recovery and growth. High energy prices globally impact our portfolio companies in the form of lower output, rising production costs, and exacerbating existing supply chain issues. Given the current market environment and outlook, it's vital to devise innovative hedging embedded in sales pricing models and to deploy all available means in risk management. We are taking a close look at our networks, policymakers' reliability, and assess if our footprint is still optimal in the context of the new reality. Investment and operational decisions are likely to be affected. Furthermore, we are reviewing our longstanding energy-saving programmes for opportunities to accelerate. The limiting factor is capital. Policymakers can play an important role as facilitators with investment incentives and low-interest rate government-backed loans.

Daniel Gaefke APAC Director BayWa r.e. Businesses with fossil fuel-dependent energy mixes face an inherent risk of energy price volatility. To insulate against future shocks, renewable energy and non-fossil fuel sources such as hydrogen present viable alternatives that can empower businesses with enhanced stability. At BayWa r.e., we have observed a favourable shift towards renewables in our conversations with prospective customers, with many prompted by energy price fluctuations to seek more stable and sustainable alternatives. These remain viable even for land-scarce territories such as Singapore, with rooftop-mounted solar panels and technology advances in hydrogen capture and storage providing a greener and more sustainable way forward.

Nirupa Chander Country Managing Director Hitachi Energy The rising energy prices give cause to accelerate the energy transition and advance a sustainable energy future for all of us in Singapore. The SG Green Plan and "4 Switches" Strategy - diversifying its generation mix with import of low-carbon electricity from neighbouring countries - already positions Singapore in a leading role in Asean. Further measures to electrify transport will drive efficiency in the overall energy ecosystem as well. While rising energy price may be a short-term pain, the overall market outlook for investments in renewables is strong and will help achieve the net-zero ambitions of this region. In our own operations globally, Hitachi Energy has moved to 100 per cent fossil-free electricity consumption at the close of December 2021 as part of our plans to be carbon neutral by 2030.

Victor Tan Chief Executive Officer TOP International Holding Global energy demand is set to grow by 50 per cent by 2035. The industrial sector (which includes mining, manufacturing and agriculture) accounts for one of the largest shares of energy consumption. As an organisation committed to sustainable business practices, we have been exploring electrification of mining equipment at our mine sites, harnessing renewable energy sources for power generation, as well as decarbonisation projects with other mine concessionaires. Our aim is to mitigate some of the impacts that rising energy prices are having on us as an organisation, whilst still continuing on with our operations to increase efficiency across all levels of the company. More importantly, this marks our ongoing commitment to support the transition to a low-carbon economy.

Terence Zou CEO and Founder Ryde The upward trend in the price of gasoline in the US has an impact on global prices, and this has some positives and negatives for us in the ride-hailing sector. For one, it would result in less profitability for our driver-partners, both for private hire vehicles and taxis, as they have very thin profit margins after considering rental and fuel costs. Higher prices could also result in a trend of increased electric vehicle (EV) adoption across the board, including adoption by owners of cars and car rental companies. If prices keep rising, there might be a shift to more EV adoption for all types of drivers. In the long term, this may even translate to a mindset shift to carpool to recover costs or even consider giving up their cars altogether. Meanwhile, consumers may switch to carpooling to save costs, which will support our RydePOOL business vertical. Thus, it is up to companies to harness the benefits of rising prices (such as adoption of cleaner vehicles), while also mitigating the negative effects on the business and its key stakeholders.

Dharmesh Arora Chief Executive Officer Schaeffler Asia Pacific Availability of reliable and affordable energy is critical for the continuous development of the manufacturing sector. The recent rise in energy prices combined with significant input material price inflation is bound to erode bottom lines of the sector. While that certainly needs attention, we hope that this will further accelerate the search for energy efficiency measures and transition towards cleaner and renewable energy sources. We have committed ourselves to ensuring that our processes and supply chains are energy-efficient, eco-friendly, and resource-conserving, including rolling out specific energy efficiency programmes at our sites and plants. We also leverage digital tools, such as our proprietary energy data management system and condition-monitoring technologies, to optimise energy costs and identify improvements in our manufacturing process. These solutions are also available to our partners and customers as we collectively pursue the transition towards a carbon-neutral tomorrow.

Chia Ngiang Hong President Real Estate Developers' Association of Singapore (REDAS) Spiralling energy prices affect the cost of all goods and services which will filter down the economic value chain and ecosystem. With the ongoing supply chain disruptions caused by the pandemic, the sudden spikes have already driven up the costs of production and increase running costs of many businesses. As real estate developers and owners where energy cost is the single largest operating expense in many buildings, our business, both new construction and existing operations, will be severely impacted as the sector is already grappling with labour shortage and high operational cost. It is thus imperative that the government proactively provide fiscal and related support for businesses as they collaborate and intensify efforts to reduce energy usage, create operational efficiency through innovation and technologies as well as actively explore alternative renewable energy resources.

David R Hardoon Managing Director Aboitiz Data Innovation Market volatility and the price increase come from a lack of understanding of our power systems and their complexity. We're turning to artificial intelligence to make our energy production and consumption more sustainable. AI will enable smarter, data-based decisions to support how we generate power, where we place investments of renewables, how we store unused energy, and how we share the power that's generated. The industry as a whole will benefit from accelerating its understanding of data and learning to make data-driven decisions with the end goal of delivering power safely, affordably, and responsibly to the environment.

Lim Soon Hock Managing Director PLAN-B ICAG The total cost of doing business has invariably risen. With oil prices happening in the midst of a pandemic, staying competitive and viable is a major challenge never experienced before since the last oil crisis. Companies have a tough decision to make: whether or not to pass the whole or part of the increase to customers. The surge in global energy prices has raised prices of power consumption, shipping and logistics costs, travelling expenses, to name a few. The easy way for companies is just to pass the increases to consumers but it would greatly risk competitiveness. In the companies that I am involved in, we instead scrutinise the equation of the total cost of doing business, with a fine-tooth comb, to identify areas where we can cut costs, for example in discretionary expenses or even to delay implementing a project, where possible. While we are concerned, we also seize the opportunity to transform our companies to be a more lean and mean operation to stay very competitive through restructuring, re-inventing, and re-engineering not just for today, but also for tomorrow. Every dark cloud has a silver lining.

Jolin Nguyen Chief Executive Officer AYP Group Generally speaking, the high price of crude oil does not bode well for the general population of Singapore as we will all have to contend with higher prices at the pump and higher costs for transportation overall. News reports have their eyes set on Russia and Ukraine's geopolitical uncertainties and the rising demand for oil driven by the reopening of country borders as the main reasons behind the recent oil price spike. The impact of oil prices on hybrid working companies like AYP Group remains minuscule at this point and we're glad our remote working culture has helped keep occurrences of Covid-19 cases low within our workforce and improve employee well-being. We remain committed to fostering a future of work that is remote for our employees.

David Leong Managing Director PeopleWorldwide Consulting Pte Ltd The rising energy price impacts businesses across the board. The volatility of energy prices is disruptive, and when the price is creeping up towards US$100 a barrel, small and medium enterprises (SMEs) suffer the brunt. These SMEs have little means to hedge against big swings in prices. They are more likely to take blows from the increased rate. Our business invariably suffers as inflationary pressures force prices to be elevated, including oil and electricity tariffs. Whatever blows come our way, we will be a silent sufferer, hoping that this will soon go away.

Helen Ng Chief executive officer Lock + Store Despite having implemented sweeping energy saving measures in our facilities, such as keycard-activated light and power switches, rising energy prices have led to a 10 per cent overall increase in our operational costs. The impact is higher on air-conditioned and climate-controlled units for wine storage. We are gradually moving away from providing air-conditioned storage so as to cushion the impact of rising energy prices and support the sustainability drive.