In our 2016 YTL Group Sustainability Report written before the USA presidential election, I highlighted the risks of protectionism and political crises and the resulting impacts on global efforts to reduce emissions. So far the scenario played out on the global environmental and sustainability stage has been thought-provoking to say the least. However, despite the alarming policy shifts, it is encouraging to see how organisations and the community at large have provided leadership, and also direction at this challenging time. It is this collaborative action and utilisation of technology that I am going to address in six separate sections dealing with the trends and also our role as a conglomerate in the liberalisation of energy markets, the future of carbon pricing, offtake agreements, the aggregation of supply and demand for renewable energy, food and other waste, and how electric vehicles will likely change the way we generate, store, distribute and use energy. This resonates well with our SDG commitments to SDG 4 - Quality Education, SDG 8 - Decent Work and Economic Growth, SDG 12 - Responsible Consumption and Production, SDG 13 - Climate Action and SDG 14 - Life below Water.

Firstly however, I would like to look at how the populist movement and the sometimes controversial policies of the Trump administration have shaken the values and ethics of the beacon of freedom and democracy for the world, the USA, and ushered in an unprecedented era of collaboration and cooperation, especially in the area of climate change.



There are procedural steps in place that may prevent Trump from effecting the USA's exit from the Paris Agreement unless he wins a second term. In the meantime however, the world will likely be looking for direction to specific states in the USA as well as to Asia where demographics and economic changes will provide a myriad of opportunities for both technology and leadership on climate change to flourish.

It is widely believed that Trump's move to abandon the Paris Agreement was a token action, intended to please grassroots supporters and show his scorn for multilateral agreements. In response, a number of leading international companies have formed the Climate Leadership Council (in addition to a number of other similar coalitions) in an attempt to build bipartisan support for climate action in the USA in what some are calling a transparent and predictable system. Individual members of the Council include James Baker, a former USA Secretary of State and President Ronald Reagan's Treasury Secretary, Lawrence Summers, who held that role under President Bill Clinton, and Stephen Hawking.

The group is proposing a plan for carbon dividends to be paid to the USA public that was originally set out in February by a group of former senior officials from past Republican administrations. The dividends would be paid for by a tax on emissions both locally and at the borders. The carbon dividends solution is well suited to break the climate stalemate in the USA, and it also has considerable potential in larger economies such as China, Europe and India. California has also extended its cap and trade programme to 2030 from 2020 and to reduce emissions by 40% from 1990 levels. The vote in the State Legislature was supported by a two-thirds majority including eight critical votes from Republicans. This was then supplemented by a further law proposed recently in the State of California to use 100% renewable energy by 2045 otherwise known as the Renewable Portfolio Standard (RPS), clearly paving the way for the State to lead the nation's charge in carbon mitigation and renewable energy should they succeed and overcome the challenges in achieving the RPS.

Opinion has been divided over the impacts of Trump's actions, and when historians look back at 2017 from points in the future, they will no doubt see it as a year of political shocks. However, they may also conclude that it was the inflection point where Americans were forced to confront their constitution afresh and reignite the power of local government, in relation to the environment among other issues. Other states and countries are likely to follow California's lead, showing that America and the world is moving in a different direction from Trump on the issue of climate change.



Singapore will be the first liberalised energy market in South-East Asia commencing with the anticipated use of smart meters and demand-side management initiatives unveiled last year. It will be spearheaded by the Energy Market Authority (EMA) and will impact competition in the Singapore electricity market as it gears up for the sector's full liberalisation in the second half of 2018. The process that started in 2001 will culminate in a nationwide event called Full Retail Contestability (FRC) creating a widespread offering of competitively-priced electricity packages to all contestable consumers, even to small business owners and households. This means that consumers will get to choose their electricity retailer. Companies can use electricity futures prices available on the Singapore Exchange website as a benchmark to assess if the prices offered by their retailers are competitive.

Some retailers offer conventional energy while others offer renewable energy plans. There are also a handful of retailers offering bundled electricity plans, pool price plans and night savings plans. This variety in electricity plans means that individual businesses would be presented with greater potential savings for eligible contestable businesses.

In the same vein, Singapore has also decided to make the bold move for a carbon tax on large emitters in the City State commencing in 2019, paving the way for other Asian countries to follow. In Europe, France also recently announced a carbon floor price of USD34 per tonne, although this is not carved in stone given the further approvals required. Germany and several other countries are also moving to a floor price, with Britain already having established a domestic carbon floor price of about USD28 per tonne. The European Emissions Trading System (ETS) charges more than 10,000 companies, but the prices have sunk lower to about USD6.75 from USD33 due to the persisting glut of permits. The total value of ETSs and carbon taxes in 2017 at the time of writing was USD52 billion, an increase of 7% compared to 2016.

Whilst carbon trading and pricing has had a very checkered past, we feel that it is here to stay. The global standard started with the Clean Development Mechanism (CDM) and voluntary credits, and has since moved onto government carbon taxes and internal corporate pricing. By the end of 2016, 46 carbon pricing initiatives were implemented or scheduled for implementation. One thing is clear though, that is the need to measure, manage and mitigate carbon. Whilst the World Bank-led carbon pricing Leadership Coalition (CPLC) continues to grow, individual countries efforts are also required to seek the support of businesses to expand and help nurture different mechanisms and pricing systems.

YTL PowerSeraya will be one of the emitters in Singapore required to make payments for the carbon tax, although the quantum is not yet clear. However, we have converted over 50% of the plant's generating capacity from heavy fuel oil (HFO) to natural gas, which with other efficiency measures has reduced our emissions, and hence our liability in this regard.

Furthermore and despite the challenging environment, YTL continues to maintain its carbon consulting subsidiary YTL-SV Carbon which specialises in GHG inventory (GHGI), carbon credit projects, offsets, and other carbon mitigation and energy efficiency technologies. Acquired in 2007, YTL-SV Carbon is one of the few companies that has chosen to weather the turbulent and volatile waters of the carbon credit markets. This has allowed us to continue to measure carbon and other GHG emissions as an internal management tool and prepare us for the likely eventuality of public GHGI disclosure.

The YTL PowerSeraya power plant in Singapore where almost 55% of the generating capacity has been converted from heavy fuel oil to natural gas

  Seen here is Unilever's offices in Leatherhead (Surrey) which together with other Unilever sites such as 100 Victoria Embankment (London), and its food and drink factories in Norwich, Trafford Park and Cork, will use 10,000 MWh of biomethane from GENeco to power the sites' heating


On a global level in 2016, renewables generation prevented the emission of more than 1.5 gigatonnes of CO2, equivalent to the emissions from more than 200 million vehicles in one year. Also, renewable power generating capacity saw its largest annual increase ever in 2016, with an estimated 161 gigawatts (GW) of capacity added. Total global capacity was up nearly 9% to almost 2,017GW at the end of the year compared to 2015. Energy storage and power grid design are two main obstacles preventing renewable energy development on a much larger scale, and how to reward flexible generation and storage remain key issues. The digitisation of energy may further change the power generation landscape just as electric vehicles (EVs) will change the auto industry. We will need to innovate and adapt to technology-led changes taking place along the supply and demand spectrum.

Regulatory structures have not always been successful in promoting the use of renewable energy, and some countries have already rolled back subsidies and preferential feed-intariffs due to budgetary concerns and populist political movements. However, corporate power purchase agreements (PPAs) have started to provide win-win solutions to renewable energy developers and the businesses offtaking the energy produced at a set price over a fixed number of years.

YTL has already made a significant step in this direction under our YTL Power International's UK utility, Wessex Water whose subsidiary, GENeco will supply biomethane (fully traceable and certified) to Unilever; which is generated by GENeco's anaerobic digestion facility in Bristol, that converts inedible food waste and sewage into energy. GENeco's deal with Unilever UK and Ireland means that from 1 January 2017, Unilever's offices in Leatherhead (Surrey) and 100 Victoria Embankment (London), and its food and drink factories in Norwich, Trafford Park and Cork, will use 10,000MWh of biomethane to power the sites' heating and thus significantly reduce carbon emissions from the sites. With electricity already coming from certified renewable sources, the purchase of a certified supply of biomethane means that Unilever will have become carbon neutral (from an energy perspective) at these five sites.

We have also pushed ahead with solar installations, albeit on a smaller scale than biogas production. Following the completion of a 250kW array on the Wessex Water headquarters (HQ) roof in 2016, we moved forward with a rooftop unit with an installed capacity of 51.48kWp in our Operator Housing Complex (OHC) Community Centre and Sports Hall in Paiton, Java, Indonesia at the end of 2016.



Another area helping to push renewable energy development is aggregation, or as it is known in the USA, the Renewable Energy Buyers Alliance (REBA) formed in 2016. Some companies don't have the energy demand to justify building a whole solar farm. Some prefer a portfolio approach to renewable energy, investing in multiple projects in different locations. Instead of relying on one large offtaker to solely finance a new solar, wind, hydropower or other renewable energy project, the so-called "aggregated" purchasing models are able to broaden the field of potential corporate backers by bringing multiple companies together in one large scale project. There are examples of the model already taking shape. One example combines Massachusetts Institute of Technology (MIT), Boston Medical Center and Post Office Square Redevelopment Corporation teaming up on a 60MW North Carolina solar farm owned by Virginia-based energy company Dominion. In Europe, Google also joined forces with Philips, AzkoNobel and DSM to build a Dutch wind farm to be commissioned in 2019.

A bird's eye view of Wessex Water's HQ in Bath with 250kW of solar panels on the roof

  YTL Jawa Timur's Operator Housing Complex using solar panels to optimise the abundance of sunshine to generate energy

The renewable energy tide has turned, and the momentum is now stronger than ever. We plan to continue driving and creating sustainable waste to energy solutions for YTL Group and our stakeholders for off grid rural populations and by replacing some large scale fossil fuel generation. Our rural renewable energy programme in Java, Indonesia now numbers over 587 units including biogas (470), micro hydro (39) and solar installations (78), and we plan to continue to scale this in order to increase the positive impacts on communities and the environment.

A bird's eye view of Wessex Water's HQ in Bath with 250kW of solar panels on the roof   YTL Jawa Timur's Operator Housing Complex using solar panels to optimise the abundance of sunshine to generate energy   Solar panels seen here powering street lighting in Java, Indonesia


Last year I wrote about the global waste issue and what we were doing in that space. In the organic waste area, water and food waste treatment will remain a priority for YTL for a number of reasons. Firstly due to water's position as an essential and increasingly scarce resource for the agricultural sector and urban communities, and secondly owing to our extensive experience in water supply and treatment. We continue to innovate with R&D and tap into technology, seeking solutions to reduce the amount of phosphates, pathogens, nitrates and other pollutants in water aquifers, rivers and streams, catchment areas and reservoirs. Wessex Water's subsidiary, GENeco is now one of the leading UK companies in water and food waste treatment, producing several by-products such as biogas and fertiliser.

One of the most surprising global developments in tackling the issue of inorganic waste in 2017 was Kenya's ban on single use plastic bags - with heavy fines of up to USD40,000 and possible imprisonment. They joined other countries who also banned these bags such as France, Italy, China and Rwanda, and also Malaysia who have moved to segregation of waste in seven states and a ban on polystyrene in Federal Territories, Selangor and Penang. Another less punitive example of attempting to reduce the amount of plastic used is by an NGO in Singapore called Bring Your Own (BYO) who will run a BYO bag campaign from 1 September 2017 to the end of the year in an effort to mitigate some of the 800,000+ tonnes of plastic waste generated in the island republic each year. In this space, YTL has also joined forces with a non-profit organisation in Sabah in 2017 to address the issue of water-borne waste, and is currently bringing stakeholders together and drafting an action plan.

The process of turning food waste and sewage into biogas and fertiliser at GENeco's plant


Electric vehicles (EV) and those powered by biogas, hydrogen or fuel cells seem to be as inevitable as a fully connected society. France and the UK have pledged to ban the sale of petrol and diesel vehicles from 2040, and Germany is currently debating the same ban for 2030. In the meantime Volvo made the daring prediction that they would move to only hybrid vehicles and EV by 2019 and BMW just launched its Mini EV. Volkswagen is also planning major foray into EVs, which may account for a quarter of its vehicle production by 2025. Outside of Europe, Toyota announced a breakthrough on solid state battery technology to support its EVs.

Retrofitting buses and other large diesel vehicles to run on stored energy or gas can be carried out, and at GENeco, we have one of the first buses powered by biogas from human waste, the Bio-Bus that ran between the city of Bath and Bristol Airport.

The Bio-Bus biogas filling point located at Bristol sewage treatment works

All this gives rise to an interesting development which relates to the supply of energy to charge EVs. Globally, the International Energy Agency estimates that there could be up to 70 million passenger EVs on the roads by 2025. In Europe and the USA, EVs could account for around 13% and 12% of electricity demand by 2040, and in the UK by 2050, EVs could create as much as 18GW of extra energy demand, which is equivalent to six Hinkley Point nuclear power stations.

The silver lining of the EV proliferation scenario potentially unfolding is that sometimes unchecked and harmful or unregulated emissions spewed by diesel and petrol tailpipe emissions could be replaced with controlled and cleaner emissions from fossil fuels and renewable energy power generation. This is just one of the reasons that we are committed to expanding our portfolio of more efficient and sustainablefossil fuel and renewable energy power generation installations around the globe. In addition to our current portfolio of 5,532MW of power generation, we are planning to add another 1,874MW in the next three years in Indonesia and Jordan.



Technological advances in areas such as artificial intelligence, 3D printing and communications are providing hope for improved and more sustainable systems and processes, and for a better quality of life. Sustainability initiatives could be assisted by a vast array of tools to help mitigate negative impacts, but still more needs to be done on a collaborative level to make work.

If Stephen Hawking is correct about the planets' likely expiry date of 100 years and not 1,000 years as he estimated earlier, the great leaps forward in space exploration could be used to find "another Earth". However, if there is no other habitable planet in our solar system, we will need to make do with the world as we know it, and we will need to make protecting God's only creations here on earth a priority and meet our obligations as stewards of the Earth.

Perhaps we should be steered by the yardstick that John Winthrop pronounced before his shipmates on the Arbella over 385 years ago as they looked upon the mostly untouched continent of North America where they were to build a new country and a new government, when he said "for we must consider that we shall be as a city upon a hill. The eyes of all people are upon us. So that if we shall deal falsely with our God in this work we have undertaken, and so cause Him to withdraw His present help from us, we shall be made a story and a byword through the world."

And so until today the pressure of Building the Right Thing remains a priority for us, and the onus of sustainable development rests firmly on our shoulders. May God continue to guide us on our journey to Making A Good Future Happen.


Managing Director
YTL Corporation Berhad

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