By Thirumalavan Panchaksharam, Manager, Energy & Sustainability – C&W Services Singapore
The Paris Agreement in 2015 sets out a global action plan to put the world on track to avoid dangerous climate change by limiting global warming to well below 2°C. Since then, the climate change debate continues to heat up across the world, driven by the visible negative impacts of growing global warming emissions.
As one of the 197 countries that adopted the Paris Agreement, Singapore has made a commitment to reduce its Emissions Intensity by 36% from 2005 levels (0.176 kgCO2e/S$) by 2030, and stabilise greenhouse gas emissions with the aim of peaking around 2030. With this goal in mind, Singapore has made an official carbon tax announcement in February 2018, with the bill passing in Parliament the following month. The city-state is now the first Southeast Asian country to launch a carbon tax for its citizens at US$3.20/ tCO2. As a basis of comparison, carbon tax rates around the world can range from US$3/ tCO2 (Japan) to US$140/ tCO2 (Sweden).
The imposition of carbon tax will have an impact on businesses as they are likely to see an increase in operating costs for large emitters. To help businesses manage these cost implications, the Singapore government has announced it will introduce funding schemes such as the Productivity Grant (Energy Efficiency) and the Energy Efficiency Fund. Commencing in 2019, these schemes will provide support for companies, including small and medium enterprises and power generation companies, as well as encourage better energy efficiency efforts.
From an individual perspective, the impact of carbon tax on households is expected to be minimal at about 1% of the total electricity and gas expenses. Eligible households will receive additional governmental rebates on their utilities bill between next year and 2021, which will cover the expected increases in expenses.
While the Singapore government has set some regulatory and macro-environmental frameworks including carbon taxes and sustainability reporting, more can be done to encourage corporates and individuals alike to play a larger role in adopting sustainable practices.
For a start, individuals and companies should understand and be aware of their own carbon footprint. Companies can consult an energy and sustainability expert to assess their carbon footprint, so that they can identify significant emission sources and implement mitigation measures to reduce the overall emission levels. C&W’s Energy & Sustainability team has been helping companies conduct carbon footprint assessments to ensure compliance with the carbon pricing act. We have also advised on energy procurement practices and based on our experience, companies can save on energy costs if they have a suitable energy retailer.
Carbon tax is the fairest and most economically efficient way to reduce greenhouse gas emissions. The introduction of carbon tax coupled with the existing sustainability reporting framework in Singapore will hopefully generate some long-term, positive results for the city state as it plays its part in addressing global warming concerns.
Thirumalavan Panchaksharam is a Manager in C&W Services’ Energy & Sustainability team in Singapore.