New carbon tax will prepare Singapore for ‘low-carbon global future’: Masagos

SIAU MING EN Today Online 20 Mar 18;

SINGAPORE — Addressing concerns that the Republic’s new carbon tax will blunt the country’s economic competitiveness, Minister for the Environment and Water Resources Masagos Zulkifli argued on Tuesday (March 20) that the levy will instead strengthen the competitive edge of companies here and prepare them for a “low-carbon global future”.

He also pointed out that the new tax, which will kick in from next year after Parliament passed the Carbon Pricing Bill, could help spur investments and adoption of low-carbon solutions. The World Bank, for instance, has estimated that global demand for green and “climate smart” solutions in the coming years could be worth as much as US$23 trillion.

“China has already made a strategic choice and stated its ambition to transform its economic development and shift towards a low-carbon economy ... To maintain our competitive edge, Singapore companies must also transform,” the minister added.

“Consumers all over the world will soon demand products and services that use the smallest carbon footprint. We must move early.”

In debating the Bill, Member of Parliament Henry Kwek (Nee Soon GRC) and Nominated MP K Thanaletchimi had asked how the carbon tax would affect the competitiveness of the affected industries. Mr Kwek and MP Lee Bee Wah (Nee Soon GRC) also asked about the impact on households and their cost of living.

From next year to 2023, large carbon emitters – defined as those that produce 25,000 or more tonnes of greenhouse gas emissions annually – will be taxed S$5 for each tonne of greenhouse gases emitted. The tax will eventually be increased to between S$10 and S$15 by 2030.

The new laws also require facilities to put in place certain measurement, reporting and verification practices to track their carbon footprint.

The carbon tax will come in the form of a fixed-price credits-based mechanism, where the large emitters will have to pay their carbon tax by surrendering carbon credits. These credits can be purchased at a fixed price from the National Environment Agency throughout the year and have no expiry date.

About 30 to 40 of the largest emitters in the power generation, petroleum refining, chemicals and semiconductor sectors will be taxed, which account for about 80 per cent of Singapore’s emissions.

Mr Masagos gave the assurance that the Government was mindful of the potential economic impact, and had conducted extensive consultations with the industry in designing the framework of the carbon tax.

The initial carbon tax rate of S$5 per tonne of greenhouse gas emissions in the first five years was “decided very carefully” after considering both the country’s economic competitiveness and environmental considerations, he added.

Companies will have time to adjust, such as by upgrading to more energy-efficient equipment. The Government will also review the impact of the carbon tax regularly, taking into account factors such as international developments and Singapore’s progress in meeting its commitments under the Paris Agreement to cut emissions intensity by 36 per cent from 2005 levels, by 2030.

As for the impact on consumers, Mr Masagos reiterated that the impact of the tax on households is expected to be small at about 1 per cent of the total electricity and gas expenses.

Eligible households will receive additional U-Save rebates of S$20 per year between next year and 2021, which will cover the expected increases in expenses.

“We will assess the impact of the carbon tax at a later stage and review the need to extend these rebates,” he added.

The authorities will also work closely with the Consumer Association of Singapore (Case) and the Competition Commission of Singapore to monitor the market for unfair pricing and coordinated price hikes that might be anti-competitive.

To reduce the compliance costs on businesses, Mr Masagos said there is a list of greenhouse gas emissions that are excluded from the carbon tax. These are small emissions sources but also cost more to measure and report when compared to the amount of carbon tax collected.

Six greenhouse gases are covered under the tax: Carbon dioxide, methane, nitrous oxide, hydrofluorocarbons, perfluorocarbons and sulphur hexafluoride.

Dr Lee and Non-constituency MP Leon Perera also asked about making public the emissions data of large emitters for more transparency. But the minister disagreed with the suggestion, citing how these reports contain commercially-sensitive information.

Wrapping up the debate on Tuesday, Mr Masagos said: “The Bill is an important step forward – not only in encouraging industry to do their part for the climate, but also in readying our economy and strengthening our competitiveness as the world transitions to a low-carbon economy. Companies ignore these realities at their peril.”


Carbon tax bill passed amid concerns over its impact on competitiveness
The Carbon Pricing Bill sets out a framework for implementing the carbon tax, including the measurement, reporting and verification requirements.
Lianne Chia Channel NewsAsia 20 Mar 18;

SINGAPORE: A bill to introduce carbon tax in Singapore was passed in Parliament on Tuesday (Mar 20).

The Carbon Pricing Bill sets out a framework for implementing the carbon tax, including the measurement, reporting and verification requirements. The carbon tax will be introduced from 2019 on large direct emitters of greenhouse gases such as power stations, and is expected to affect between 30 and 40 emitters currently operating in Singapore.

These large emitters will be charged S$5 per tonne of greenhouse gas emissions from 2019. The tax rate will be reviewed by 2023, with the intention of increasing it to between S$10 and S$15 per tonne by 2030.

Moving the second reading of the bill, Minister for the Environment and Water Resources Masagos Zulkifli pointed out that companies in Singapore reported an energy efficiency improvement rate of 0.8 in 2016, up from 0.4 in 2014 and 0.6 in 2015. But he added that Singapore still has some way to go, as leading jurisdictions like Belgium or the Netherlands achieve annual improvement rates of one to two per cent.

“The carbon tax will incentivise companies to improve energy and carbon efficiency, while giving them the flexibility to take action where it makes business sense,” he said. He added that in a recent consultation session with industry and non-government organisations, many agreed on the need for climate action and supported pricing carbon.

The carbon tax will take the form of a “fixed-price credits based mechanism”, Mr Masagos added. This means that the affected facilities will pay the carbon tax by buying and surrendering carbon credits corresponding to their greenhouse gas emissions, rather than through direct payment. These carbon credits can only be bought from the National Environment Agency (NEA) at a fixed price.

MEMBERS OF PARLIAMENT RAISE ISSUES RELATED TO HOUSEHOLDS, BUSINESSES

Eight parliamentarians spoke on the bill, raising points ranging from the impact of the carbon tax on households, supporting businesses in the change and the impact of the tax on Singapore’s international competitiveness.

MP for Nee Soon GRC Lee Bee Wah noted that with the carbon tax rate of S$5 per tonne, the impact is expected to be small. But she added that there are still concerns about the impact on households.

“This may not seem significant, but with the increase in the price of water and other items, it will all add up,” she said. “One major public concern is how it will affect our cost of living. How can we ensure that businesses are not going to profiteer?”

On support for businesses, MP for Jurong GRC Rahayu Mahzam pointed out that the implementation of the act will “clearly change” the way businesses are run.

Describing it as a “bold and new initiative”, she commended the Government for choosing a “soft start and incremental approach” by imposing a lower tax per tonne of emission at the beginning, and increasing it over time.

But she pointed out that there will be administrative work to be done, mechanisms to be put in place to track emissions, and auditing to be carried out to ensure compliance.

“Given that this is a completely new regime that the businesses are facing, would the Government be providing support, perhaps in the form of business consultancy, to help the affected businesses manage the change?”

Meanwhile, Nominated MP K Thanaletchimi raised concerns that the carbon tax would incur costs that affect industry competitiveness.

“As a small nation that relies heavily on trade and foreign investment, how is the Government going to ensure that the economy remains competitive with the introduction on the carbon tax?” she asked.

CARBON TAX DELIBERATED CAREFULLY AND EXTENSIVELY WITHIN GOVERNMENT

In response to MPs, Mr Masagos noted that the impact of the carbon tax on households is expected to be small, at about 1 per cent of total electricity and gas expenses on average. He added that eligible HDB households will receive additional U-Save rebates of S$20 per year, from 2019 to 2021.

On average, these additional rebates will cover the expected increase in electricity and gas expenses arising from the carbon tax. “We will assess the impact of the carbon tax at a later stage and review the need to extend these rebates,” he said.

He added that the Government will also work closely with the Consumers Association of Singapore and Competition Commission of Singapore to monitor the market for unfair pricing and coordinated price hikes.

On supporting companies, Mr Masagos said the Government is prepared to spend more than the estimated S$1 billion in carbon tax revenue that is expected be collected in the first five years on worthwhile carbon abatement projects. Existing energy efficiency incentive schemes will also be enhanced, he said.

He assured Parliament that in introducing the tax, the Government has been mindful of Singapore’s international competitiveness, given that Singapore is an export-oriented economy.

Concluding, he stressed that the carbon tax has been deliberated carefully and extensively within the Government. It has also made a “concerted effort” to consult and engage the industry.

“The bill is an important step forward, not only in encouraging industry to do their part for the climate but also in readying our economy and strengthening our competitiveness as the world transitions to a low-carbon economy,” he said.

“Companies ignore these realities at their peril.”

Source: CNA/lc


Carbon tax Bill passed amid competitiveness concerns
MPs support Bill but wonder if Republic would lose out to those countries with no such tax
Audrey Tan Straits Times 21 Mar 18;

As the first country in South-east Asia to put a price on carbon emissions, Singapore could run the risk of becoming less competitive than countries with no such tax, said some MPs as they asked for more details about the impending carbon tax.

Yet, all eight who spoke up in Parliament yesterday supported the Carbon Pricing Bill, saying it was a crucial step in ensuring that future generations are shielded from the worst effects of climate change.

Climate change is caused by greenhouse gases like carbon dioxide, which trap heat.

But from next year, all facilities producing 25,000 tonnes or more of greenhouse gas emissions in a year will have to pay a carbon tax, as Parliament passed the Bill to give Singapore the legal muscle to effect this.

The tax is aimed at curbing large emitters from polluting the environment and spurring them to use cleaner sources of energy.

Mr Henry Kwek (Nee Soon GRC) asked if the tax could impact the competitiveness of Singapore's export-oriented petrochemicals industry. But Minister for the Environment and Water Resources Masagos Zulkifli stressed that the pursuit of environmental sustainability and economic growth is not a zero-sum game.

"It is a strategy to stay competitive. They can do good and do well at the same time," said Mr Masagos, citing two firms that have done both.

FORWARD-LOOKING BILL

The Bill is an important step forward - not only in encouraging industry to do its part for the climate, but also in readying our economy and strengthening our competitiveness as the world transitions to a low-carbon future. Companies ignore these realities at their peril.

MR MASAGOS ZULKIFLI, Minister for the Environment and Water Resources.

Fuel company Chevron Oronite, for example, netted annual energy savings of $1.8 million and cut carbon emissions by 4,800 tonnes by installing new equipment.

GlobalFoundries, a semiconductor company, redesigned equipment and reduced its fuel consumption, resulting in annual cost savings of $260,000 while producing 640 tonnes less carbon.

But Mr Masagos acknowledged that the 30 to 40 companies affected by the carbon tax needed time to make adjustments.

To help companies move towards a low-carbon future, the Government has set the carbon tax at an initial $5 per tonne of greenhouse gas emissions from 2019 to 2023. This rate will be reviewed by 2023, with plans to raise it to between $10 and $15 per tonne of emissions by 2030.

Workers' Party Non-Constituency MP Leon Perera said it was prudent to set the carbon tax at a low level initially, but asked if there were other schemes to nudge Singapore towards a smaller carbon footprint in the longer term.

Mr Masagos said the Economic Development Board has been piloting a financing programme in which companies that are not able to afford the upfront costs of energy efficiency projects can apply for loans through a third-party financier. He also said revenue from the carbon tax will be used to fund green initiatives of large emitters as well as small and medium-sized enterprises.

As for the tax effect on households, Mr Masagos said, in response to queries from MPs like Ms Lee Bee Wah (Nee Soon GRC), that it is likely to be small, in the range of 1 per cent of total electricity and gas expenses on average.

Still, an additional U-Save rebate will be given for three years to help Housing Board households. Eligible households will each receive $20 more a year, from next year to 2021.

This will tide them over when their electricity and gas expenses are expected to rise, and give them time to reduce their consumption, he added.

Beyond the rebates, it is also important to encourage energy-saving habits in households, he said.

A lamp replacement programme is one way of doing so, with the Government helping families living in one-and two-room HDB homes by replacing their bulbs with more energy-efficient LED lights.

He added: "The Bill is an important step forward - not only in encouraging industry to do its part for the climate, but also in readying our economy and strengthening our competitiveness as the world transitions to a low-carbon future.

"Companies ignore these realities at their peril."

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