It can play an active role by helping its neighbours cut emissions via innovation, clean-tech adoption and carbon financing
Sharad Somani and Rahul Kar, Business Times 18 Dec 09;
IN A recent announcement, Singapore led by example by pledging to slash its carbon emission growth by 16 per cent below 'business as usual' levels by 2020.
Alongside China and Brazil, this was announced ahead of the 15th Conference of the Parties to the United Nations Framework Convention on Climate Change.
While its legal obligations remain contingent on the success to reach a global climate agreement by the political leaders, Prof S Jayakumar, Senior Minister and Coordinating Minister for National Security, stated that all of Singapore's measures will be 'domestically funded and unilaterally implemented'.
As the world now awaits the final Copenhagen summit agreement this week, Singapore's will to abide by its voluntary carbon commitment remains clear.
National strategy
This commitment is a natural extension of Singapore's national strategy on sustainable development outlined by the Inter-Ministerial Committee on Sustainable Development (IMCSD) in April this year. It will see $1 billion channelled towards the implementation of IMCSD's recommendations over the next 10 to 20 years.
Singapore is, therefore, well-positioned to capitalise on the opportunities accruing from any new world order arising from a low-carbon economy in Asia-Pacific and the rest of the world.
Attaining the set goals of cutting down 74 million tonnes of carbon emissions by 2020 is a tall order, but within reach with sheer national will.
This can be achieved through a measured approach in internal discipline imposed on national emission levels, as well as supported by its robust financial market system and sustained national environmental management efforts.
The key challenge Singapore, therefore, faces is to effect a substantial carbon emission reduction above its current high baseline, while maintaining the optimal balance between environmental conservation and economic competitiveness.
Businesses on their part should rally behind the government's call for action to innovate their business practices and invest in technologies that can deliver a low-carbon economy.
To guide Singapore to its carbon emission reduction goals, the government must also help Singapore businesses quickly make sense of the business risks and opportunities in a low-carbon economy. It must play the catalytic role of enabling a level playing field in the sectors most integral to Singapore's economy.
Some key guiding principles are:
1) Embracing the 80-20 principle
First released in April 2009, Singapore's Sustainable Development Blueprint sheds light on how Singapore plans to reduce carbon emission through a series of targets and initiatives to improve resource efficiency and enhance its urban environment.
Singapore has included ambitious goals, such as cutting energy consumption per-dollar of gross domestic product by 35 per cent from 2005 levels by 2030. Other goals include lowering energy consumption in new and mature housing estates by 20 and 30 per cent respectively by 2030. It also wants to see 70 per cent of its population take public transport by 2020, up from the 59 per cent recorded in 2006.
The initiatives detailed in Annex A of IMCSD's recommendations will provide the needed impetus for internal discipline to manage the national emission level.
Beyond transport, construction and energy industries, there are significant opportunities for carbon reduction in the aviation, healthcare, oil and gas, tourism and the financial services industry sectors.
According to the 2008 KPMG International report Climate Changes Your Business: business risks and economic impacts at sector level, these six industry sectors featured highly in the 'danger zone', and scored highly on the business risks and economic impacts of climate change which they face.
Tackling these key industry sectors which contribute to 80 per cent of carbon emissions will be critical to obtaining support and adhering to the roadmap meeting the 2020 target.
2. Adopt 'carrot and stick' measures
The Sustainable Development Blueprint has provided some excellent measures to expedite the adoption of carbon management programmes in both the public and private sectors.
In addition, a good combination of regulatory and fiscal measures, such as carbon taxes, carbon offsetting and cap-and-trade system, can be adopted to cascade the carbon emission reduction quota across the key target sectors.
By also adopting a global standard measurement, reporting and verification framework, this will put a governance infrastructure in place so that emission reductions can be more measurable and comparable.
Singaporeans themselves can also be incentivised to embrace a green lifestyle, using a series of green taxes promoting responsible personal consumption and other lifestyle choices. For example, property tax rebates for acquiring green buildings, green rebates for recycling and lower road taxes for electric vehicles and vehicles using CNG.
Singapore businesses can also explore how they can harness the financing options and business opportunities arising from Singapore's drive to be a global clean-energy hub. There are some major opportunities tapping into ongoing national programmes.
Singapore's government has committed $350 million to develop Singapore as a global clean-energy hub. This includes $170 million for the Clean Energy Development Programme. To grow the clean-tech industry, Singapore has also allocated nearly $700 million to promote a vibrant industry ecosystem. An anticipated $3.4 billion of value-add activities and 18,000 employment opportunities are expected to be generated by 2015.
Businesses should actively explore how they can tap into the Clean Development Mechanism (CDM) to help them in their renewable energy projects and to overcome any economic, technological or social barriers for adopting cleaner and more efficient energy alternatives. Some potential CDM projects involve industries switching to less greenhouse gases-intensive fuel alternatives, pursuing energy efficiency improvements, and waste-to-energy projects.
Singapore companies can also invest in projects around the region to generate carbon credits that can be traded through the various carbon trading platforms to generate attractive revenues.
Besides meeting regulatory requirements, businesses can optimise cost by effectively managing their direct carbon emissions, as well as the emissions occurring along their industry's value chain in accordance with the Greenhouse Gas Protocol.
Some key areas in which businesses can review and improve their carbon footprint include:
1) Conducting green energy audits to improve energy efficiency
2) Managing a sustainable supply chain by improving the management of carbon (and therefore costs) across their supply chain
3) Sustainable IT (green IT) to explore new IT strategies and value chains through a process of assessment, strategic improvements and verification.
Effective management
As a 'clean and green' nation since 1963, Singapore already successfully attained a carbon intensity in 2006 which is 30 per cent below 1990 levels.
From 'greening the city' to managing the energy consumption level of industries, households and the transport sector, Singapore has already laid a laudable foundation for city planning and effective environmental management these past four decades.
Beyond sharing its success model and best practices as a sustainability city, Singapore can now play an active role by helping developing neighbouring countries reduce their emissions through innovation, clean-technology adoption and carbon financing.
As an international financial hub, Singapore is also an emerging carbon-trading exchange where regional enterprises can leverage CDM and carbon markets to finance and invest in conservation or clean-technology innovation projects.
In more ways than one, Singapore is already on the road of green revolution, and on target to fulfilling its carbon promise beyond Copenhagen.
The writers are executive director, and associate director, at KPMG Corporate Finance Pte Ltd in Singapore. The views and opinions expressed herein are those of the authors and do not necessarily represent the views and opinions of KPMG in Singapore
