PM Lee on carbon tax and nuclear power in Singapore

Carbon tax needed if global emission-curbing regime arises: PM Lee
Satish Cheney Channel NewsAsia 1 Nov 10;

SINGAPORE: Singapore will have to apply a carbon price - be it through a carbon tax or a cap and trade scheme - to send the right price signals, if there's a global regime to curb carbon emissions.

This is according to Prime Minister Lee Hsien Loong who was speaking at the Singapore Energy Lecture on Monday.

The Ministry of Finance had previously said it would be "more practical" to reduce carbon emissions through taxes because Singapore is a small domestic market with only "a few large energy consumers".

PM Lee said it is not enough to just push for efficiency gains because of the rebound effect.

Consumers would just use more efficient appliances more often, thereby increasing overall consumption.

So, there's a need to impose a charge to induce consumers to change their behaviour.

Mr Lee said this at the Singapore Energy Lecture on Monday.

He said this was part of a four-pronged strategy to prepare itself for the future energy landscape.

"If there's a global regime to curb carbon emissions, that means that Singapore will have to reduce our own emissions more sharply than we are doing now, in order to comply with international obligations, and we would have to make the carbon price explicit to send the right price signals," said PM Lee.

Analysts said it is not easy to figure out how a carbon tax will impact consumers and companies here in Singapore as details are not available for now.

But green activists welcome the idea, saying it will encourage more environmentally-conscious behaviour.

One suggestion is to invest the money collected towards energy research.

Howard Shaw, Executive Director of Singapore Environment Council said: "Currently the energy tariff is a flat figure. So, if you use more, you pay more. Perhaps one way of moving forward from that is to divide households into lower energy users, average energy users and high energy users.

"Basically, the high energy users will be subject to a different higher tariff. So, the more you use, the more you pay in terms of rate."

India, which is Asia's third-largest energy consumer, already has a carbon tax.

In July this year, the Indian government introduced a nationwide carbon tax of 50 rupees per metric tonne of coal both produced and imported into India. Officials expect to raise 25 billion rupees for the financial year 2010-2011 from the tax which they are hoping to use for a clean energy fund.

Countries like Japan and South Korea are considering implementing a carbon tax.

Meanwhile, Mr Lee says there are many uncertainties surrounding the energy climate.

So Singapore is diversifying its energy supplies as well as investing in energy research.

The prime minister noted that several Southeast Asian countries are planning to build nuclear power plants.

Given its small size, safety is a major concern for Singapore.

At the same time, he said the nuclear energy option could not be totally dismissed.

"There is often strong resistance in countries - from the green movement, from populations who have witnessed accidents like Chernobyl, and are fearful and anxious about their safety. But if we look at this rationally, without nuclear energy, the world cannot make sufficient progress in dealing with global warming," said Mr Lee.

He added it would be a long time before Singapore takes any decision on nuclear energy, but it should ready itself to do so.

-CNA/wk/ls

Making the right energy choice
The way forward is to impose a charge, says Prime Minister Lee
Teo Xuanwei Today Online 2 Nov 10;

SINGAPORE - By his reckoning, the United Nations climate change talks in Cancun this month will not yield an agreement. But if a global treaty is reached to curb carbon emissions, Singapore will have to apply a "carbon price", said Prime Minister Lee Hsien Loong.

Speaking at the Singapore Energy Lecture yesterday, Mr Lee pointed out that sending the "right price signals" is part of its key strategies for the future energy landscape.

The way forward, said Mr Lee, is to get consumers to "make the right choices" by imposing a charge - through a tax system or cap-and-trade scheme.

Said Mr Lee: "At present, we don't have a carbon tax, but we calculate a shadow price for carbon in our cost-benefit analysis so that Government policies and decision making can be better-informed and rational."

"If there's a global regime to curb carbon emissions, and that means Singapore will have to reduce our own emissions more sharply than we're doing now in order to comply with international obligations, then we'll have to make the carbon price explicit to send the right price signals."

Mr Lee said Singapore is investing in industry research and development, developing infrastructure, diversifying energy supplies and keeping options - including nuclear power - open.

While Singapore uses market forces in the energy sector as far as possible, a competitive industry and more energy-efficient technologies may not be sufficient, he said.

The Finance Ministry had previously said it would be "more practical" to reduce carbon emissions here through taxes because Singapore is a small domestic market with only "a few large energy consumers".

The Economic Strategies Committee had also recommended the Government price energy to reflect its "total cost", including energy security and environmental sustainability.

Industry experts whom MediaCorp spoke to yesterday said carbon pricing here is "inevitable at a certain point",

Said Cuscaden Investments director David Hoe: "For those who believe that climate change is caused by an increase in carbon, the only way for rational economic behaviour is to put a price on the intangible long-term losses in the environment."

Although determining the "real price" of carbon is tricky and has implications on individuals and the economy, it is the only way to focus everybody's minds on energy efficiency, added Mr Hoe, who expects the move to happen within five years.

KEEPING NUCLEAR ENERGY OPTION OPEN

Mr Lee also reiterated the need to diversify energy supplies to "protect ourselves against supply disruptions and price fluctuations".

Singapore is building a liquefied natural gas terminal, which will be ready by 2013, instead of relying on piped natural gas from its neighbours. Other possibilities include coal and importing electricity from nearby sources.

One more "big solution" is nuclear power, said Mr Lee, who acknowledged it was "very difficult to do" and "not something we can likely undertake".

An obvious obstacle is opposition due to safety fears. "If we even build one, it'll be very difficult to put it far from population," he said.

But Singapore "can't afford to dismiss the option of nuclear energy altogether". Said Mr Lee: "If we look at this rationally, the world can't make sufficient progress in dealing with global warming without nuclear energy."

He cited the example of Germany, where despite "tremendous opposition" and a previous commitment, the government extended their nuclear plants beyond 2020. Mr Lee also noted that the United States may build new plants for the first time in 30 years.

It may take Singapore "a long time", but it is important to keep up with new developments and give the country "the ability to exercise the option, should it one day become necessary and feasible".

Asked during the Q&A session if this might happen during his administration, Mr Lee said: "I would say possibly during my lifetime."

Safety a major concern but nuclear power can't be dismissed
Singapore should have ability to exercise option should it be necessary one day
Joyce Hooi Business Times 2 Nov 10;

(SINGAPORE) While a nuclear power plant in Singapore is not just around the corner, it is certainly on the horizon.

When pressed for a timeframe on how soon there might be one on the island at the Singapore Energy Lecture yesterday, Prime Minister Lee Hsien Loong said: 'Possibly during my lifetime.'

It is, however, 'not very soon', he added.

In his lecture at the event that was part of Singapore International Energy Week, Mr Lee said that Singapore's small size would be a challenge, in addition to the existing concerns about safety, nuclear waste disposal and the challenges faced by developing countries in building nuclear power plants.

'Safety is a major concern, because of our high urban density . . . and yet we cannot afford to dismiss the option of nuclear power altogether,' he told the audience.

'So we keep up with new developments, the technologies are advancing - smaller, safer reactors, with more fuel-efficient designs that reduce the amount of nuclear waste produced and we keep up with experiences in other countries.'

He said that it would be a long time before any decision is made on nuclear energy.

But, Singapore should be ready to do so. It should have the ability to exercise such an option, 'should it one day become necessary and feasible'.

Singapore will have to start building up its capabilities now by consulting specialists and training its engineers and scientists to assess the developments in nuclear energy, he said.

'Without nuclear energy, the world cannot make sufficient progress in dealing with global warming,' he said.

In the region, other countries have taken the plunge. Russia will be helping to build Vietnam's first nuclear plant, while Malaysia has approved construction of one.

Indonesia's House of Representatives have also approved the government's plans to build nuclear plants.

Mr Lee also emphasised the need to factor carbon into the price of energy if a global commitment to cut carbon emissions is reached.

'If there is a global regime to curb carbon emissions, and Singapore has to reduce (carbon) emissions more sharply to comply with our international obligations, then we will have to make the carbon price explicit to send the right price signals.'

If carbon were to be priced into energy use, it would apply to both the industry and consumers, he said.

In his speech yesterday, Mr Lee spoke about four key strategies to cope with the changing landscape of energy - promoting competitive markets, diversifying energy supplies, building robust infrastructure and investing in energy research and innovation.

Government preparing for nuclear power option
We need to be ready when time comes for us to make a decision: PM
Rachel Chang Straits Times 2 Nov 10;

SINGAPORE will start now to prepare for the day when nuclear energy is necessary and feasible.

That day may not be that far off, Prime Minister Lee Hsien Loong said yesterday at a dialogue at an annual Singapore energy conference.

When asked by moderator Sri Jegarajah from broadcasting station CNBC whether it would be during his time in office, he said to laughter: 'I would say possibly during my lifetime.'

Earlier, PM Lee, in a 45-minute address, gave the clearest indication yet that nuclear power is increasingly an option being scrutinised by the Government.

Identifying nuclear power as an 'important part of the solution to mankind's energy problems', he said Singapore is building up its capabilities now because the nuclear option is one it 'cannot afford to dismiss'.

Measures taken will include getting in touch with nuclear experts as well as training local engineers and scientists, the Prime Minister said.

The Ministry of Trade and Industry is currently in the midst of doing a feasibility study on having nuclear power here.

'It will be a long time before we make any decision on nuclear energy,' he said. 'But we should get ourselves ready to get ready to do so. That means to give Singapore the ability to exercise the option should it one day become necessary and feasible.'

PM Lee's keynote lecture at the Singapore International Energy Week was attended by 800 businessmen, policymakers and analysts from across the globe.

The conference, which ends on Thursday, offers a variety of sessions on topics ranging from power generation and energy security to carbon trading.

In his address, PM Lee dwelt on the future energy challenges facing the world and Singapore's energy strategy.

This includes diversifying the country's energy supplies, as well as introducing measures to influence Singaporeans to adopt a more energy-saving lifestyle.

His lecture comes a month before the United Nations global conference on climate change in Mexico and amid an uncertain world where government leaders, he said, are grappling with such questions as: 'Will future energy prices rise significantly? What will be the global regime on climate change? What new technologies will emerge?'

But PM Lee made it clear that Singapore would put a price on carbon, should a legally binding global agreement to curb carbon emissions be reached.

He did not specify whether this carbon price, which all consumers and businesses must pay, would be in the form of a carbon tax or a cap-and-trade scheme.

But he revealed the Government has already calculated a 'shadow price for carbon' which it uses in policy-making.

PM Lee's comments on nuclear energy come in the wake of a building momentum in the region and around the world in favour of nuclear power.

Where once governments promised to retire reactors to placate populations fearful of disasters such as the one in Chernobyl, Ukraine, in 1986, the looming urgency of finding alternatives to fossil fuels has refocused minds.

He cited Germany's 17 nuclear reactors as an example. Scheduled to shut down by 2020, its Bundestag, or Parliament, has extended their use by 12 years on average despite widespread objection.

Closer to home, South-east Asian countries such as Vietnam, Thailand and Malaysia have plans to build reactors.

But before embarking on them, developing countries must first build up a strong safety culture, among other things, he said.

For highly urban Singapore, its small size poses an extra challenge, he added.

'If we ever build (a nuclear plant), it's very hard to put it far from population because nowhere in Singapore is far from population,' he said.

'But we cannot afford to dismiss the option of nuclear power altogether.'

He expressed the hope that technological advances to make nuclear reactors smaller, safer and less waste-emitting would one day make them feasible here.

'If we look at this rationally, without nuclear energy, the world cannot make sufficient progress in dealing with global warming,' he stressed.

Nanyang Technological University Assistant Professor Chang Youngho said building up local capabilities was a step in the right direction: 'We need to train local people who can design nuclear plants for the local context.'

A price on carbon if climate pact is inked
PM Lee says this will send right message to consumers, businesses
Jessica Cheam Straits Times 2 Nov 10;

SINGAPORE will have to put a price on carbon to send the right message to consumers and businesses if all countries pledge to curb greenhouse gas emissions, Prime Minister Lee Hsien Loong said yesterday.

This could be in the form of a carbon tax which would translate to higher energy costs, or through 'cap and trade', a form of carbon trading that rewards those who save energy and makes polluters pay for their emissions.

It is not enough for Singapore to 'just push for (energy) efficiency gains', he said, because energy consumption can still increase when consumers use energy-efficient appliances such as air-conditioners more often.

Hence the need to charge people to change their behaviour, he said yesterday at the annual Singapore Energy Lecture held at Suntec City as part of Singapore International Energy Week.

This is the first time Singapore has explicitly declared it will impose a carbon price if a global deal on climate change is reached.

Mr Lee's comments to an 800-strong audience come a few weeks before the United Nations climate change meeting in Cancun, Mexico where governments across the globe will meet to negotiate a global climate treaty.

In a changing energy landscape, Singapore's challenge will be to find energy that is cost-competitive, secure, and clean and sustainable.

To that end, it has invested in beefing up knowledge and capabilities in different types of energy such as nu-clear and solar to give the country more options in the future.

It is also diversifying its energy supplies, such as by importing liquefied natural gas (LNG) and building an LNG terminal by 2013.

Other strategies include building a robust electricity grid and gas infrastructure and promoting a competitive market. Singapore, for instance, is the first country in Asia to liberalise its electricity and gas markets.

Some of these strategies were part of the recommendations in an Economic Strategies Committee report released in February.

Singapore does not have a carbon tax now, but Mr Lee said the Government has calculated a 'shadow price for carbon' to help it formulate policies.

He did not elaborate on what this price is, but the current price of a UN-approved carbon credit is between ? 12 (S$22) and ? 15 a tonne.

'If there is a global regime to curb carbon emissions... then we will have to make the carbon price explicit to send the right price signals,' he said.

Speaking at the sidelines of the event yesterday, Energy Market Authority chief executive Lawrence Wong said details of the carbon price and how it will be implemented are 'still being studied'.

Countries like New Zealand have just established a cap-and-trade system and many European countries such as Germany and Switzerland have carbon taxes.

Singapore had previously committed to reducing its emissions by 16 per cent below business-as-usual (BAU) levels by 2020 if a legally binding climate change deal is finally reached.

Its current plan, without any deal, is to reduce by about 7 to 11 per cent below BAU levels by 2020.

Commenting on a question from the audience about the upcoming negotiations in Cancun, Mr Lee said he does not think there will be a 'grand agreement', but it was important to keep the conversation going.

'It's not something you can solve with one international negotiation... we hope cumulatively (to) make progress in time so we don't have sudden catastrophic change in the global climate,' he said.

Carbon pricing system still being studied
Jessica Cheam & Grace Chua Straits Times 2 Nov 10;

IT IS only a matter of time before Singapore introduces a carbon pricing system, and consumers and businesses will be charged for the carbon emissions tagged to their goods and services.

That was the view of environmentalists and those from the energy sector, after Prime Minister Lee Hsien Loong said yesterday that the country would impose carbon pricing if a global agreement on curbing carbon emissions was reached.

Asked to elaborate on the pricing system and who it would affect, Energy Market Authority chief executive Lawrence Wong said: 'The concept is clear enough that you have a carbon price which applies to all, not just one group of consumers, but residential and industrial consumers.

'All have to pay a carbon price.'

The authority is studying the method that Singapore should adopt: a carbon tax or a cap on carbon emissions and trading of allowances.

Industry leaders such as chief executive Edwin Khew of IUT Global, a waste-to-energy firm, said that while companies here had started to look at reducing their operational costs - a large part of which was energy - some small and medium-sized enterprises had not fully considered the impact of higher energy costs.

'If the carbon tax kicks in, these companies will be scrambling,' said Mr Khew, who is also chairman of the Sustainable Energy Association of Singapore.

So, will a carbon tax or a cap-and-trade system work better for Singapore?

Credit Suisse's Asian chief economist Joseph Tan said it could be a combination of both. 'The concept of a carbon price, while established in Europe, is new to Asia,' he noted.

Of the two, he felt that a carbon tax would be easier to implement in the short run.

'A carbon tax is much easier to understand first,' he added.

When consumers and businesses are more familiar with carbon prices, then a cap and trade system could be implemented.

Singapore's position in the region could served it well as a carbon trading hub, Mr Tan pointed out.

'Carbon trading will allow more market participation as businesses will need to buy and sell. Relying on market prices will also be an efficient way of allocating resources,' he added.

Having a carbon pricing system would also make people think twice about buying energy-guzzling products, said Mr Howard Shaw, executive director of the Singapore Environment Council.

He pointed out that a carbon price of sorts already existed, in the form of higher road tax and certificate of entitlement prices for cars with larger engines.

But Mr Shaw also wanted to know what the revenue from a carbon tax would be used for.

'Will it go back into government reserves or will it actually be directed into the implementation of clean and renewable energy resources in Singapore?' he asked.

The latter was necessary, he said, to shift towards a clean-energy economy.