Climate change is a well-known topic, even to the layperson. It is often lumped together with global warming, which isn’t wrong considering that the current change in climate most of us are facing now is, well, warming. That is mainly attributed to increasing levels of greenhouse gases in the atmosphere.
In 2016, Singapore ratified the Paris Agreement[1], affirming our commitment to keeping global temperature rise this century below 2oC above pre-industrial levels, while at the same time aiming for greater efforts to limit that increase to 1.5oC[2]. One of the solutions to achieve this is to reduce greenhouse gas emissions. In Singapore, we aim to reduce our emissions intensity (EI) by 36% from 2005 levels by 2030[1].
How will we achieve this? Broadly speaking, there are 2 methods to reduce carbon emissions – carbon crediting, and carbon taxes. In Singapore, we employ the use of carbon taxes[3]. These taxes are enforced in all areas, namely the industrial sector, in buildings, transport, households, waste and water treatment, as well as power generation[4]. Currently, the carbon tax in Singapore is priced at $5 per tCO2e and only applies to facilities which emit more than 25,000 tCO2e annually[5]. The tax rate will be reviewed again in 2023, and it might be increased to between $10 and $15 per tCO2e.
Carbon taxes are effective as they increase the cost of power generation and usage. This promotes the development and employment of greener technologies, which might be less costly than having to deal with a huge carbon tax. Have you noted the italicised “might”? Indeed, what rate of taxation is enough to be considered as a strong deterrent factor for companies to develop more sustainable solutions?
A report by the International Monetary Fund suggested that different tax rates between $35 and $75 per tCO2e are required by different countries to reduce emissions to attain the 2oC target[6]. This is dependent on the country’s existing energy tariffs, taxes, rebates, and other factors.
While I am unable to say for sure what is the ideal tax rate for Singapore, it is evident that we are nowhere near the suggested tax rates. Despite so, Singapore has seen a remarkable decline in EI. In 2005, our EI was at 0.176 kgCO2e /S$GDP[4]. That has since decreased to about 0.130 kgCO2e/S$GDP in 2014[7]. Less than halfway to 2030, and we are already more than halfway to our 2030 target of 0.113 kgCO2e/S$GDP[4].
Emissions Intensity from 2000 to 2014. (Credit: National Environment Agency 2014[8])
SDG13: Climate Action
References
[1] NEA. (2020, October 20). Singapore’s Efforts in Addressing Climate Change. https://www.nea.gov.sg/our-services/climate-change-energy-efficiency/climate-change/singapore’s-efforts-in-addressing-climate-change
[2] UNFCCCC. (n.d.). What is the Paris Agreement? Retrieved October 28, 2020, from https://unfccc.int/process-and-meetings/the-paris-agreement/what-is-the-paris-agreement
[3] The World Bank. (2020, August 1). Carbon Pricing Dashboard. https://carbonpricingdashboard.worldbank.org/map_data
[4] National Climate Change Secretariat. (2016). Singapore’s Climate Action Plan: Take Action Today, For a Carbon-Efficient Singapore. https://www.nccs.gov.sg/docs/default-source/publications/take-action-today-for-a-carbon-efficient-singapore.pdf
[5] NEA. (2020, October 15). Carbon Tax. https://www.nea.gov.sg/our-services/climate-change-energy-efficiency/climate-change/carbon-tax
[6] Parry, I. (2019, December). Putting a Price on Pollution. Finance & Development. https://www.imf.org/external/pubs/ft/fandd/2019/12/the-case-for-carbon-taxation-and-putting-a-price-on-pollution-parry.htm
[7] NEA. (2020, July 1). Greenhouse Gas Inventory. https://www.nea.gov.sg/our-services/climate-change-energy-efficiency/climate-change/greenhouse-gas-inventory
[8] National Environment Agency. (2018, December). Singapore’s Fourth National Communication and Third Biennial Update Report. https://www.nccs.gov.sg/docs/default-source/default-document-library/singapore’s-fourth-national-communication-and-third-biennial-update-repo.pdf
Hi Ernest,
Thanks for your replies. I was aware of the change and I’m glad my comment stimulated you to look it up. Something else you might ask yourself… why are we a non Annex-I country, and is that designation in line with your understanding of “developing nation”.
jc
Hi Dr Coleman, thanks for helping to improve my content in this post!
According to the UNFCCC, Annex I countries are those that were members of the OECD in 1992 and some countries with economies in transition. Conversely, non-Annex I countries, as you said, are “developing countries”, with some countries also recognised to be facing more vulnerability due to climate change.
While Singapore is seen as a rather developed country, it is still regarded as a “developing country” in many intergovernmental organisations. This is because there are certain responsibilities or criteria that a developed country has to fulfil, and Singapore may not be in a firm position to meet all the requirements or responsibilities. That said, Singapore is acknowledged as a “high-income developing nation”. I came across this old, yet quite relevant article that highlights possible reasons why Singapore did not apply for full OECD membership (and still have not).
While I admit that I still do not possess enough knowledge in this area to form a detailed opinion, I would say that looking this up changed my understanding of “developed and developing nations” a little to go beyond just the economies of the respective nations. Perhaps then what could be done for the UNFCCC is a restructuring of the categorisation of parties to better define and set the roles of member states. I will definitely look this up another day when I have more time as I am really interested in public policy, and this might help me form a better understanding of how and why our policies are formulated as such. Thanks for the opportunity!
Hi Ernest
Really informative post on how Singapore used carbon tax to adhere to the reduction of EI. While the carbon tax is effective in Singapore’s context, Singapore is also prospective of being the carbon credit trading hub for corporations looking to expand carbon services related business in the Asian region. (https://www.nccs.gov.sg/singapores-climate-action/carbon-services-and-climate-finance/) Do you think that carbon credits are a good way to reduce carbon emission levels in Singapore, putting aside carbon taxing?
Hi Wen Han,
Going straight to the point, while I understand the motivations behind the implementation of carbon credits, I do not think that it is a good solution to reduce emission levels in Singapore, nor the world for that matter. If you do a quick Google search, I am sure that you will be able to find the many problems associated with carbon credits, and I do agree with them. In my opinion, the biggest reason why carbon crediting is not a good solution is because it can be bought to offset their emissions.
Richer firms (who may also be the biggest emitters) may find that funding CDM projects is a more economical solution compared to investing in cleaner technology or developing sustainable solutions. As such, instead of reducing their emissions, which is the whole intention behind the entire system, these firms may choose to pay their way out, buying carbon credits and continuing to emit as per usual. Hence, whether it is in Singapore or any other country in the world, I do not think that carbon credits should be used as a solution.
Hope this answers your question, thanks!
Hi Ernest,
So… EI ? Is that really the yardstick we want to use ? Because the thing with EI as a metric is it allows a nation or activity to emit ever more carbon as long as the economy or profitability of the activity grows.
Just saying…
Great post, btw.
jc
Hi Dr Coleman,
Now that you mention it… that is true… Honestly, that did not cross my mind. Unfortunately, that is the index that Singapore had used in our pledge for the Paris Agreement, and I am unable to find why they decided to use this index, though I’m sure it includes economic reasons.
I went to do more digging and found that early this year, Singapore has set a new emissions target. I apologise for the lack of complete research on my part before this blog post, but in any case, our Nationally Determined Contribution for the Paris Agreement has been modified and improved. According to this report (p8-9), instead of EI, Singapore has moved on to use Absolute Emissions as our index. We aim to reach peak emissions at 65MtCO2e around 2030, then half it to 33MtCO2e by 2050, and net-zero emissions as soon as viable by the end of the century. Now, that seems like a more effective target as compared to using EI. The net-zero emissions do sound wonderful too. While it is hard for me to figure out how we are going to achieve that as we have limited carbon sinks in our small area, it is a target that I sincerely hope we will be able to achieve too.
Hope this clarifies. Thanks!
Hi Dr Coleman,
Small update!! I was doing some readings as I realised that I was unsure about how the Paris Agreement affects Annex I and non-Annex I Parties differently. Singapore is a non-Annex I party and I found that under the Paris Agreement, while Annex I parties should take the lead in emission reduction by setting absolute emission targets, non-Annex I Parties were not compelled to do so, and instead are advised to move towards absolute emission targets over time. As such, this may be a reason why Singapore used EI at the start and based on current ability, changed to absolute emissions during the start of the year.
Hope that better answers your question!
Hi Ernest,
Thanks for the interesting read, I was unaware that Singapore had implemented a carbon tax before this. It is quite heartening to see that our efforts are at least on track to meeting our targeted EI.
However, as you had mentioned, we are unsure if it is enough to just simply continue taxing. Since this is the case, do you think that the government should be intervening in other ways besides taxation like taking the burden of developing new technologies by themselves?
I was also wondering why you felt that the targets set were sufficient, should the studies into the necessary decreases in EI not have already been done by the relevant authorities before trying to enforce their policies?
Looking forward to hearing from you!
Mark
Hi Mark, thanks for reading this post!
Taxing is one solution, but it should not be the only solution. We should explore a wide range of solutions to solve this issue from multiple approaches. Development of more efficient technologies is one of them. Regarding whether the government should take on the burden of developing new technologies, from what I understand, our government agencies are involved in R&D efforts in their respective areas of focus. They mainly partner with research institutes and there are funds set aside for such projects. The agencies are also involved in pilot studies when a concept has to be tested on the field. In addition, taxation only applies to large facilities that emit more than 25,000 tCO2e annually. This excludes individuals like you and me. That being said, there are similar policies in place such as the Vehicle Emissions Scheme (https://www.onemotoring.com.sg/content/onemotoring/home/buying/upfront-vehicle-costs/emissions-charges.html) to encourage buyers to purchase cleaner vehicles. Simply put, I do think that the government should put in place policies that tackle every sector involved in emissions, whether in the form of taxes, research or education.
To answer your second question, while I am sure that the government has done their research before setting the target of a 36% decrease in EI by 2030, I am unable to find details of how they have arrived at their number. What I believe though is that 36% is an ambitious yet realistic target that Singapore should be able to achieve by 2030 through measures such as R&D or taxation. Every reduction in emissions is beneficial, and I don’t mean to discredit the effectiveness of the target. What I do mean, however, is whether that amount of decrease will actually be able to prevent a temperature rise of 2 degrees by 2100, as set out by the Paris Agreement. Of course, our current target is only set for 2030, and I’m sure based on how ambitious Singapore tends to be, I am looking forward to another target being set after 2030 to further reduce our emissions.
Hope that answers your questions! Thanks!