(Closed on 20 Apr 2017) Public Consultation on Singapore's Climate Change Strategy And Carbon Tax

[CLOSED ON 20 APR 2017] PUBLIC CONSULTATION ON SINGAPORE'S CLIMATE STRATEGY AND CARBON TAX

Response to comments received from the Singapore's Climate Change Strategy And Carbon Tax

The National Climate Change Secretariat conducted a public consultation exercise from March to May 2017. From the online consultation and focus group discussions, we received feedback and suggestions related to the proposed carbon tax policy and Singapore's climate change strategy to (i) enhance carbon efficiency in the industry, power, buildings, transport, household, waste and water sectors; and (ii) harness green growth opportunities. Below is a summary of the feedback and responses according to the themes highlighted. Responses to more specific feedback and suggestions may be found in Annex A.

Carbon Tax Policy

Several suggestions were received on the design of the tax policy, such as:

Introduce a "tiered pricing scheme" to progressively tax companies by the amount of emissions they emit;
Increase the price level after a few years of introducing the tax; and
Extend the tax to cover other types of pollutants such as carbon monoxide and nitrogen dioxide.

A single, uniform carbon price will be levied on all large emitters emitting more than 25,000 tCO2e of greenhouse gases annually, across all sectors. This uniform price signal serves to encourage emissions reductions where it is most cost effective and provides businesses certainty in the tax rate regardless of their emissions levels and sectors. For other types of pollutants, there are existing policies in place to address these issues. Nevertheless, the Government will keep in view the suggestions made. We will review the need to adjust the tax rate and coverage where appropriate, communicate its intent and consult stakeholders ahead of changes.

Several respondents noted that the administrative burden for monitoring, reporting and verification should be kept low. The requirements and guidelines for companies are currently in the process of being developed. As a number of companies affected are already reporting their energy use and emissions to their corporate headquarters using international standards like the ISO, we will take reference from these standards and ensure that they are consistent with the reporting guidelines by the United Nations Framework Convention on Climate Change (UNFCCC).

Businesses were concerned about a level playing field and the impact on their competitiveness. There were also suggestions to prevent overcharging. The tax will be imposed upstream, at the point of emissions to ensure economy-wide coverage. We will work with companies to ensure that they adopt the necessary measures to enhance energy efficiency and become more competitive. We have also released information on the expected impact of the tax on electricity prices so that businesses are aware of the cost pass-through.

The impact of the tax on households was a common concern from respondents. We expect the impact of the tax on households to be modest. A $10-20/tCO2e carbon tax is similar to an increase in current electricity prices by 2.1 per cent to 4.3 per cent[1]. For comparison, quarterly electricity prices have fluctuated by up to 10 per cent between 2010 and 2016. For an average household living in a 4-room flat paying around $72 per month in electricity bills, the carbon tax translates to an increase of $1.70 to $3.30 per month. We hope that this will encourage more households to adopt energy efficient practices.

Respondents had several suggestions for how carbon tax revenues could be used. For instance, to provide affected companies with transitional assistance, and fund initiatives to enhance energy efficiency and further the deployment of low carbon solutions such as renewables. The Government will look into funding climate change related initiatives. These include climate change mitigation efforts, such as grants to support industry energy efficiency or renewable energy test-beds. We will continue to work with companies to support energy efficiency initiatives and new low-carbon innovations.

Another area of interest was the use of a cap-and-trade system and the purchase of carbon credits to offset emissions. While some companies have already taken initiatives to participate in mechanisms under the Kyoto Protocol, negotiations at the UNFCCC are looking at further expansion of the carbon markets. We will need to ensure that the global system remains open, and accessible to all parties.

Enhancing Carbon Efficiency

Industry Sector

Respondents agreed on the need for greater energy efficiency in the industry sector, but cited the lack of awareness, misconceptions, and higher upfront costs that might be preventing energy efficiency improvements. One suggestion was for the Government to offer subsidies to replace polluting technologies or develop energy-efficient technologies. To enhance awareness on energy efficiency, agencies are working with the industry and commercial sectors to reinforce the importance and benefits of energy efficiency. Existing grants, such as the National Environment Agency's (NEA) Energy Efficiency Fund and the Economic Development Board's (EDB) Productivity Grant, are available to support efforts by companies to replace their technologies with more efficient ones.

Power Sector

A few respondents highlighted that power generation companies were already efficient and that the competitive environment of low electricity prices would provide few opportunities for substantial investments in energy efficiency. Others felt more should be done to encourage emitters to invest in renewable technologies. The Government will continue to work with the power sector to assess where and how best to further enhance energy efficiency. A carbon tax encourages generation companies to invest in and use more energy efficient technologies. In addition, generation companies or companies that sell electricity generated by renewables such as solar will not be taxed. Over time, this creates an incentive to shift towards renewables.

Buildings Sector

There were a few suggestions to improve energy efficiency for the buildings sector. Respondents felt that agencies must address energy inefficiency in buildings through buildings design, to reduce the need for air-conditioning. Currently, the Building and Construction Authority's (BCA) Green Mark Scheme, a green building rating scheme, evaluates and sets benchmarks for environmental sustainability in buildings. The criteria for Green Mark includes energy efficiency, energy effectiveness, cost effective design, etc. Since the launch of the scheme, the number of green building projects has increased from 17 in 2005 to more than 2800 in 2016, covering more than 31 per cent of buildings in Singapore. As BCA aims to make 80 per cent of all buildings green by 2030, we expect to see more energy efficient buildings in the future.

Transport Sector

There were suggestions to reduce the number of cars relying on fossil fuels and introduce electric vehicles for taxis and buses. The Government is exploring ways to electrify our transport sector. Announced in 2016, an electric vehicle (EV) car-sharing programme will be launched in the second half of 2017. The programme will deploy up to 1,000 EVs, along with 2,000 charging points. This will contribute towards the Land Transport Authority's (LTA) efforts to increase the use of public transport as a share of overall transport from 66 per cent in 2015 to 75 per cent by 2030, and 85 per cent by 2050. LTA and EDB also launched a trial last year to introduce 100 electric taxis to Singapore's roads. The trial will last 8 years and will help to determine the viability of using electric vehicles as part of our transport network.

Household Sector

For households, respondents felt that the lack of awareness, misconceptions, effort required and inconvenience, might be holding households back from being more energy efficient. Suggestions were given to conduct public awareness campaigns on climate change, share practical and simple steps everyone can take to reduce waste, energy and water consumption, and encourage recycling. We recognise that building knowledge and awareness is key to encouraging behavioural change. We have introduced various public education initiatives on the importance of climate change action, such as cinema screenings of short videos, as well as comic strips in newspapers. Government websites, such as NEA's Energy Efficient Singapore microsite[2], make information about climate change and energy efficiency readily available to the public. NEA has also launched the Energy-Saving Challenge on 1 July 2017 to encourage households to reduce energy usage. These programmes have been effective, and continue to be a crucial part of the Government's outreach plans. The Government will continue to enhance public education on energy-saving habits and we welcome specific suggestions too.

Waste and Water Sectors

For the waste sector, respondents generally felt that more could be done to increase recycling and to reduce waste. To encourage recycling, the National Recycling Programme was launched by NEA in 2001 to make recycling more convenient for households. To further encourage recycling, all new Housing Development Board (HDB) developments launched since 2014 are fitted with Centralised Chutes for Recyclables.

For the water sector, one respondent felt that the energy intensity of our water production should be lowered, especially since we are relying more on NEWater and desalination. PUB, Singapore's National Water Agency is testing new technologies such as electrochemical desalting, to reduce the energy used in the seawater desalination process. Reductions in energy use will decrease carbon emissions from the water sector.

Harnessing Green Growth Opportunities

Respondents felt that the Government should promote the use of clean technologies, while others suggested that research needs to be done to identify the most effective ways of reducing our emissions and developing cost-effective solutions.

The Climate Action Plan outlines initiatives which Singapore plans to implement to encourage research, development and deployment in clean technology. This plan was developed through a series of technology roadmaps[3] which explore the possibility of long-term emissions reduction in multiple domains. These include building energy efficiency, solar photovoltaic, green data centres, solid waste management, e-mobility, carbon capture and storage/utilisation, and industry energy efficiency. Guided by the findings, we continue to support efforts from basic research, through to test-bedding and commercialisation.

Under the Research, Innovation, and Enterprise (RIE) 2020 Plan, $0.9 billion will be invested in the Urban Solutions and Sustainability domain from 2016 to 2020 to tackle Singapore's energy, water, land, and liveability challenges. Funding will be directed towards research and development in environment and water technologies, clean energy, and energy efficiency solutions. The Government will continue to explore other ways of encouraging innovation to address sustainability issues in Singapore and the region.

Responses to other frequently asked questions on the proposed carbon tax can be found at Annex B.

[1] Singapore Power's Q1 2017 electricity tariffs for households is 20.20 cents per kWh.

[2] The microsite can be found at https://www.nea.gov.sg/our-services/climate-change-energy-efficiency/energy-efficiency

[3] The technology roadmaps can be found at technology-roadmaps