SPEECH BY ER DR LEE BEE WAH, MP FOR NEE SOON GRC, AT THE SECOND READING OF THE CARBON PRICING BILL IN PARLIAMENT ON 19 MAR 2018
Reducing carbon foot-print is the way to go for our future. This Bill will be a good step forward to get our people to be in sync with the international trend. We need to position Singapore for a low-carbon future as that will be the new norm. Taking climate action need not be a trade-off against economic development. Rather, we should recognise that taking climate action today is important and can reduce business risk and open new opportunities and growth for businesses, especially in the eco-industry. It can also spur businesses to move up and upgrade themselves and be more efficient use of energy. It is a necessary step that will enable Singapore to stay competitive as we move towards a carbon-constrained world.
Helping Businesses to Adapt
NEA noted that our companies achieved an energy efficiency (EE) improvement rate of only 0.4% in 2014 and 0.6% in 2015, as compared to the 1-2% per annum achieved in leading countries such as Belgium and the Netherlands. I would like to ask, with the carbon tax, how much improvement are we targeting for Singapore?
During the Budget 2018, the Finance Minister announced that support for companies will be enhanced through schemes like the Productivity Grant and Energy Efficiency Fund. I’d like to ask the Minister so far how many companies have tapped on these grants? How effective have they been in encouraging improvements in Energy Efficiency? What outreach efforts are employed to get more companies onboard? Also, are there any “standard packages” or success stories the Ministry can recommend to companies that don’t know how to go about doing it?
Nevertheless, while charging a flat rate of $5 carbon tax helps simplify matters, companies are concerned about the lack of a clear benchmark. They are concerned that if the tax fails to reduce carbon emissions, the tax rate will eventually be increased across the board, thus penalising those who have been reducing their carbon emissions and reducing competitiveness overall. In this regard, can we be more open with regards to how the Monitoring, Reporting and Verification (MRV) requirements are done? I would like to propose that all these reports under the MRV requirements be made available to the public. This will offer greater transparency and awareness. On this subject, I understand that the reports have been a mandatory requirement even before this Bill.
NEA has been working with companies to familiarise them with the new measurement and reporting requirements on large emitters in the Energy Conservation (Amendments) Act passed last year.
The Carbon Pricing Bill introduces a new requirement for additional third-party verification on emissions reports, which will ensure greater fairness and accuracy. I’d like to ask if the MRV requirements in the CP Bill differ from the reporting requirements under the Energy Conservation Act.
Improving Energy Efficiency should remain key
The carbon tax will put a price signal to encourage consumers to reduce their emissions. However, improving our Energy Efficiency continues to be a key strategy in reducing our carbon footprint whilst improving our competitiveness. It is hence important for companies to be more ambitious in their energy efficiency improvements.
The carbon tax and ECA will work hand in hand, together with other mitigation measures, to reduce our emissions intensity and meet our Paris pledge.
The government has been laying the groundwork, and with the new Singapore Energy Centre to be launched in early 2019 to explore innovative ideas and develop talent to meet future energy needs, I am confident that this will further elevate our regional and global standing as a leader for eco-solutions. This is good news for businesses who will find our nation’s reputation stands them in good stead. Can the government share further details about the Singapore Energy Centre, as well as other future investments in eco-solutions?
Impact on Households
While I am optimistic for businesses, I have some concerns for households. With the current carbon tax rate of S$5/tCO2e, on average, the impact of the carbon tax is expected to be small, at about 1% on total electricity and gas expense, or about S$0.30 per month for a HDB 1-room flat to about S$1.10 per month for a HDB Executive flat.
This may not seem significant, but with the increase in price of water and other items, it will all adds up. One major public concern is how it will affect our cost of living. How to ensure that businesses do not take this opportunity to increase price excessively? Is Government going to monitor this?
From the second half of this year, consumers will be free to switch from Singapore Power to other energy providers. This is in line with the move to increase competitiveness in the energy solution industry and give consumers the freedom to choose a company whose package complements their principles and budget. Many households and small businesses have been using Singapore Power for a long time. So making the move might be challenging, especially among the elderly. I hope the government can do more to increase public awareness.
In conclusion, we pledged to reduce emissions intensity by 36 per cent from 2005 levels, and to stabilise and peak GHG emissions by around 2030, under the United Nations Framework Convention on Climate Change (UNFCCC). The Carbon Pricing Bill is a signal of our fulfilment to abide by it, and it will put us in good standing in the international community. As the first country in Southeast Asia to implement such a tax, we send a crucial signal to our Southeast Asian neighbours the significance we place on transparency when it comes to environment issues. Personally, I have pledged and I’m also looking into how to reduce the energy usage of our Community Club in the coming CC upgrading. I hope to get more residents on board this worthy initiative.
Mr. Speaker Sir, Mandarin please.
Sir, I support the Bill.
As the emissions reports contain commercially-sensitive information, they will not be shared publicly. We have strict provisions in the Bill to ensure the confidentiality and security of the data reported.
That said, I note that the Members are concerned about tracking the effectiveness of our policies in lowering our energy consumption and emissions. I would like to clarify that we already track and publish the improvements in energy consumption per dollar GDP from 2005 levels in the Budget Book. We also regularly report our emissions to the United Nations Framework Convention on Climate Change and will continue to do so, and these are all publicly available.
(Encouraging energy efficiency)
Members have asked what the Government is doing to support companies in this transition to a low-carbon future. The Government is prepared to spend more than the estimated S$ 1 billion in carbon tax revenue that will be collected in the first 5 years, on worthwhile carbon abatement projects.
Existing EE incentive schemes such as the Productivity Grant for Energy Efficiency, or PG (EE), and the Energy Efficiency Fund (E2F) will be enhanced.
This enhanced support will also extend to SMEs, to encourage them to improve their EE, including basic measures such as upgrading to more efficient lighting. More support will go to projects that achieve greater emissions abatement, beyond basic enhancements.
Mr Perera has asked whether part of the revenue from the carbon tax will be used to provide loans to companies. The EDB has been piloting an EE Financing Programme whereby companies that are not able to afford the upfront costs of EE projects can apply for loans through a third-party financier.
The potential benefits of such a programme are that industrial facilities will not have to pay for the upfront costs of these projects, but can still enjoy part of the energy savings. Part of the risk is transferred to the third-party financier.
Beyond financial support, the Government will also grow the wider industrial EE ecosystem in Singapore to develop greater expertise in the energy services sector. Initiatives include engaging Institutes of Higher Learning to train and up-skill energy services professionals, and working with professional bodies such as the Institution of Engineers Singapore to develop Chartered Engineer certification for EE professionals. At the same time, NEA officers have been and will continue to engage the companies to help them to identify areas for EE improvements.
(Impact on households)
We will assess the impact of the carbon tax at a later stage and review the need to extend these rebates.