Speech by Mr. Louis Ng Kok Kwang, MP for Nee Soon GRC at the Second Reading of the Carbon Pricing Bill [Bill No. 17/2018]
Sir, I am in favour of establishing a framework for taxing businesses responsible for high Green House Gas emissions.
Climate change is one of the most serious problems of our time, and the consequences of unchecked climate change for every country – including Singapore – are likely to be grave.
In Singapore, industries are the largest emitters of Green House Gases. This Bill is thus an important and necessary step to manage Singapore’s carbon emissions, and is aligned with our commitment to the Paris Agreement.
Nonetheless, many green groups have raised queries and concerns with me. Please allow me to share some of them and seek a few short clarifications on details of the implementation of our carbon tax.
Implementation of the Fixed Price Credit Based (FPCB) system
Green groups have shared concerns on the implementation of a Fixed Price Credit Based (FPCB) system, as it seems to require companies to purchase credits at the beginning of each reporting period.
If this is so, companies would thus have to make an accurate estimate of how much emissions the facility would produce for the reporting period, and buy the corresponding number of credits. Can Minister confirm this?
The main concern here is whether any unused credits can be used in the next reporting period.
Can Minister clarify this? What would happen to the un-used credits? Would they be wasted? Do the credits ever expire?
If unused credits do expire before the next reporting period, I am concerned that facilities that have over-bought credits may be compelled to use less energy-efficient technologies, so as to use up the credits they have already purchased and are unable to transfer or sell. This is a worst case scenario.
However, it is also possible that companies in this situation would feel no incentive to reduce emissions as they have bought more than enough credits.
Whichever the case, it would go against the primary objective of this Bill, which is to promote more energy efficient methods of production to drive down carbon emissions. This is certainly not what we want.
Funding green initiatives using revenue from the tax
Next, greener alternatives for industries and power generation will require substantial investment and all-round support.
The Ministry has said that revenue from the tax will fund green initiatives via two existing schemes: the Productivity Grant (Energy Efficiency), and the Energy Efficiency Fund.
The green community is heartened to know that funds from the tax will go back in to green initiatives. With a new stream of funds available, there are hopes that greater support can be given to promote the use of clean energy.
I would like to ask the Ministry if it intends to develop new schemes with the new stream of funds, to further assist industries in the transition towards a low carbon future, and specifically, if it would consider using these funds to directly subsidise the production, research and development of clean energy in Singapore.
Sir, notwithstanding the above clarifications, I stand in support of the Bill.
Mr Louis Ng asked about the FPCB mechanism. Companies can buy credits from NEA at a fixed price throughout the year, but must surrender credits equivalent to their preceding year’s tax liability by 30 September.
There is no expiry date on the credits in this initial phase. Nevertheless, companies have told us that they are likely to buy the required credits only after they receive the notice of tax assessment, so as not to tie up their liquidity. Hence, the scenario whereby companies operate their plants in a less efficient manner in order to “use up unused credits”, is highly unlikely.