Henry Kwek
MP for Nee Soon GRC
Speech on Carbon Pricing Bill
- The Carbon Pricing Bill is welcomed as a useful tool to help our companies be more environmentally responsible as we manage our carbon footprint as an economy and to meet our national obligations under the Paris Agreement.
- With regards to the bill, I would like to raise several points.
- First, it would be helpful if at regular intervals, the government can share on the results of the carbon tax on lowering the energy consumption of residents of Singapore, which should exclude the manufacturing sector’s energy consumption.
- This will allow us to know whether the carbon tax is effective in abating consumption, and whether there is a need to either fine-tune the tax amount, or postpone a further increase.
- Secondly, I hope that the government will consider mitigating the additional cost of living for not just for the most vulnerable Singaporeans, which Minister for Finance announced, but also for our retirees and sandwich classes.
Compliance and Administrative Cost
- Thirdly, I hope the government can bear in mind the costs increase to businesses. And here I mean indirect costs, beyond the carbon price. Can the government share on the likely indirect compliance and administrative cost that the carbon emission industries will have to incur? Have we worked hard to ensure that the compliance and administrative efforts are not too onerous?
- Would companies have to hire and dedicate specific resources just to see to this in addition to their core operations? If so, then the companies face a double whammy of tax costs and administrative costs.
- Perhaps the government or the NCCS can help beef up companies capabilities by providing some technical support or assistance in the short-run so that companies develop their own capabilities over time.
- Fourthly, I also hope that government should also communicate the carbon pricing design and necessary procedures early so that companies can invest early to be compliant.
- Fifthly, I hope the government can share how it will impact the competitiveness of our industry, especially the petrochemicals industry. Given that most of the petrochemicals industry’s output are exported, and their competitors based in other countries may not need to price in their carbon emission. Is there anything that we can do to mitigate their challenges overseas?
Carbon Tax vs Carbon Trading
- Not withstanding the concerns I have raised, I agree with the approach of embarking on the carbon tax, rather than to other alternatives, such as carbon trading. I would like to highlight my concerns about the suitability of carbon trading in Singapore, should that be considered by future governments.
- Carbon trading is ideal in countries where there are low-cost ways of reducing carbon emission, such as through more environmentally friendly forestry and farming practices. In this way, carbon trading encourages the society to not just reduce carbon emission, but to find the cheapest way to do so.
- However, for Singapore, our carbon emission companies are concentrated in petrochemicals, power-generation, or manufacturing. So they are quite homogenous in their carbon emission approaches. We have no major forestry and farming industries.
- As such, for Singapore, there could be limited upside of trading emission between the emission producers, compared to other countries. As for buying carbon credits outside Singapore, there are concerns about the integrity and effectiveness of some of the carbon credits scheme.
- In comparison, the clear carbon pricing approach implemented is clear and effective, and the revenues from it can be directly applied to better our society.
- With that, I support the bill.
Answer:
Together with the Ministry of Trade and Industry (MTI), the Economic Development Board (EDB), and the National Climate Change Secretariat (NCCS), my Ministry and the National Environment Agency (NEA) have consulted companies extensively over the past year on the design of our carbon tax framework. Whilst companies understood the need to price carbon, they asked for a transition period to adjust to the impact of the tax. This is why we are starting with S$ 5 per tonne for the first 5 years; companies will have time to adjust, for example, by upgrading to more energy-efficient equipment.
As highlighted by Mr Kwek and Ms Rahayu Mahzam, we are mindful of the need to manage compliance costs, which was also a key feedback from companies. We have done the following:
a. Firstly, we have built on existing measurement, reporting and verification (MRV) requirements set out in the Energy Conservation Act (ECA) which companies are already familiar with.
These requirements take reference from international standards like the ISO and GHG Protocols, which are used by many companies for corporate sustainability reporting. This approach streamlines requirements and aligns with international practices.
b. Second, we have identified a list of excluded emissions so that companies need not incur disproportionately high costs to measure and report these small emissions sources.
c. Third, NEA is actively growing the pool of third-party verifiers in Singapore to ensure that companies can access competitive offerings.
15. NEA has been organising briefings to familiarise companies with the new MRV requirements and carbon tax obligations, and will continue to help companies build up their capability. The detailed MRV requirements will be publicly available.
