D. Advance Our Green Transition

 

D. Advance Our Green Transition

  1. 153 Mr Deputy Speaker, I will now speak about our green transition.
  2. 154 Climate change is a global crisis that becomes more pressing with each passing year. At last year’s UN Climate Change Conference in Glasgow, or COP26, countries were urged to get to net zero emissions by or around the middle of the century, to keep alive the ambition of limiting global warming to 1.5 degrees Celsius above pre-industrial levels.
  3. 155 2050 is still about 30 years away. But unless deep reductions in CO2 and other greenhouse gas emissions occur in the coming decades, global warming will exceed 1.5 degrees, or even 2 degrees in this century. So, the world needs to take urgent action.

Net Zero Ambition

  1. 156 Singapore is fully committed to doing our part in the global movement to tackle climate change.
  2. 157 But unlike many other countries, we are highly disadvantaged by a lack of natural renewable energy sources. We do not have huge rivers or hot springs to draw hydro and geothermal power. We do not have the land for wind or solar energy to be sufficient for our needs.
  3. 158 But thankfully, green technologies have been improving by leaps and bounds. Alternative low-carbon solutions, like carbon capture, utilisation and storage, and hydrogen, are starting to look more plausible.
  4. 159 Carbon markets are also growing steadily. At COP26, Singapore helped to finalise a landmark decision on Article 6 of the Paris Agreement, which unlocks the door for carbon credits to be traded on a global basis.
  5. 160 Such developments give us greater confidence to review our long-term climate goals.
  6. 161 Two years ago, we made an international commitment to peak our emissions around 2030. We also announced our Long-Term Low-Emissions Development Strategy, or LEDS, to halve our emissions from its peak by 2050, and to achieve net zero emissions as soon as viable in the second half of the century.
  7. 162 Singapore takes these commitments very seriously. We are on track to achieving our 2030 target. We have since reviewed our longer-term plans. With advances in technology and new opportunities for international collaboration in areas like carbon markets, we believe we can bring forward our net zero timeline.
  8. 163 We will therefore raise our ambition to achieve net zero emissions by or around mid-century. We will consult closely with industry and citizen stakeholder groups to firm up and finalise our plans before making a formal revision of our LEDS later this year.

Carbon Tax

  1. 164 To achieve this net zero ambition, we will need to set the right price of carbon, so that businesses and individuals will be able to internalise the costs of carbon, and take actions to moderate their emissions.
  2. 165 When we introduced the carbon tax in 2019, we kept the initial tax low – at $5 per tonne of emissions – to give our businesses time to adjust. To move decisively to achieve our new net zero ambition, we will need a higher carbon tax.
  3. 166 I will therefore raise our carbon tax to $25 per tonne in 2024 and 2025, and $45 per tonne in 2026 and 2027, with a view to reaching $50 to $80 per tonne by 2030.
  4. 167 The current tax of $5 per tonne will remain unchanged until 2023, as previously stated. We are pacing the increases to the carbon tax between now and 2030, and will announce subsequent increases ahead of time. This will provide certainty for businesses.
  5. 168 Besides this, we will not impose an additional carbon tax on the use of petrol, diesel and compressed natural gas. These already have excise duties that encourage users to moderate their fuel consumption and hence emissions. We will continue to review and adjust these fuel excise duties periodically.
  6. 169 I appreciate that some businesses and households may require support as they adjust to the carbon tax increase.
  7. 170 For example, we are mindful that firms in our emissions-intensive and trade-exposed sectors may face higher costs than those in countries with lower or no carbon tax. Some will need a little more time to make the necessary reduction in emissions or investment in cleaner technologies. Hence, to support such firms and manage the near-term impact on their competitiveness, we will put in place a transition framework.
  8. 171 Such transition frameworks are found in many countries with carbon taxes. They provide existing companies with allowances for a share of their emissions. For our framework, the allowances will be determined based on efficiency standards and decarbonisation targets. This will help mitigate the impact on business costs, while still encouraging decarbonisation. We will continue to engage affected companies on the design of the framework prior to its implementation in 2024.
  9. 172 From 2024, we will also allow businesses to use high-quality, international carbon credits to offset up to 5% of their taxable emissions, in lieu of paying carbon tax. This will moderate the impact for companies. It will also help create local demand for high-quality carbon credits and catalyse the development of well-functioning and regulated carbon markets.
  10. 173 We will also do more to support companies, especially SMEs, to invest in energy-efficient equipment and decarbonisation solutions.
  11. 174 For households, the higher carbon tax will be felt mainly through an increase in utility bills. At $25 per tonne, this would translate to an increase of about $4 per month in the utility bills for an average 4-room HDB household. We will provide support, such as additional U-Save rebates, to help cushion the impact during the transition. More details will be announced next year, ahead of the carbon tax increase in 2024.
  12. 175 I should clarify that I do not expect to derive additional revenue from this increase in the carbon tax.
    1. a. Some of the revenue will be used to cushion the impact on households and businesses.
    2. b. A large part of the revenue will be used to support a decisive shift towards decarbonisation through investments in new low-carbon and more energy efficient solutions. These investments will help to lower our emissions, and bring us closer towards our net zero goal.

Singapore Green Plan

  1. 176 The path towards net zero will entail significant economic restructuring and changes in how we live and work in the future. All of us – the public, businesses, the government – will face difficult choices. Costly investments may be required, for example, to import or generate low-carbon energy.
  2. 177 But now is the time when we must move decisively towards the future of a net zero world. This will allow us to tap fully on the many exciting possibilities in this green transition. That is why we launched the Singapore Green Plan 2030 last year, to bring everyone on board our sustainability movement.
  3. 178 Over the coming decade, we expect to see a “greening” of traditional sectors of our economy, like aviation, energy, and tourism. At the same time, emerging green sectors like green finance, and carbon services will grow in prominence. Millions of new green jobs will be created around the world, and demand for talent with green skills will increase.
  4. 179 Moving quickly will position Singapore to build on our competitive advantages to capture these opportunities. We can become the go-to location in Asia for expertise in carbon services, and the trusted regional marketplace for carbon credits. As a key node for international air and sea transport networks, we can become a frontrunner in the development of sustainable aviation and marine fuels.
  5. 180 In the financial services sector, for example, green finance is one of the fastest growing segments. Singapore now accounts for close to half of the ASEAN green bond and loan market. We aim to do more, so that banks and financial institutions will use Singapore as a base to develop their capabilities, and to develop innovative green financial solutions to service their customers all over Asia and the world.
  6. 181 The public sector will do its part to develop a robust green finance market. We aim to issue up to $35 billion of green bonds by 2030 to fund public sector green infrastructure projects. This will include bonds issued by the Government, as well as Statutory Boards. The Government will also publish a Singapore Green Bond Framework and issue its inaugural green bond later this year.
  7. 182 Green finance is just one of many exciting new areas of green growth. As I mentioned just now, there are many more such opportunities across every sector of the economy. We aim to move Singapore into the forefront of green technologies – where new innovations are developed, trialled, scaled-up and eventually exported to the rest of the world. We will work hard to grab first-mover advantage and develop new engines of growth in the green economy.
  8. 183 Another important pillar of the Singapore Green Plan is to transform our living environment, and make it a greener and more sustainable home, and a beautiful city in nature for all to enjoy.
  9. 184 One aspect we have been focusing on is transport. We aim to be a car-lite city, supported by a comprehensive public transport network, which is the cleanest and most energy-efficient mode of transport. This is why we are maintaining our policy of zero growth rate for private vehicles – we are perhaps the only city in the world which has taken this bold step.
  10. 185 For those who wish to drive, we want their vehicles to be cleaner. Hence, we had announced our intention to phase out internal combustion engine vehicles by 2040. For passenger vehicles, the most promising clean energy option is electric vehicles or EVs. We have provided significant incentives for EV adoption. In fact, within a year, the EV share of new car registrations has jumped from just 0.2% in 2020 to around 4% last year.
  11. 186 Given this momentum, we will further accelerate EV adoption by building more charging points closer to where we live. To do this, infrastructure upgrades will be necessary, and the financing can come from green bonds.
  12. 187 Mr Deputy Speaker, Singapore is fully committed to doing our part on the global climate change agenda. Various Ministers will elaborate more on our efforts under the Singapore Green Plan at the COS, because this is truly a Whole-of-Government effort. In advancing our green transition, we will strive to be a bright green spark and to secure a more sustainable future for ourselves and for the world.