Carbon tax needed in drive to stay competitive: Masagos

(From left) Singapore Refinery technical manager Lai Man Wai, Environment and Water Resources Minister Masagos Zulkifli, ExxonMobil Asia Pacific chairman and managing director Gan Seow Kee, Singapore Jurong Cogeneration project executive Moiz Husain
(From left) Singapore Refinery technical manager Lai Man Wai, Environment and Water Resources Minister Masagos Zulkifli, ExxonMobil Asia Pacific chairman and managing director Gan Seow Kee, Singapore Jurong Cogeneration project executive Moiz Husain and Singapore Refinery process manager Neo Ee Ee at ExxonMobil's new cogeneration plant.PHOTO: EXXONMOBIL ASIA PACIFIC

The upcoming carbon tax may be a bitter pill to swallow, but it could pay off in a more energy-efficient global economy, said Minister for the Environment and Water Resources Masagos Zulkifli.

The levy on big greenhouse gas emitters announced in this year's Budget is meant to nudge the industry to adopt cleaner, better practices, he noted.

Mr Masagos told a petrochemical industry audience yesterday: "We are aware of industry concerns over the impact of the carbon tax on competitiveness, given that Singapore is an export-oriented economy.

"But precisely because Singapore is an open, globally connected and export-driven economy, our companies must stay ahead to stay competitive."

Mr Masagos was speaking at the opening of energy giant ExxonMobil's third cogeneration plant here.

The facility in Pioneer Road uses both natural gas and waste heat from refinery operations to produce power and steam for ExxonMobil's integrated refinery and petrochemical complex.

The facility in Pioneer Road uses both natural gas and waste heat from refinery operations to produce power and steam for ExxonMobil's integrated refinery and petrochemical complex. It is expected to cut the company's net carbon dioxide emissions here by 265 kilotonnes a year.

It is expected to cut the company's net carbon dioxide emissions here by 265 kilotonnes a year, equivalent to taking more than 90,000 cars off the roads.

With the new plant online, ExxonMobil's integrated complex here - its largest globally - is now almost entirely self-sufficient in meeting its energy needs.

Economic Development Board executive director Damian Chan said in a statement that the fresh investment "reflects our emphasis on growing the energy and chemicals industry in a competitive and sustainable manner".

Mr Masagos noted Singapore has pledged to bring its emission intensity down by 36 per cent from 2005 levels - a vow made despite the country contributing just 0.11 per cent of the world's carbon emissions.

"Action on climate change is a shared global responsibility," he said. "Despite the uncertainties in global climate leadership after the US' announced withdrawal from the Paris Agreement, Singapore will continue to work with all other small states and major economies to stay the course."

Mr Masagos later said national energy efficiency gains are "far, far below the targets that we have set for ourselves", standing at between 0.4 per cent and 0.6 per cent.

Projections show that an annual improvement of 1 per cent to 2 per cent a year will be needed, he said, calling a carbon tax "a very big thrust in achieving our commitments" under the climate deal.

He acknowledged that many companies "are concerned about the cost that will be imposed on them" by the carbon tax, slated to start in 2019. A rate of between $10 and $20 for each tonne of gas emissions has been floated, and 30 to 40 greenhouse gas producers - such as power stations - are expected to be hit.

But as the world makes an effort to shrink its carbon footprint, "we'd all better ready to be competitive", Mr Masagos said.

"One way to do that is to ensure that we put in processes that produce less gas and also use less energy," he added.

"And if we do not prod the industries to do so, I don't think we'll take the proper steps forward."

A version of this article appeared in the print edition of The Straits Times on October 13, 2017, with the headline 'Carbon tax needed in drive to stay competitive: Masagos'. Print Edition | Subscribe