SINGAPORE - A carbon tax will soon be implemented to spur large emitters to become greener in their operations. But industry players say the need to conserve energy has to filter down to consumers too.
This was the view of Mr Yu Tat Ming, chief executive of power generation company PacificLight Power, who said: "The purpose of the carbon tax is to reduce Singapore's overall emissions. It sends a signal to large emitters that they need to become more efficient in their operations, but the green message should be reinforced among end users too."
Citing the example of how a water conservation tariff forms part of a household's water bill, he said there should be a similar tariff to promote energy conservation.
Mr Yu was speaking on Tuesday (Jan 23) at a pre-Budget consultation session on the carbon tax, organised by the Ministry of the Environment and Water Resources (Mewr) ahead of the Budget on Feb 19, when details of the carbon tax are expected to be revealed.
Mr Yu was among 44 participants from 40 different organisations, including industry players, non-government groups and academics, who were at the consultation. It was also attended by Minister for the Environment and Water Resources Masagos Zulkifli.
Speaking to the media on the sidelines of the event, Mr Masagos said: "Inevitably, a carbon tax imposed on power generation companies, which generate electricity, will somewhat trickle down into the economy."
But he added that the Government will look into implementing mechanisms to ensure that costs are not excessively passed on to consumers. One way to do this would be to promote competition in the industry, or encourage companies to look into cleaner alternatives such as solar power, Mr Masagos said.
Plans to impose a carbon tax of between $10 and $20 on each tonne of greenhouse gas emission was first floated at last year's Budget. The tax will be applied on power stations and other large direct emitters which produce more than 25,000 tonnes of carbon dioxide equivalent of greenhouse gases a year. There are currently 30 to 40 of such large emitters, mainly from the petroleum refining, chemicals and semiconductor sectors.
During Tuesday's session, industry players acknowledged that while a carbon tax is necessary to help Singapore meet its climate targets under the Paris Agreement, it should be implemented in a way that will not erode competition.
Among the suggestions given was the channelling of revenue raised from the carbon tax into a kitty that could be used to fund energy-efficiency initiatives or research into green technologies, or given as incentives to companies that do well.
Mr Edwin Khew, chairman of the Sustainable Energy Association of Singapore, said revenue collected by the Government from the carbon tax could be in the range of $300 million to $600 million a year. "This money can be used to incentivise those that need to improve in terms of energy efficiency, or help them invest in new equipment and new processes."
Asked if this would be fair to companies that are comparatively more energy efficient, Mr Khew said the focus should be at the national level, instead of individual companies. "Ultimately, this would make companies with less efficient plans more competitive, and help keep jobs in Singapore."
Another suggestion was for industry-specific benchmarks to be set for the large emitters, which span a range of industries, including petrochemical, pharmaceutical and generation companies. This would give each company greater clarity on how much to reduce their emissions by, instead of relying on national level projections.
Under the Paris Agreement, Singapore has pledged to reduce its emissions intensity by 36 per cent from 2005 levels, come 2030. Emissions intensity is the amount of greenhouse gases emitted to achieve each dollar of gross domestic product. Singapore has also pledged to stop any increase to its greenhouse gas emissions by around 2030.
The industrial sector produces about 60 per cent of Singapore's total greenhouse gas emissions, which is why the Government has rolled out a raft of measures - including the imposition of a carbon tax - to force large emitters to go green.