Higher carbon tax meant to alert firms that emissions have explicit cost, impacting environment: Grace Fu

Singapore's carbon tax currently applies to all facilities producing at least 25,000 tonnes of greenhouse gas emissions in a year. PHOTO: STEPHANIE YEOW

SINGAPORE - The newly announced carbon tax hike is meant to send a signal to companies that carbon emissions have an explicit cost because of their impact on the environment, said Minister for Sustainability and the Environment Grace Fu on Saturday (Feb 19).

"Producers of such greenhouse gases need to price in (the carbon tax cost) when they are making their business decisions," added Ms Fu.

Explaining the rationale behind the tax hike, she said she hopes the higher and adequate amount will tip the scales towards environmental sustainability "rather than put a zero price or $5 at this moment".

She added: "Businesses in the petrochemical, pharmaceutical or semiconductor sectors will then price (the costs) in and say, 'If I need to pay x amount because of carbon emissions over the next six, eight, 10 years, maybe it's worthwhile for me to install some equipment that will be of higher energy efficiency, or capture some of the carbon dioxide that has been emitted, so that I can reduce my carbon tax bill.'"

She was speaking at a panel discussion at the Singapore University of Social Sciences (SUSS) after the university tied up with the Singapore Scout Association to develop green initiatives for its students and help them hone leadership skills in the sustainability scene.

In his Budget speech on Friday, Finance Minister Lawrence Wong said Singapore's carbon tax rate will be raised from the current $5 per tonne of emissions to between $50 and $80 by 2030 to help the country reach net-zero emissions by or around 2050.

The current rate will be in place until next year. It will go up to $25 in 2024 and 2025, and $45 in 2026 and 2027, before reaching $50 to $80 per tonne by 2030.

Singapore's carbon tax currently applies to all facilities producing at least 25,000 tonnes of greenhouse gas emissions in a year. They include 30 to 40 large emitters such as oil refineries and power generation plants.

They contribute 80 per cent of Singapore's greenhouse gas emissions.

Ms Fu added that the Government will use the carbon tax collection to incentivise companies to adopt carbon-reduction measures.

For instance, if a small or medium-sized enterprise wants to install an energy-efficient chiller or air-conditioner, it can apply for energy grants from the National Environment Agency (NEA), she said.

The Government also intends to introduce more grants to encourage companies to reduce their energy usage, she added.

On Saturday, Ms Fu witnessed the inking of a memorandum of understanding between SUSS and the Singapore Scout Association.

Minister for Sustainability and the Environment Grace Fu (centre) speaking at a panel discussion covering the topics of Green Economy and Jobs, on Feb 19, 2022.

They will develop an educational programme of courses, workshops and community projects to help young people in Singapore understand the United Nations' Sustainable Development Goals (SDGs).

The collaboration, which kicks off next month, will prepare young people for the emerging green economy through education, research and community outreach, said SUSS in a statement on Saturday.

Under the programme, they will take short sustainability-related modules, such as on using new technology to further the green movement. SUSS students will also do more community service, which is already a graduating requirement for all full-time undergraduates.

They are also encouraged to initiate and co-create green projects with the community, said SUSS president Cheong Hee Kiat.

The SDGs comprise 17 global ambitions, such as ensuring water security and combating climate change impacts, which are intended to be achieved by 2030.

Ms Fu noted that next year, the UN will review the SDGs and tell countries what further improvements they need to make to meet the global goals.

SUSS' new programme will be spearheaded by its Centre of Excellence for Social Good.

The centre's director, Professor Ang Hak Seng, said SUSS students are equipped with knowledge on how to change people's behaviour and mindsets for the better.

He envisions students working with the scouts to organise community competitions and games to encourage more seniors to recycle, for instance.

If students need funding for projects, they can tap resources such as the SG Eco Fund or the National Youth Fund, said Ms Fu.

The $50 million SG Eco Fund was launched in November 2020 by her ministry to support ground-up projects that advance environmental sustainability in Singapore.

This story has been edited for clarity.

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