THE CASE OF THE CARBON TAX
As nations scramble to tackle climate change, the carbon tax should encourage companies to reduce their use of fossil fuels – which release large amounts of carbon dioxide when burned – to avoid paying taxes and turn to renewable energy, experts said.
It’s “the most direct and efficient way to set the price of air,” said Dr. Thomas. It also provides a substantial source of revenue to invest in renewable energy, he added.
Nevertheless, the effectiveness of the carbon tax depends on its rate, which must be high enough to incentivize companies; the time given to industries to adapt to the tax; and the availability of green technologies that industries can exploit, experts said.
Dr Thomas said experience from other countries has shown that a strong reduction in emissions usually occurs when the rate exceeds S$25.
He suggested that Singapore delay the revised rates until the mid-2020s rather than 2030, given the “very immediate” cost of climate change, such as sea level rise and weather changes.
Professor Euston Quah, an environmental economist at NTU, however, argued for carbon tax adjustments to be spread over a longer period, beyond 2030.
He highlighted the constraints Singapore faces in switching to renewable energy. The use of solar energy, for example, is hampered by limited space, while harnessing energy sources through an international grid or pipeline would present energy security issues.
A longer track with less drastic increases in carbon tax prices would give businesses time to adjust to the changes, said Albert Winsemius Professor of Economics Prof Quah.
WHAT COMPANIES ARE DOING
Large emitters subject to the carbon tax said they had already put in place various decarbonization measures to reduce their emissions over the past decade.
Ms Geraldine Chin, president and chief executive of oil company ExxonMobil Asia Pacific, said the company has launched a series of initiatives since 2002, which have led to energy efficiency gains of more than 25% and reduced carbon emissions from its Singapore facility.
These initiatives include the operation of three cogeneration facilities that simultaneously produce electricity and steam. Cogeneration recovers thermal energy after the production of electricity to produce steam.
The steam is then used for operations at the ExxonMobil plant in Singapore. This process requires less fuel and emits less carbon than if steam and electricity were produced separately.
Ms Chin said her Singapore team was also working on a detailed emissions reduction roadmap to deliver on the company’s ambition to achieve net zero greenhouse gas emissions of its assets operated by 2050.
She added that ExxonMobil has long supported an explicit price on carbon and added that a stronger carbon price signal from the government encourages investment in reducing greenhouse gases.
However, given Singapore’s open economy, it is also important that the carbon tax framework safeguards the competitiveness of trade-exposed industries. They compete with other industrial facilities around the world that have no or a lower price on carbon domestically or on their exports, Ms Chin said.
German chemicals company Evonik, which is headquartered for its Southeast Asia, Australia and New Zealand operations in Singapore, said it also takes climate and environmental protection “extremely seriously”.
Among its efforts to reduce its emissions is a bespoke power supply solution for its methionine plant on Jurong Island, which gives it complex control over energy management and maximizes energy efficiency. to reduce carbon emissions.