Session 5 presentation from the 4th Strategic Dialogue of the Carbon Market, 15-16 May 2019

1. Informational Barriers to
Carbon Pricing:
Singapore’s Experience
Carbon Market Platform
15/16 May 2019

2. 2
Export-oriented and
Open Economy
• Lack of natural resources
and hinterland
• Manufacturing as one of
our twin engines of
growth
Dense Urban Landscape
 Low-lying, highly
urbanised island-state
 Accommodate housing,
commercial centres,
air/sea ports, etc.
 High population density
of 7,650 per km2
Limited Alternative Energy Options
 Unfavourable climatic conditions for large scale
deployment of hydro, wind and geothermal
 Solar energy is the best option but limited by
intermittency and land constraints
 95% electricity generated from natural gas
Singapore’s National Circumstances

3. 3
Carbon tax from 2019
• Tax rate set at S$5/tCO2e for transition period between 2019 and 2023
• Tax rate to be reviewed in 2023 with increased rates of between S$10/tCO2e to $15/tCO2e by 2030
Singapore’s Key Mitigation Actions

4. • Singapore’s GHG emissions for 2014 totaled 50.9 MT
CO2e (about 0.1% of global emissions); industrialised
only in 1980s
• Small, low-lying island city-state, Singapore is vulnerable
and are already facing the effects of climate change
• Needs to be responsible global citizen; global approach
best chance to avoid worst effects of climate change
In our interest to address climate change
#1 Need to Act on Climate Change
Based on Second National Climate Change Study (2015); for the period of 2070 – 2099 (relative to 1980-2009)

5. 5
• Demonstrate that carbon pricing is a cost-effective mitigation measure
• International platforms e.g. PMR, CPLC
• Bilateral consultations with regional countries exploring carbon pricing
• Co-hosting events aimed at building carbon pricing capabilities and cooperation (e.g. Asia Pacific Climate
Week 2018, Asia Pacific Carbon Markets Roundtable 2019, Innovate4Climate 2019)
• Led forums to galvanise climate action in the region
• ASEAN Working Group on Climate Change, Special ASEAN Ministerial Meeting on Climate Change, CPLC
Singapore Chapter
Singapore can play a catalytic role in the region
#1 Need to Act on Climate Change

6. #2 Impact on Competitiveness
• Regular engagement gives
advance notice and reduces
regulatory risks
• Started studying carbon pricing
early in 2007
• Yearly conversations with large
emitters, and regular
consultation with broader public
on the role of carbon pricing in
our climate strategy
• Emissions reduction projects
take time to plan and execute
• Introduced Energy Conservation
Act in 2013
Long history of preparation and consultation

7. • Low tax rate for initial 5 years for companies to implement energy and carbon efficiency improvement
measures; carbon tax rate review will take into account international competitiveness concerns
• Carbon pricing more cost-effective compared to regulations or mandates
• Improving resource efficiency also improves competitiveness, especially for carbon intensive
companies
• Carbon tax is not a revenue generation exercise
• Carbon tax revenue are recycled to fund emissions reduction efforts, including enhancement of energy
efficiency incentives (supports up to 50% of eligible costs, from previous 30%)
• Prepared to spend more than the carbon tax collected to support worthwhile projects
Transition period to help companies adjust and improve energy and carbon efficiency
#2 Impact on Competitiveness

8. #3 Impact on Cost of Living
• Transparent and upfront communications on the potential impact of carbon tax
• Increase in electricity prices around S$0.2 cents/kWh (or ~1%) increase from tariffs
• Small compared to historical quarterly fluctuations of up to 10%
• Pricing carbon is in line with philosophy for right pricing of scarce resources
• Transitional assistance for households to adapt to the carbon tax; energy saving from best practices
such as adopting energy efficient household appliances can more than offset carbon tax
Impact is modest and manageable

9. #4 Abatement Benefit
• Carbon tax trajectory encourages emitters to internalise carbon constraints
• Impact on large emitters
• Clean tax system
• Revenue recycling

10. Thank You