Singapore to implement carbon pricing

February 18, 2017 by  
Filed under Insights

Now that Singapore will be implementing carbon pricing, the first question is whether it would be in the form of a carbon tax or a cap and trade system?

Carbon tax allows price certainty but uncertainty in emissions reduction. Easier to implement and price certainty is good for businesses. But usually tax increase is not favoured politically.

Cap and trade allows more certainty in emissions reduction but price can become volatile. Not easy to implement, need an agency to set up an emissions trading system.

I favour the straightforward carbon tax. Regardless of the type of carbon pricing – either carbon tax or cap and trade, what matters is that it is a well-designed system that can ensure that the necessary emissions reduction is achieved while providing certainty to businesses (in this economic downturn).

The second question is whether business and living costs would go up. I’m not too worried about this because the revenue from carbon pricing can be used to offset cost increases, in the form of reduced business tax, tax credits, household rebates, etc.

The third question is the scope and timeline for implementation of the carbon pricing. I think it would start with big emitters, likely those companies under the Energy Conservation Act, since they are already taking action to reduce emissions. I think carbon pricing would take at least 2 years or earliest 2020 before it kicks in, considering the need for legislation change, consultations, setting up the system, and considering the current economic downturn.

Just my preliminary thoughts, more details on the carbon pricing will be announced by the government soon.

Singapore Preparing For a Smart Energy Economy

November 1, 2010 by  
Filed under Insights

Prime Minister Lee Hsien Loong delivered the annual Singapore Energy Lecture this morning at the 3rd Singapore International Energy Week (SIEW). PM Lee spoke about how Singapore is preparing for the new energy future amid uncertainties in future energy prices, a global regime on climate change, and new technologies. Singapore’s challenge is to have energy that is cost-competitive, secure, clean and sustainable. PM Lee outlined four key strategies towards a smart energy economy:

1. Promote Competitive Markets

To promote competitive markets, Singapore will price energy properly and avoid subsidies for households and businesses, and foster competition in the production and supply of energy so as to increase efficiency. PM Lee also said that Singapore should work through the market to cut carbon emissions as pushing for efficiency is limited due to the rebound effect. Therefore, there is a need to impose a charge on consumers to induce them to change their behaviour, and the best approach is to apply a carbon price, whether through a carbon tax or cap and trade scheme. Read more