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TODAY: S$5 per tonne tax rate ‘fair amount’ to pay for greenhouse gas emissions: Masagos

By Siau Ming En

The initial carbon tax of S$5 per tonne of greenhouse gas emissions imposed on large emitters is a “fair amount”, and was decided after considering the industry’s compliance costs, among other factors, said Environment and Water Resources Minister Masagos Zulkifli on Thursday (Feb 22).

The initial tax rate will also help affected businesses transit into the carbon tax regime, and give them time to adjust and comply, said Mr Masagos, who spoke to reporters on the sidelines of the opening of a green classroom at Bukit View Secondary School.

In his Budget speech in Parliament on Monday, Finance Minister Heng Swee Keat announced that large carbon emitters who produce 25,000 tonnes or more of greenhouse gases annually will be taxed S$5 for each tonne of emissions from next year to 2023. This will be increased to between S$10 and S$15 by 2030.

The carbon tax will apply to about 30 to 40 of the largest emitters in the power generation, petroleum refining, chemicals and semiconductor sectors, which account for about 80 per cent of Singapore’s emissions.

Mr Masagos said they had consulted the industry and arrived at the S$5 per tonne rate, which is lower than the S$10 to S$20 rate first announced by the authorities last year. They also wanted to make sure that the cost of compliance is comparable to the tax they will have to pay.

The businesses had also asked the authorities to be transparent about the tax rates in the long run, among other reasons, which is why they have set a flat carbon tax rate that will apply to all sectors, with no exemptions, he noted.

“We took into account that these companies need to transit into the future where they will need time to change their processes, improve their emissions, so that when the tax actually takes place at a higher rate… they (would) already have reduced (their) emissions,” he added.

Businesses will also need time to comply with the requirements under the carbon tax regime, as well as to adjust to them during this period of transition, he said.

“I think by giving them five years to adjust and also getting used to the compliance regiment of this carbon tax, S$5 is a fair amount to put to our companies,” said Mr Masagos. In jurisdictions where there is a high carbon tax, he noted that exemptions are also made for certain industries where the tax rates are lowered such that it is no longer as effective.

While there is concern about the projected carbon tax rates after 2030, Mr Masagos said that timeline is still “too far away”. Reiterating that companies will pay between S$10 and S$15 by 2030, he added that this is “depending on many factors, including competitiveness as well as the level playing field we will like to see around.”

When asked if more regular and detailed data on Singapore’s emissions,including those of individual emitters, will be published, Mr Masagos said the carbon pricing bill has to be passed in Parliament so that the authorities can get a clearer picture of how much greenhouse gas each large emitter produces and how to nudge them to do better.

In the draft carbon pricing bill released for public consultation last October, large emitters will have to register themselves as a taxable facility. The National Environment Agency will determine the number of carbon credits they have to surrender based on the emissions report they submitted for that year, which must be verified by an independent third party.

Such data will not be released publicly but the Ministry of Environment and Water Resources (MEWR) will continue to release key environmental statistics annually.

For instance, the most recent publication last year showed Singapore’s total annual greenhouse gas emissions for 2014 and 2015, which were recorded at about 50 million and 51.4 million carbon dioxide-equivalent tonnes respectively.

There is a more comprehensive emissions report published in 2012, which was submitted to the United Nations Framework Convention on Climate Change two years ago. Updated figures will be released at the end of this year.

Dr Sanjay Kuttan, programme director at Nanyang Technological University’s (NTU) Energy Research Institute, said more data on Singapore’s emissions will help with innovation, where specific innovation can be targeted at areas or processes that can be more efficient.

Associate Professor Toh Mun Heng from the National University of Singapore Business School said the amount of information to be made publicly available has to be balanced between allowing businesses to remain competitive, and to be accountable to the public.

Given that the large emitters will have to submit more of such data to the authorities, the Government has to be the “honest broker” to monitor the emitters’ emissions levels and their impact on the environment and the public, he added.

Copyright 2018 MediaCorp Press Ltd. Article first appeared in TODAY on 23 February 2018.

Last updated 23 Feb 2018

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