Emitters are working to improve energy efficiency to deal with impending carbon tax hikes
SINGAPORE: To cope with further carbon tax hikes coming into effect in the coming years, major emitters say they will continue to improve energy efficiency, among other initiatives, to reduce their emissions.
Singapore’s carbon tax rate will rise from S$5 per tonne of emissions to between S$50 and S$80 by 2030, as part of more ambitious climate targets announced as part of Budget 2022 on Friday 18 February.
The rates will first be increased to S$25 per tonne of emissions in 2024 and then to S$45 per tonne in 2026. The tax is currently applied to installations that directly emit at least 25,000 tCO2e of greenhouse gas emissions. greenhouse effect (GHG) per year.
DBS senior economist Irvin Seah said it would create a “significant impact” on the economy, particularly for the power generation, manufacturing, aviation and ground transportation sectors. This in turn could be passed on to consumers in the form of higher prices, he said.
One such large emitter CNA spoke to, power producer and power retailer PacificLight, said the increases will certainly have a “direct impact” on operating costs.
But it will achieve this by optimizing the efficiency of its production equipment, CEO Yu Tat Ming said.
Mr Yu said the company had invested more than S$5 million in improving the plant’s efficiency since 2013, which helped reduce its emissions by 1.5%.
It will also upgrade its plant next year with “the region’s first-ever Advanced Turbine Efficiency (ATP) package”. This will bring the total carbon reduction to 40,000 tonnes per year, equivalent to providing carbon-free electricity to more than 20,000 Singaporean households, he said.
In addition, PacificLight has received a license in principle for a solar import pilot project from Indonesia to Singapore, which will reduce carbon emissions by more than 357,000 tonnes per year, Yu said.
As part of Friday’s budget announcement, companies will also be allowed to use “high quality” international carbon credits to offset up to 5% of their taxable emissions from 2024.
Yu said PacificLight, which has been trading carbon credits since 2014, will likely use these offsets to optimize costs.
SUPPORTING AN “EXPLICIT PRICE” FOR CARBON
Oil company ExxonMobil told CNA it supports an “explicit carbon price to establish market incentives” and provide the clarity needed for investments.
It even set its own goal of achieving net-zero emissions from its operated assets by 2050, a company spokesperson said.
“We are taking a holistic approach to developing detailed emissions reduction roadmaps for our major operated assets, including our integrated manufacturing complex in Singapore.”
But given that Singapore has an export-oriented economy, he also noted the importance of ensuring that the carbon tax framework “maintains the competitiveness of trade-exposed industries”.
As for oil company Shell, the company “has always been in favor of putting in place a direct price on carbon emissions” as part of a broader framework for net zero emissions, a doorman said. -talk to CNA.
He also welcomed news that authorities will use much of the carbon tax revenue to help companies invest in low-carbon technologies.
“It’s essential because the short-term impact on competitiveness is real,” he said.
He noted that Singapore exports most of its energy and chemical products and has to compete with other countries that either don’t have carbon pricing policies or have “sophisticated mechanisms” to help their trade-exposed industries stay competitive. , if they do.
Shell added that it is transforming its business, moving away from traditional fuel production and instead moving into businesses such as circular chemical production.