Towards a Low-carbon Society (Motion)
Mr Louis Ng Kok Kwang (Nee Soon): Sir, it is too hot and too wet! If you recall, this was what I said one year ago, when this House came together to declare climate change a global emergency. Yet, somehow, the world has become even hotter and even wetter. July 2021 was the world’s hottest month. Regions, from sunny California to snowy Siberia, faced their largest wildfires in history. The Arctic hit a record high of 38 degree Celsius. Catastrophic floods struck India, Europe, Malaysia, Australia and China. In China’s Henan province, a year’s worth of rain fell in a single day.
And it is not just heat and rain either. Extreme winter weather left nearly 10 million people in the US without power and water. It killed 318 people and caused nearly US$200 billion of damage, making it the deadliest and costliest natural disaster in US history.
The science is clear: climate change will increasingly usher in extreme weather and throw lives and livelihoods into disarray. As an open country, Singapore will undoubtedly be hit hard. This is a grim picture and we are running out of time.
This is why my fellow GPC Members and I have returned to this House just one year later to call again for the Government to take further steps to tackle climate change, to sharply reduce Singapore’s carbon emissions and urgently move towards an inclusive low-carbon society. We are not alone in this fight.
As the climate crisis worsens, the people of Singapore have taken up the fight in their personal and professional lives. I shared the stories of some of these inspiring individuals in this House last year, including Esther, Lastrina, Xiang Tian and Wei Shan. I am happy today to share more about what they have done to further the fight against climate change and I am happy they are up in the gallery, joining us in Parliament for this important debate.
Let me start with an update on Esther, the Chief Sustainability Officer of City Developments Limited. Last year, I shared how it really is not common to see a business leader advocate about climate change like she does and how despite all her time working with titans of the industry, her inspiration comes from youths. She continues to walk the talk. This past year, she attended COP26 in Glasgow as a private sector representative with our activists. At COP26, Esther proudly flew Singapore’s flag and spoke at the Built Environment Leaders Panel, a main stage event.
But it is not just at COP26 where Singapore’s activists and business people stand together. Back home, Esther led CDL’s partnership with young activists from the Singapore Youth for Climate Action, or SYCA. Together, CDL and SYCA launched a campaign called "Keep Calm and Love Our Planet". Climate change can feel too big, too difficult a problem for the youths of the world. The campaign aims to dispel the sense of paralysis and instead motivate youths to take action against climate change. If you have not spoken to Esther before, I strongly encourage you to do so. She is a breath of fresh air, overloaded with enthusiasm and passionate about working together with our youths to save this planet we call home.
And this brings me to the young leaders at SYCA – Lastrina, Cheryl, and Swati, who Esther works closely with. Last year, I shared how Lastrina co-founded SYCA in 2015 to shine a light on what young people can do for the environment. Her message is one of empowerment. I am happy to share that SYCA celebrated their sixth birthday in November last year. With this milestone, other leaders have stepped up. Lastrina has empowered and inspired many others and this movement has grown.
Two of the leaders at SYCA are Cheryl and Swati. Passionate about fighting climate change, they attended COP26 as youth representatives. But their journey to COP26 was full of challenges, involving complicated logistics and fund-raising. Yet, their go-getter attitude exemplify exactly what we want to see from our youths today. They shared with me that, to quote: "We are cautiously hopeful because we are see changing mindsets and positive actions all around us. We have seen our peers push for change and encourage positive impact through conscious food choices, recycling and sustainable energy use. There are students, entrepreneurs, teachers, artists and individuals in various professions among us who work tirelessly to achieve this. They inspire us to keep going and empower other individuals who have this shared vision of this world."
Last year, I also shared the story of Xiang Tian, a young man who leads LepakInSG, a youth initiative that circulates environmental events to motivate others to get involved. One year on, Xiang Tian remains optimistic about what we can achieve through collective action. He told me: "One thing that makes me hopeful is the increasing number of people who are learning more about the climate crisis and other environmental issues and taking actions to push for change."
In the past year, LepakInSG has been active on social media, explaining the important environmental impact studies and baseline studies we have done. Importantly, Xiang Tian is still doing this infamously in his slippers, although I am aware he is finally not wearing his slippers today. He sacrificed them to be able to enter Parliament.
Sir, Xiang Tian's work makes these complex but important topics more accessible to the public and makes it easier for the public to get involved, such as in consultations on land use and development plans. Xiang Tian tells me that LepakInSG has exciting plans coming up to facilitate discussions between green groups in Singapore. I cannot wait.
We are also very fortunate that at the PAP Youth Wing, we also have young activists working tirelessly on climate change issues. Wei-Shan is one such activist, leading a team of volunteers who are passionate about making a serious difference. We have been on many late night calls with the YP team led by Wei-Shan. Last year I talked about the familiar sight of her two young children on our many Zoom calls. Like my daughters, they remain a regular and welcomed presence on our calls over the past year. Welcomed in most cases, except when my daughter Katie appeared completely naked when I was on a Zoom call listening to the Prime Minister’s National Day Rally live. I was horrified and I sure hope that no one, including the Prime Minister, saw.
Sir, Esther, Lastrina, Cheryl, Swati, Xiang Tian and Wei-Shan inspired us. Along them are countless other activists and citizens who have fought so hard against climate change in their own ways. Their call for action is loud and clear. I hope we can heed their call. In this spirit, I come to this House with three proposals: first, we should commit to achieving net zero emissions by 2050; second, we should increase the carbon tax to a price necessary to achieve net zero emissions by 2050; and third, we should expand coverage of the carbon tax to include all reportable facilities.
Let me start with my first ask. The Government should commit to achieving net zero emissions by 2050. I have pushed for this many times in this House now. Sir, 2050 is not just a random year. It is based on science; global emissions must be net zero by 2050 if we want to have any hope of limiting global warming to 1.5 degrees Celsius. Singapore’s current commitment is to reach net zero as soon as possible after 2050. This runs not just against what science say is needed, it runs against what many other countries are doing. Already, 136 countries have set concrete target years for carbon neutrality. This is 70% of all the countries. It includes nearly every developed nation in the world. Last year, the US, Australia and Israel also committed to reach net zero by 2050. What is stopping us?
I understand that the Government may want to focus on actions, not targets. And I do thank the Government for taking the right actions: releasing the Green Plan and for sharing how it will transform Jurong Island into a sustainable chemical and energy hub. But actions are motivated by targets. It will be harder to get to net zero by 2050 if we are not actually intending for that to happen.
In addition, setting a target in line with scientific and international standards set a strong message to Singaporeans. This would help the Government achieve what it says is needed: a whole-of-nation approach to climate change.
Last October, Minister Grace Fu said, “We will continually review and enhance our climate targets.” I thank the Government for its openness to revising its targets. Given the increasing severity of the climate crisis and the potential for sparking a whole-of-nation response, will the Government commit to reaching net zero emissions by 2050?
My second proposal today is that we increase the carbon tax significantly. There is no question that the carbon tax is the most powerful tool we have to slash emissions. Everything else – from green jobs to green financing that we are debating is important, very important. But the carbon tax has the highest potential to reshape incentives and motivate action. But our current rate is $5 per tonne. Finance Minister Lawrence Wong said last October that this is too low. I agree with him.
How high should it be to sufficiently slash emissions? One range from the High Commission on Carbon Prices, which is supported by the World Bank, proposed that US$50 to US$100 is needed by 2030. The IMF similarly recommends a rate of U$100 by 2030. Even higher prices have been suggested by LSE’s Grantham Institute, which proposes US$145 and the OECD, which provides a central estimate of U$147
My ask is that we look at the studies that have been done by these institutions and the principles for how they arrived at these prices. I hope we can adopt the principles and approaches to derive a price that Singapore needs to reach net zero emissions by 2050. An increase in the carbon tax will also mean an increase in tax revenue. I hope the Government will use this to help subsidise decarbonisation projects in the private sectors as well as limit the impact on lower-income Singaporeans by issuing more U-Save rebates or vouchers under the Climate Friendly Households Programme. Let us make this transition an inclusive one.
My third and final ask is that we expand the coverage of the carbon tax. Currently, carbon tax applies only to facilities emitting at least 25 kilotonnes of CO2-equivalent in a year. This covers around 50 facilities that contribute about 80% of our total carbon emissions.
We should be aiming for a higher coverage. I understand that the Government set a high threshold to limit compliance costs by smaller emitters. But smaller emitters, those emitting at least two kilotonnes of CO2equivalent, are already “reportable facilities” and have to pay the costs of monitoring and measuring their emissions.
Given that any additional compliance costs would likely be minimal, it would make sense for the carbon tax to cover all reportable facilities. This would, after all, be in the spirit of a whole-of-nation fight against climate change. Emitters, small and large, have a role to play.
In conclusion, let me summarise my proposals: first, the Government should pledge to achieve net zero emissions by 2050; second, it should increase the carbon tax rate significantly; and third, it should expand coverage of the carbon tax to include all reportable facilities.
The fight against climate change must involve decisive action. On the matters of net zero targets and carbon taxes, we need to move much faster. I thank the Ministries and agencies for their hard work so far in helping Singapore play its part in the global fight against an existential crisis.
Sir, during last year's climate change Motion, I spoke extensively about how Captain Planet, that children's cartoon, motivated me to care more for the environment. Through that sharing, I learnt that many people did not know who on earth Captain Planet is and that I really am getting old. But I am glad many went to find out about Captain Planet and the important message of protecting our planet.
Sir, let me end with a quote from Gaia, the spirit of Earth in Captain Planet, and I quote, "The feeling that one person can't make a difference is the greatest obstacle of all." Small as Singapore may be, I hope we can all believe in her ability to make a difference in the global fight against climate change.
Mr Gan Kim Yong (The Minister for Trade and Industry): Mr Deputy Speaker, I thank the Members for tabling today's Motion. Climate change is an urgent global concern and would require collective and coordinated global action to address, as the scale of effort needed to make a meaningful impact far exceeds what individual countries can achieve.
As a small island state, we are particularly susceptible to even small changes in global temperature, which will affect anything from sea level to weather patterns to food production and even supply of fresh water.
In fact, our journey towards sustainability started decades ago. Given our limited natural resources and the lack of a hinterland, we have been pushing the envelope to conserve and maximise critical resources such as land and water, and green our island even as we embark on industrialisation and urbanisation.
As a responsible global citizen, Singapore must also play our part in making our world sustainable. We launched a whole-of-nation movement, the Singapore Green Plan 2030 last year, outlining our plans towards a more sustainable Singapore.
However, as we make the transition towards a greener future, we will need to make trade-offs and accept changes to the way we live and work. For example, as businesses introduce greener methods of production, production costs may go up because of the use of greener materials or greener ways of disposing waste. Some may require significant investments in new and greener equipment or need technologies that are yet to be available. This may eventually translate to higher costs for consumers.
But as Prof Koh Lian Pin pointed out, we will be doing ourselves a disservice if we focus only on the higher costs in the short-to-medium term and lose sight of the larger and longer-term opportunities that sustainability movement brings.
We must continue to act decisively to prepare ourselves for these opportunities, while pacing our transition in a calibrated manner and managing the trade-offs and cost impact carefully, as Ms Poh Li San, Mr Liang Eng Hwa, Ms Foo Mee Har and Mr Derrick Goh pointed out.
Minister Grace Fu will speak about Singapore's planning ahead and acting decisively on green transition, including the ambitious steps that we are taking. I will elaborate on what we intend to do on the economic front.
Under the green economy pillar of the Singapore Green Plan 2030, we aim to do three things; first, capture green growth opportunities; second, transform our existing businesses and industries to integrate sustainability into their business models; and third, equip our workers with relevant skills so that they can benefit from green growth.
There are a number of exciting economic opportunities arising from the global movement towards sustainability that play to Singapore's strengths as a transport, advanced manufacturing, trading and financial hub. Several Members, including Mr Don Wee, Mr Gan Thiam Poh, Ms Nadia Samdin and Mr Henry Kwek, as well as Ms Mariam Jafaar and Assoc Prof Jamus Lim mentioned green financing; and Mr Saktiandi Supaat too.
As countries step up their efforts towards their climate change commitments, there will be growing demand for green financing, as well as investments into green technologies, infrastructure and businesses. Singapore has established itself as a trusted financial and business hub. We are well placed to capture emerging opportunities in green financing. In fact, we are already a market leader in Southeast Asia for sustainable debt. The sector is still evolving and there is great potential as demand for green finance continues to grow in the region.
The Monetary Authority of Singapore (MAS) has developed a holistic green finance action plan to support sustainable finance market development, strengthen the financial sector's resilience to environmental risks and standardise and enhance climate-related disclosures.
Mr Don Wee also asked the Government to consider issuing more green bonds. Yes, we are exploring opportunities to do so under MOF's Green Bonds Programme Office.
Carbon services and carbon credits will play an increasingly important role to help businesses and governments meet regulatory or voluntary climate goals. As Prof Koh Lian Pin, Mr Henry Kwek and Mr Saktiandi Supaat mentioned, we can build on Singapore's foundation as a trusted and deep commodities trading hub as well as the vast potential for the creation of nature-based credits in our region to become a carbon services and trading hub. In 2021, 13 international firms anchored and expanded their carbon services offerings in Singapore.
We are also working with like-minded partners to standardise the rules on cross-border transactions of credits and to build the infrastructure and processes to facilitate this. For example, arising from the efforts of the Singapore Emerging Stronger Taskforce's Alliance for Action on Sustainability, DBS, SGX, Standard Chartered and Temasek have set up the Climate Impact Exchange or CIX. CIX provides a carbon exchange and marketplace for companies to access high quality carbon credits. This exchange will have high standards of disclosure and emphasis on high quality carbon credits. This is how we can differentiate ourselves and avoid greenwashing problems mentioned by Assoc Prof Jamus Lim.
Over a longer timeframe, there are also opportunities in low-carbon technologies such as hydrogen, sustainable aviation and maritime fuels, smart electricity grids and sustainable foods. We are investing research and development resources into these areas which we would need for ourselves and we hope to build new economic engines in the process.
These new green activities are exciting, but they will take time to grow and mature. On the other hand, most of our existing enterprises will be affected by the green wave. This is because investors, lenders, customers and regulatory agencies will increasingly impose environmental requirements on these enterprises.
The impact will differ for different sectors and enterprises, depending on the nature of their businesses and operations. The impact is most significant for the largest emitting sectors such as the petrochemical industry.
We have been working with businesses in the sector to help them decarboniese. Last November, we released the Sustainable Jurong Island report, which outlines our plan to transform Jurong Island into a sustainable energy and chemicals park that operates sustainably and exports sustainable products globally.
Our aspiration is for the energy and chemicals sector to increase its output of sustainable products by four times from 2019 levels and achieve more than six million tonnes of carbon abatement per annum from low-carbon solutions by 2050.
The journey is a challenging one but we are determined to get there.
Our power sector, which provides electricity for both businesses and households is also a major emitter. MTI and the Energy Market Authority (EMA) are therefore embarking on energy transition plans to decarbonise electricity production.
We are accelerating solar deployment and plan to import up to four gigawatts of electricity by 2035.
Mr Gerald Giam asked about the subsidies for solar deployment, especially for the private property. We do not have subsidies for solar deployment as solar is already cheaper than our retail electricity and there is already incentive for them to do so. However, EMA has schemes to facilitate the sale of excess electricity to the grid and we will continue to help and support them.
We will also develop and tap on low-carbon solutions, such as hydrogen and carbon capture utilisation and storage (CCUS), when these become more viable. In addition, we will work with generation companies to enhance the efficiency of our power generation systems. But lower emitting businesses will also need to incorporate sustainability as an integral part of their business and embrace sustainability as a competitive advantage.
For example, more tourists and international conferences now require that countries and hotels they are visiting to have met certain sustainability standards. I am encouraged that a recent survey by the Sustainable Living Lab with Singapore Business Federation and other partners found that our SMEs recognise additional market opportunities, reputation improvements and cost reductions as the top three motivations for them to consider becoming more sustainable. I will explain later how we can provide a conducive environment to help our SMEs.
Our third aim is to equip our workers with relevant skills so that they can benefit from the green economy, as Ms Hany Soh, Ms Rachel Ong, Mr Dennis Tan and Mr Edward Chia highlighted. As the green economy develops, many green jobs will be created that will require new green skills. For example, a traditional car mechanic will need now to learn how to repair an electric vehicle. An internal combustion engine is very different from an electric motor. A power engineer will now need to learn about hydrogen, solar and other renewable forms of energies. An investment manager will need to learn about sustainability standards and green financing.
SkillsFuture Singapore identified the green economy as a growth area in their inaugural report on skills demand for the future economy. There are green job opportunities in many sectors, such as financial services, energy and power, built environment and manufacturing. There are also skills that are transferable across sectors, such as carbon footprint management and sustainability management. These skills can equip our existing workforce to take on new jobs or new roles in existing jobs in the new green economy.
Workforce Singapore (WSG) is working with partners to explore a broad-based career conversion programme (CCP) for sustainability professionals. This CCP will not only help companies nurture "sustainability champions" to kickstart their journey, but also support the transition of affected workers due to the greening of their jobs.
At the sectoral level, efforts are underway to build our talent pipeline.
WSG and Singapore Polytechnic have rolled out a new CCP for clean and renewable energy professionals in September 2021. Over the next two years, the new CCP will support the transition of up to 150 existing employees that are impacted and mid-careerists from other sectors into the clean and renewable energy-related jobs.
Separately, MAS is setting up centres of excellence for training and research in green financing. We have three such centres in Singapore – the Singapore Green Finance Centre by SMU and Imperial College Business School, the Sustainable and Green Finance Institute established by NUS and the Sustainable Finance Institute Asia. MAS will also be launching a new Sustainable Finance Technical Skills and Competency category in the Skills Framework for Financial Services. These efforts support our workers in building the relevant knowledge and skills which can, in turn, help anchor Singapore as a leading centre for green finance.
To achieve these ambitions, I agree with many Members that the Government needs to work in partnership with the private sector and the community. The Government's role is to provide an enabling environment to help businesses and workers take advantage of these opportunities. Our approach rests on five key pillars.
First, we will need to right-price resources through the carbon tax, which Minister Grace Fu will speak on later and which Mr Louis Ng also mentioned. The correct pricing will guide investment decisions and spur companies to decarbonise. But it will also come with higher costs for businesses and consumers. We should calibrate and pace the adjustment carefully to give companies sufficient time to adapt, put in place decarbonisation measures and stay competitive, as Members, including Ms Foo Mee Har and Mr Derrick Goh, mentioned.
A higher carbon tax will also have an indirect impact on households. The Government will consider how we can help ease the cost increase, especially for the lower-income households. For instance, when the carbon tax was first introduced in 2019, the Government provided additional U-Save rebates for three years to cover the expected average increase in electricity and gas bills from the carbon tax. We also subsequently introduced the Climate Friendly Households Programme to provide eligible households with vouchers to offset the cost of energy-efficient appliances.
Second, we will complement the carbon tax with financial support to help companies adapt. Last October, I announced the Enterprise Sustainability Programme (ESP) to help local businesses build capabilities in sustainability and capture opportunities in a green economy. The ESP is expected to benefit at least 6,000 enterprises over the next four years. It will support training workshops, capability and product development projects and key enablers, such as certification and financing. Several of these efforts will involve partnerships with the trade associations and chambers.
We will also leverage the green finance drive to provide another incentive for companies to become more sustainable. The Green and Sustainability Loan Grant Scheme (GSLS) that MAS rolled out in November 2020 encourages banks to develop green and sustainability-linked loan frameworks to make such financing more accessible to small and medium-sized enterprises to better support their transition to greener business models. The GSLS helps defray qualifying expenses incurred by businesses and banks.
Third, we are developing standards and accreditation to help companies assess and demonstrate their sustainability credentials.
To date, the Singapore Standards Council and the Singapore Accreditation Council have developed more than 50 national standards and 13 accreditation programmes supporting the green economy. Examples include standards in renewable energy, electric vehicles and food sustainability and resilience. We developed these standards in consultation with industry associations, professional bodies, Institutes of Higher Learning, research institutes and companies to ensure they are relevant and robust.
Singapore is also an active member of the two international standards setting bodies, the ISO as well as the International Electrotechnical Commission (IEC), at the technical and governance levels. For example, Singapore is involved in the development of new ISO and IEC standards in the areas of water efficiency management, waste terminology, solar, photovoltaic and circular economy.
At the governance level, Singapore also chairs the ISO technical management board that oversees some 300 technical committees, including in sustainability, such as for sustainable finance, circular economy and environmental management.
Fourth, we are helping our companies access green opportunities abroad through the Green Economy Agreements (GEA). The GEA comprises two key aspects. First, the GEA would set common rules and standards that would promote trade and investment in environmental goods and services. Second, the GEA would facilitate cooperation in areas, such as the scaling of low-carbon technology and pilot projects.
Negotiations with Australia are underway for the first of these GEAs. GEAs will build on and enhance Singapore's economic connectivity established through our extensive network of trade agreements. They will also strengthen international governance on trade and environmental sustainability and put us in good stead to contribute to international discourse on rules writing and standards setting in the global response to climate change.
Finally, we will partner companies to do research and development and testbed new green technologies and solutions, a point Mr Gerald Giam mentioned. This will help us build knowledge and develop capabilities and place us in a stronger position to capture green opportunities in the long run. For example, last year, we awarded $55 million to 12 projects under the Low-Carbon Energy Research Funding Initiative, which will see collaboration between research institutes and industry to develop low-carbon technologies, such as hydrogen and CCUS.
Mr Deputy Speaker, Sir, the sustainability movement is gaining momentum. There are challenges for our businesses in transiting to a more sustainable business model. There are also immense opportunities for our enterprises and workers in the rapidly growing green economy. The Government will help foster the right environment for businesses and workers to adapt to and take advantage of these opportunities.
As Ms Mariam Jaafar and Ms He Ting Ru mentioned, every one of us has a role to play to support the sustainability movement, do our part to conserve resources, minimise waste and opt for greener products and services. Sir, we look forward to continue working with the industry, businesses, workers and everyone on this exciting journey. On this note, Sir, I support the Motion.
Ms Grace Fu Hai Yien (The Minister for Sustainability and the Environment): Mr Deputy Speaker, I would like to thank you for allowing me to join in today's debate on this Motion. I would also like to thank Members, Ms Poh Li San, Mr Gan Thiam Poh, Ms Nadia Samdin, Mr Louis Ng, Ms Hany Soh and Mr Don Wee for sponsoring today’s Motion.
This Motion draws attention to the importance of developing Singapore’s green economy and ensuring an inclusive transition towards a low-carbon society. On behalf of my colleagues at MSE and across the Government, allow me to express our deep appreciation for the many good and fresh perspectives and constructive suggestions that Members have put forth, including those submitted by the Young PAP.
A year ago, this House passed a Motion declaring climate change a global emergency and a threat to mankind. The latest science has given even stronger evidence on the urgency for action. According to the Intergovernmental Panel on Climate Change (IPCC) report published last August, human influence has unequivocally warmed the climate.
Without strong and sustained reductions in greenhouse gas emissions, global temperature rise will exceed 2°C within this century, increasing the intensity and propensity of extreme weather events, such as floods, droughts and wildfires and accelerating biodiversity loss in every part of the world.
Some of these harsh realities are already being felt today, as seen by recent record-breaking floods in Southeast Asia, prolonged drought in South America, high temperatures and raging wildfires in North America, followed by extraordinary snowfall.
As a small, low-lying island in the tropics, Singapore is particularly vulnerable to sea level rise. Climate change is an existential threat to us.
One year on, our efforts to accelerate climate action and embrace sustainable development have grown stronger. Since the Singapore Green Plan 2030 was launched last February, agencies have made considerable headway. In the coming weeks, the five leading Ministries for the Green Plan will deliver updates on the progress of key initiatives and share their outlook and focus areas for the year ahead.
A similar "green awakening" is rapidly spreading across the globe. At the start of 2020, there were only 18 countries with net zero aspirations. Today, the number has grown to 84, including the world’s five largest emitters, accounting for almost 90% of global emissions and over 90% of global GDP. Despite the ongoing COVID-19 pandemic, countries have sought to incorporate sustainability and climate action in their recovery plans, laying groundwork for the transition to a low-carbon future.
Last November, I had the privilege of leading the Singapore delegation at the 26th United Nations Climate Change Conference (COP26). As the first conference of such a scale and scope since the pandemic, COP26 was a landmark opportunity to rally the world around the climate action clarion call. World leaders, businesses and civil society organisations came out in full force, emphasising the need to raise our collective mitigation ambition significantly in this critical decade.
COP26 had laid a firm foundation and accelerated the momentum for global climate action. A substantive and balanced package of decisions, known as the Glasgow Climate Pact, was forged through hard-earned consensus and compromise. Parties agreed to revisit their 2030 climate pledges, or Nationally Determined Contributions (NDC) and communicate Long-term Low Emissions Development Strategies (LEDS) towards net zero emissions, to align with the Paris Agreement temperature goal.
The Pact will scale up climate action and drive capability- and capacity-building efforts to keep a 1.5-degree climate change within reach. Singapore will do our part to meet our international obligations. We will review our policies and actions under the Green Plan, while managing our inherent constraints and trade-offs. We will also expand our options for reducing emissions through international partnerships and in step with global advancements in low-carbon technologies. We will review our targets and raise our climate ambition, and as Prof Koh Lian Pin highlighted, ensure that our targets are backed by the right strategies, policies and actions.
As a responsible member of the international community, Singapore has been working hard to support a multilateral rules-based approach to address climate change. Singapore, together with Norway, co-facilitated negotiations that brought the Article 6 rulebook across the finishing line, after six years of protracted talks. Article 6, which governs market and non-market cooperative mechanisms towards emission reduction, was the sole outstanding issue under the Paris Agreement Work Programme. The agreement on Article 6 clears the path for the establishment of mechanisms that facilitate the transfer of emission reductions, or carbon credits, we call it, between countries to meet their climate targets, while ensuring high standards of environmental integrity. For countries with limited domestic abatement potential such as Singapore, these mechanisms will present new pathways to raise ambition, as Ms Poh Li San mentioned.
At COP26, we also supported various global partnerships and initiatives aimed at raising global climate action. Singapore became the first country in Asia to join the Powering Past Coal Alliance to progressively phase out the use of unabated coal in our electricity mix by 2050. We endorsed the Glasgow Leaders’ Declaration on Forests and Land Use to affirm our collective commitment to sustainable land use. We joined various other voluntary coalitions, pledging to reduce global methane emissions, green government operations and cultivate climate-smart agriculture. Our membership in these coalitions will facilitate the sharing of best practices and collaboration with like-minded countries.
Singapore will continue playing a constructive role to sustain the momentum for global climate action and support fellow small states and developing countries to build capacity and achieve the Sustainable Development Goals.
Corporates are playing a critical role in driving the global transition. They are increasingly focused on Environmental, Social and Governance (ESG) issues, striving to do well and do good at the same time.
With greater demand from investors, activists and consumers, more businesses are paying attention to their triple bottom lines of Profit, People and the Planet, as Mr Edward Chia noted. The Glasgow Financial Alliance for Net Zero (GFANZ) has gathered more than 450 financial institutions with assets in excess of US$130 trillion, in the common pursuit of aligning their investment portfolios with credible net zero pathways. More than 5,000 companies worldwide have now joined the UN Race To Zero campaign, pledging to take immediate action towards achieving net zero by mid-century, publish clear action plans and submit regular progress reports. Among them are Singapore companies such as City Developments Limited (CDL), Olam International, Singtel and the Singapore Exchange (SGX). Greater private sector involvement will be a multiplier, bolstering our collective response.
Civil society and community organisations also play an instrumental role. As advocates, they raise awareness on the importance of climate action, and organise ground-up initiatives to rally the community for climate action and environmental sustainability. At COP26, I was glad to meet Singaporean representatives from a diverse range of backgrounds: academia, youth groups, businesses, NGOs. Like Mr Louis Ng, I was inspired by their passion and aspirations for a greener Singapore and the various projects and platforms they have mounted to make a difference. Esther, Cheryl, Swati, Xiang Tian, Wei Shan – these are all representatives of how much energy we have found in our corporate as well as our NGO people sector. Ms Hany Soh said many residents also take pride in championing sustainability initiatives through the Action for Green Towns initiatives.
Mr Deputy Speaker, the low-carbon transition is well underway. Going green is no longer an option, but a strategic transition we must undertake to thrive in a carbon- and resource-constrained future. The transition will have far-ranging implications on every facet of society, including our lifestyle and livelihoods.
This Motion is therefore timely, as we are building the necessary foundations for Singapore’s transition to a low-carbon society. The Government has every intent, as this Motion states, to partner the private sector, civil society and the community in turning our collective goals in the Green Plan into reality.
If we work together and make the right choices, the low-carbon transition can yield significant opportunities and rewards. It is in Singapore’s interest to secure an early foothold in emerging growth areas so as to reap valuable dividends and future-proof our economy. As Mr Liang Eng Hwa mentioned, the latent economic opportunities in Southeast Asia are immense, if the region maximises its potential to export innovative products and expands its green service offerings. Miss Rachel Ong also described vivid examples of innovation opportunities created by the global sustainability wave, which our youths and workers can participate in.
As with all transitions, there will invariably be disruptions and trade-offs. The Minister for Trade and Industry Mr Gan Kim Yong and several Members spoke about some of the structural challenges for large emitters in the hard-to-abate sectors, such as the petrochemical and electricity generation industries. Some businesses and households may have to brace themselves for temporary cost increases. Transition costs can also manifest in intangible ways, such as the inconvenience from changing our habits and the way we live, work and play.
Yet we must press on, for inaction will cost us even more dearly.
Without prompt and effective mitigation, the detrimental effects of climate change will be exacerbated. The IPCC reports that global mean sea level rise could reach up to one metre by 2100, if the world pursues a high emissions scenario pathway. While the direct impacts may be clear, the indirect costs, while less immediately apparent, can be even more significant, as Prof Euston Quah and Tan Jun Rui have argued in a recent Straits Times article. For example, floods can claim lives and damage infrastructure, but also displace local communities, raise food prices and disrupt critical supply chains.
With the accelerated global shift towards a low-carbon future, businesses which do not adjust face the risk of shrinking demand, stranded assets and becoming obsolete. A recent study by Standard Chartered Bank showed that eight in 10 multinationals plan to work exclusively with suppliers that are aligned with their low-carbon transition plans by 2025. It is, therefore, in the best interests of businesses, the economy and the nation at large to make this crucial transition.
Deputy Speaker, the transition to a low-carbon society will not be straightforward or a quick fix. To engender an effective and inclusive transition, we have our work cut out.
Mr Gan has spoken about the concrete steps we are taking to capture green growth opportunities, transform businesses and industries, and equip our workers.
Allow me to elaborate on a few other key areas raised by Members. First, raising carbon pricing; second, leveraging carbon markets; and third, strengthening corporate accountability.
First, carbon pricing. I note that Members from both sides of the aisle have spoken in support of the need for a carbon tax and for a higher carbon tax, either at this debate or at the debate last year. I am not sure if this assumption is correct; I tried to listen very carefully, I have not heard anyone asking to remove a carbon tax or asking for it to be lowered. So, I take it the assumption that the rationale for a carbon tax is supported by Members of the House on both sides of the aisle, and also the call for a higher carbon tax is an equally shared view by both sides of the House. So, if this assumption is wrong, please correct me.
We have heard a wide spectrum of views and proposals on this matter. Members such as Mr Louis Ng have spoken on the need for an appropriate carbon pricing policy that drives emissions reduction effectively. While others such as Mr Liang Eng Hwa, Ms Foo Mee Har argued for the need to preserve our competitiveness, to pace our increases, given the weakness of a post-COVID-19 recovery. This speaks to the complex and difficult considerations that influence our approach to carbon pricing. And let me explain our considerations.
The carbon tax is central to our climate mitigation strategy and complements our suite of abatement efforts across all sectors. By pricing the cost of CO2 emissions, the carbon tax enhances the business case to implement energy efficiency improvements and other emission reduction solutions. These shifts in decisions are vital to ensuring the long-term viability of business investments and activities in a carbon-constrained world.
Indeed, we observe that carbon-tax liable companies have accelerated the implementation of decarbonisation projects. The impact of a carbon price goes beyond current industries. It also ensures that Singapore attracts the right kinds of future investments that are aligned with our low-carbon vision.
Over time, a stronger price signal is needed to steer our economy towards a low-carbon future. This will tilt the scales further in favour of more innovative low-carbon technologies, driving companies to take bolder steps towards decarbonisation. This will also keep Singapore’s carbon tax trajectory in line with the broader international momentum on climate action and support the review of our climate targets.
As many Members have noted, the carbon tax should provide a broad-based pricing signal across the economy. That is indeed the approach we have taken, as Senior Minister Teo Chee Hean had explained at last year's Motion on Climate Change.
Our carbon tax covers about 80% of our total emissions. If we include the excise duties on vehicular fuel, more than 90% of our emissions are subject to a carbon price. This coverage is one of the highest in the world. But we must also balance the need to extend coverage against the potential administrative costs on businesses. Hence, we have taken the practical approach of setting the existing carbon tax threshold at 25,000 tonnes, which ensures that the carbon tax is applied at key nodes and then flows through to the rest of the economy. This reduces the administrative load on small emitters, especially SMEs, to measure, report and verify their emissions. We will, however, continue to encourage small emitters to track their carbon footprint on a voluntary basis and indeed, a growing number has begun to do so.
We agree with Mr Derrick Goh and Ms Foo Mee Har on the need to support companies along their decarbonisation journey with revenue from the carbon tax. In fact, for the first five years, we are prepared to spend more than we collect, to incentivise the adoption of energy-efficient processes and other worthwhile abatement projects, such as through the enhanced Resource Efficiency Grant for Energy (REG(E)) and Energy Efficiency Fund (E2F). Some of the carbon tax revenue is also used to manage the impact of the carbon tax on households.
Under the Research, Innovation and Enterprise (RIE) 2025 plan, we have channelled additional funds towards the research, development and demonstration of low-carbon technologies, such as hydrogen and carbon capture utilisation and storage though initiatives such as the Low-Carbon Energy Research Funding Initiative (LCER FI).
More broadly, we have also increased investments in the urban solutions and sustainability research domain to help us better understand the impact of climate change on Singapore and develop novel solutions for sustainability, such as protecting our coastline, finding cheaper ways of reducing emissions and keeping our homes and offices cool. And this is one point that Ms Mariam Jaafar has raised, about patient capital and investments in the long run, and the Government has been investing significantly in new technologies in the sustainability arena.
Over the past months, the Government has consulted businesses and engaged the public on the need for and the potential impact of a higher carbon tax, as part of our review of the post-2023 carbon tax level and trajectory. The Minister for Finance will announce the outcome of our review at Budget 2022.
Second, leveraging carbon markets to raise our climate ambition and to give our low-carbon transition an added boost.
Companies, especially those in hard-to-abate sectors, are keenly exploring market-based mechanisms where carbon credits are traded. Some may tap on voluntary markets to offset their carbon footprint out of their own volition, while others participate in compliance markets to meet their regulatory mandate imposed by the jurisdictions they operate in. For these companies, the ability to tap on carbon credits from emission reduction projects elsewhere provides a complementary pathway to deliver greater abatement in the near term, while long-term fixes, such as changes to business models, production processes, are being developed and implemented.
Likewise, nations are looking to carbon markets, empowered by Article 6 of the Paris Agreement to raise climate ambition. We agree with Mr Gan Thiam Poh that domestic abatement should remain our priority and continue to take bold steps to decarbonise, including advanced low carbon technologies like hydrogen and carbon capture, utilisation and storage. However, there is significant uncertainty associated with these options at the moment, given that their commercial success hinges on factors such as technological maturity and transboundary cooperation, which are not entirely within our control. Therefore, access to well-functioning carbon markets serves as a complementary option in our toolkit to meet our climate commitments, especially in the event that domestic abatement options do not materialise.
Mr Saktiandi Supaat and Mr Derrick Goh spoke about doing more to build confidence in carbon markets. Indeed, for a long time, carbon markets have been held back by concerns of environmental integrity, exacerbated by a fragmentation in rules and standards and a proliferation of low-quality carbon credits that did not represent real, measurable and additional emissions reductions.
To address this trust deficit, we must first establish robust rules and clear guidelines centred on environmental integrity, ensuring that the generation of carbon credits from emissions reductions projects achieves the desired outcomes of reducing overall global emissions. This is why Singapore agreed to co-facilitate discussions on Article 6 – to provide a common rules-based, global framework and a foundation to safeguard environmental integrity and avoid double-counting.
Concurrently, we are actively participating in various international platforms to promote greater environmental integrity and forge partnerships in carbon markets, as Mr Henry Kwek has alluded to. Singapore recently joined the Voluntary Carbon Markets Integrity Initiative (VCMI) as part of their Country Contact Group (CCG). The CCG seeks to align voluntary carbon markets with international architecture, such as the Paris Agreement and set out pathways for use of voluntary carbon credits to enhance global ambition. Singapore also supports the Taskforce on Scaling Voluntary Carbon Markets (TSVCM) – lots of acronyms here – a private sector-led initiative working group to shape and develop rules and standards for the trading of high-quality credits in voluntary carbon markets.
The third limb, which is to strengthen measures to advance sustainability accounting and procurement practices among our companies. Greening the economy we have today is the first step to growing the green economy of tomorrow.
We agree with Mr Don Wee that sustainability reporting and auditing is a critical aspect of good corporate governance in a low-carbon world.
SGX has published in December 2021, its roadmap for mandatory climate-related financial disclosures for listed entities, starting with listed entities in industries that are most exposed to climatic risks. MAS will be consulting the industry on mandatory climate-related financial disclosures for financial institutions. The Government will consider global developments and the experience of such mandatory disclosures before deciding on the approach for other entities.
We are heartened by the recent acceleration in progress towards a global sustainability standard, founded on the Task Force on Climate-related Financial Disclosures (TCFD) framework. With the creation of the International Sustainability Standards Board (ISSB), there will be a new global standard setter to guide corporate reporting in the sustainability space. There are a lot of initiatives going on and all groups are trying to get their act together and harmonise across the regions.
As reporting standards evolve, we encourage all companies to begin building capabilities in sustainability reporting and auditing, and as Mr Henry Kwek has said, to understand the key nuances that apply to their sectors and in the international markets that they operate in. This is crucial. It is all coming on us and we need businesses doing international business to understand how these regulations are going to impact us.
As a major buyer of goods and services, the Government is catalysing the change. Under the GreenGov.SG initiative of the Green Plan, the public sector has introduced procurement measures to encourage our service providers and suppliers to be more sustainable. For example, public agencies will purchase products that meet high resource-efficiency or sustainability standards. The Government will also consider suppliers' sustainability-related policies and practices when evaluating tenders. We will continue to explore ways to push the boundary on sustainability.
As individual consumers, our choices can make a difference. By voting with our wallets, we can nudge companies to green their products and supply chains. A recent SEC Newgate report has found that the top ESG concern of Singaporeans is whether or not companies are taking responsibility for their supply chain, 81% of it – which confirms the point that made by Ms He Ting Ru on ensuring that supply chain sustainability is respected; and also ahead of other indicators such as giving back to nature and the communities, 78%; and reporting the positive environmental impact that they deliver, 57%.
We agree with Ms Nadia Samdin and Assoc Prof Jamus Lim that greater recognition of businesses that embrace sustainable practices will allow ordinary consumers and other business customers to make more informed purchasing decisions.
The Minister for Trade and Industry elaborated on our efforts to develop standards and accreditation to help companies assess and demonstrate their sustainability credentials.
Other home-grown efforts include the Singapore Green Labelling Scheme, administered by the Singapore Environment Council, supported by NEA, as well as the Green Mark Certification Scheme by BCA for the built environment. So, we do have several of these schemes to help consumers make up their mind, to help decipher which are the companies that have complied with sustainability requirements. They conduct a holistic assessment of businesses' sustainability efforts and certify environmentally-preferred products that meet eco-standards.
Deputy Speaker, let me conclude. Over the course of our short history, Singapore has been confronted with multiple inflection points that compelled us to rethink and reshape the way forward. We find ourselves at yet another turning point. While the low-carbon transition may seem daunting, it can open up a brighter and greener future for Singapore and generations of Singaporeans.
As Members have rightly noted, it is essential that the fruits from this low-carbon transition can be enjoyed by all. As we put in place the right policy enablers, we must adopt an inclusive approach each step of the way, by consulting widely and providing support to those that need a hand. The thoughtful insights and recommendations shared in this House today have been most encouraging. We will study each idea carefully and incorporate suitable suggestions into our policies and plans.
Just like we have always tackled challenges squarely as a nation, we will continue to apply the same determination to the low-carbon transition, turning adversity, crisis, challenges into opportunity. We will build on our own strengths and continue to advance Singapore's competitive position by: supporting global climate action as a trusted interlocutor at multilateral fora, such as the United Nations Framework Convention on Climate Change (UNFCCC), International Civil Aviation Organization (ICAO), International Maritime Organization (IMO) and the World Bank; advancing research, pioneering innovative solutions, and building new norms and standards for the green economy; promoting green finance, digitalisation, and low-carbon innovation, which are key enablers for the green transition; and investing in our people to thrive in the green economy.
Under the Green Plan, the Government will continue our efforts to spur whole-of-society action and catalyse partnerships across the people, public and private sectors for sustainability. With all parties working hand-in-hand to create new growth sectors, we can forge a brighter future for Singapore.
On this note, I support the Motion and call on the whole of nation – corporates, civil society and the community – to join us as we embark on this exciting transition.
