Singapore To Implement Carbon Tax By 2019 And We Will Pay Higher Electricity Tariffs
A draft carbon taxation bill mysteriously appeared on government feedback website Reach as part of a second round of public consultation led by the Ministry of the Environment and Water Resources last Tuesday (31 Oct).
If you’re a concerned citizen afraid of higher electricity prices or a self-proclaimed eco-warrior, this may be your last chance to comment on the new regulations before they come into effect by 2019.
Because we have nothing better to do, we examined the bill to find out how it would directly impact you and why you should give your feedback before it’s too late.
Footing The Bill For The Environment
This ambitious 71-page bill is Singapore’s bid to be the first in South-East Asia to enact legislation aimed at reducing greenhouse emissions as part of the Paris Agreement. It will act as the overall framework for carbon taxation and determine corporate obligations for large greenhouse gas emitters in Singapore.
A Carbon Tax Valued At S$10-20/tonne of CO2 Emitted?
How much carbon tax can we expect to pay?
Ironically, the current draft of the bill leaves what is arguably the most important section blank and up for further debate.
As it turns out, this draft bill is simply a follow-up to a consultation paper written by National Climate Change Secretariat (NCCS) in March after Finance Minister Heng Swee Keat announced a planned carbon tax as part of the 2017 Budget.
According to NCCS’ report, Singapore is planning for a carbon tax valued between $10-20/tonne of CO2 emitted (approximately US$7-14/tCO2e) to be applied to direct emitters.
This figure would place us between Portugal and Canada’s equivalent based on this infographic by the World Bank.
Electricity Tariffs For Households Expected To Rise
How would this affect you?
Electricity tariffs are expected to rise for households due to a “trickle-down effect” from this proposed carbon tax. NCCS’ report estimates that an average household living in a four-room HDB flat paying $72/month in electricity bills will probably have to fork out an additional $1.70 to $3.30 per month.
The draft bill confirms this by setting the taxable emissions threshold for direct emitters such as power stations at over 25,000 tonnes of carbon dioxide emissions.
Based on these figures, Channel NewsAsia estimates that Senoko Energy could pay between S$47-94 million while Tuas Power would have to cough up S$45-90 million annually. These costs will then be passed on to regular consumers of electricity, like you and me.
However, Finance Minister Heng Swee Keat has gone on record to say that our carbon tax system will be “modest” on households and small businesses as it is intended to hit large industrial energy users.
The revenue from the carbon tax will hopefully stimulate clean technology and market innovation, and create a price signal to incentivise industries to reduce their emissions.
A short-term cost for a hopefully long-term benefit? We sure hope so.
NEA Is Basically The New Carbon Tax System
According to the draft bill, NEA will have a key role to play in the new system. The proposed flow will go like this:
Translated into layman terms:
- A facility submits an emissions report verified by an independent third party to NEA.
- A registrar from NEA decides on the amount of credits available for the facility to purchase.
- This amount is based on a NEA accredited monitoring report submitted by the facility in the previous year.
- The facility surrenders the necessary carbon credits to the NEA as the final taxable amount.
Currently, NEA will have the final say on the price for carbon credits issued, but it will only be announced closer to the date of implementation.
A Lack of Checks And Balances
Obviously, there presents a problem to this arrangement.
If NEA is in charge of regulating the monitoring, issuing and price of carbon credits, we will have to assume that they will be impartial in balancing the interests of Singapore’s economy, regular citizens and the environmental impact of carbon emissions.
The only check and balance in this system stated in the bill is a verification by an “independent third party”.
Unfortunately, the bill does not go on to specify who this third party should be.
Put simply, it’s like when you ask your mother for pocket money and she decides to reward you based your performance in school. After you report your marks to her, she says they have to be certified by a qualified teacher or else they won’t count. Then you realize that actually the qualified teacher in question is – your mum.
A Clean, Green Fighting Machine For Climate Change
For what is worth, Singapore’s current proposed carbon tax framework does seems like a healthy attempt to balance market forces, government regulation and environmental costs – except we don’t know how much the carbon tax is estimated to be.
Your feedback matters in determining this amount, because if the proposed carbon tax is too high, we may risk driving possible businesses away from Singapore. If it’s too low, businesses would rather pay the tax than work towards reducing their carbon emissions.
Whichever the case, the prices of electricity will most probably rise and impact us on a daily basis.
If you recall, the last time a bill was passed in Parliament with such far-reaching consequences, it allowed for changes to the constitution so a Reserved Election could take place. We didn’t really get a say in that, and here we are, living with the consequences of a presidential walkover.
Now that you’ve been given a chance to have your feedback heard, it’s not too late to do your part in helping Singapore live up to her name as a cleaner and greener city.
You can check out the draft bill on the REACH website and submit your feedback via email to MEWR_CPBill@mewr.gov.sg by 8 Dec.