THE CASE OF THE CARBON TAX

As nations struggle to fight climate change, the carbon tax is expected to incentivize companies to reduce their use of fossil fuels – which release large amounts of carbon dioxide when burned – to avoid paying taxes and turn to energy renewable, experts said.

It’s “the most direct and efficient way to price air,” said Dr. Thomas. It also provides a substantial source of revenue to be invested in renewable energy, he added.

However, the effectiveness of the carbon tax depends on its rate, which must be high enough to incentivize companies; the period of time given to industries to adapt to the tax; and the availability of green technology for industries to use, experts said.

Dr. Thomas said the experience of other countries has shown that a strong reduction in emissions usually occurs when the rate exceeds $25.

He suggested that Singapore bring forward the revised rates in the mid-2020s, rather than the 2030s, given the “very immediate” cost of climate change such as sea level rise and weather changes.

However, Professor Euston Quah, who specializes in environmental economics at NTU, argued that carbon tax adjustments should be spread over a longer period beyond 2030.

He highlighted the constraints Singapore faces in transitioning to renewable energy. The use of solar energy, for example, is hampered by limited space, while exploiting energy sources through an international grid or pipeline would present energy security issues.

A longer track with less drastic increases in carbon tax prices would give companies time to adjust to the changes, said Professor Quah, who is the Albert Winsemius Professor of Economics.

WHAT COMPANIES DO

Major emitters subject to the carbon tax have said they have already implemented various decarbonisation measures to reduce their emissions over the past decade.

Ms Geraldine Chin, president and CEO of oil company ExxonMobil Asia Pacific, said the firm has introduced a number of initiatives since 2002 that have led to energy efficiency gains of more than 25% and reduced Singapore’s carbon emissions. facility.

These initiatives include the operation of three cogeneration plants that produce both electricity and steam simultaneously. Cogeneration recovers thermal energy after electricity is generated to produce steam.

The steam is then used for ExxonMobil’s plant operations in Singapore. This process requires less fuel and emits less carbon than if steam and electricity were produced separately.

Ms Chin said her team in Singapore is also working to develop a detailed emissions reduction roadmap to deliver on the company’s ambition to achieve net greenhouse gas emissions from its operating assets until 2050.

She added that ExxonMobil has long supported an explicit price on carbon and added that a stronger carbon price signal from the government encourages investment in reducing greenhouse gases.

However, given Singapore’s open economy, it is also important that the carbon tax framework protects the competitiveness of trade-exposed industries. They compete with other industrial facilities globally that have either no or a lower carbon price domestically or on their exports, Ms Chin said.

German chemical company Evonik, which is headquartered in Singapore for its operations in Southeast Asia, Australia and New Zealand, said it also takes climate and environmental protection “extremely seriously”.

Among its efforts to reduce its emissions is a bespoke power supply solution for its methionine plant on Jurong Island, which gives it complex control over energy management and maximizes energy efficiency to reduce carbon emissions.