Carbon tax revenue not earmarked for specific purposes: DPM Teo

Singapore

HAVING a carbon tax in Singapore will encourage carbon mitigation and incentivise businesses and consumers to lower emissions, said Deputy Prime Minister Teo Chee Hean in Parliament on Thursday.

This tax, which will be implemented from 2019, will complement the regulatory measures already in place and provide price certainty to industrial facilities for investments in clean energy and energy efficiency, he said.

Speaking during the debate on the budget of the Prime Minister's Office, he stressed that the revenue generated from the carbon tax would not be set aside for specific purposes.

"We are not earmarking the taxed amounts for specific purposes, but government funds will support measures such as enhancing energy-efficiency incentives and training workers in energy management. These will help our companies use less energy, save costs and reduce their emissions."

The carbon tax, unveiled by Finance Minister Heng Swee Keat in his Budget 2017 speech last month, will make an impact on large direct emitters of greenhouse gases such as power stations; between 30 and 40 emitters operating in Singapore are expected to be hit by the tax.

Mr Heng had described such a system as the "most economically efficient and fair way" to reduce greenhouse gas emissions, and would help Singapore reach its commitments to the Paris climate agreement ratified last year.

Under this agreement, Singapore has committed to reduce the emissions intensity level of the year 2005 by 36 per cent by 2030.

It also aims to stabilise its emissions, with the aim of peaking at around 2030.

For now, the government is looking at a carbon tax rate of between S$10 and S$20 per tonne of greenhouse gas emissions.

Mr Teo, who oversees the National Climate Change Secretariat, noted that industry consultations on the carbon tax have already started and will be expanded. Public consultations start this month.

He said the Ministry of the Environment and Water Resources (MEWR) will enhance the Energy Conservation Act this year to include energy measurement and reporting, and energy-management requirements.

Both MEWR and the Ministry of Transport will enhance the Carbon Emissions-based Vehicle Scheme (CEVS) by including other pollutants, said Mr Teo.

"Our companies, particularly those with an established track record in clean energy and energy efficiency, are in a good position to seize green growth opportunities in the region and beyond as countries, including Singapore, take steps to reduce carbon emissions," he said.

Earlier in his speech on the subject of driving innovation in the Public Service, he announced that Prime Minister Lee Hsien Loong has appointed Ong Ye Kung to champion public service innovation.

Mr Ong, who is Education Minister (Higher Education and Skills) and Second Defence Minister, will focus on areas that require close coordination among various agencies.

Mr Teo listed two areas that will be covered: The first is a review of regulations to drive innovation and entrepreneurship, and the second, the adoption of procurement methods that support industry development and help companies and people to seize new economic opportunities.

"These initiatives are in line with the recommendations of the Committee on the Future Economy. Mr Ong will also work with the Public Service on further areas to drive change and innovation," said Mr Teo.

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