Carbon tax hike a 'strong signal' Singapore is serious about green targets: Tan See Leng

SINGAPORE'S carbon tax rate hike sends a strong signal to the world that the Republic "means business" about reaching its ambitious climate goal of achieving net zero emissions by or around the middle of the century, said Second Minister for Trade and Industry Tan See Leng on Monday (Feb 21).

Not only that, it also sends a message to businesses and workers here that there are opportunities in this nascent and growing field that they can take advantage of, said Dr Tan at The Business Times - Budget Dialogue 2022, presented by OCBC Bank.

"There will be, obviously, a lot of opportunities in the green economy. Globally, I think there's going to be a lot of exciting change, a lot of transformation that's going to happen. There will be millions of jobs created globally across the green economy," said Dr Tan, who is also Manpower Minister.

"I think (the transition) would put us in good stead to offer those opportunities for many of our Singapore workers."

Finance Minister Lawrence Wong announced in his Budget speech last Friday that Singapore plans to raise its carbon tax rate in several steps, with a view to reaching S$50 to S$80 per tonne by 2030 - far more ambitious than the original target of between S$10 and S$15 per tonne by 2030.

The first increase, set to take effect from 2024, will bring the rate to S$25 per tonne, significantly higher than the S$10 to S$15 per tonne range predicted by watchers. It will then rise to S$45 per tonne in 2026 and 2027.

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Dr Tan stressed that the pricing and timing of the carbon tax increase was calibrated to give businesses time to adjust.

"There's a cost to do anything. There's a cost to getting businesses and our people to be familiar with the cost of embarking on all these renewable technologies itself," he said.

"So setting the carbon tax allows us to, in a graduated manner, get people adjusted to the cadence of making sure that we should always be adopting and adapting energy conservation as a way of life."

To prep the local workforce to take on new opportunities in this sector, the authorities are working with institutes of higher learning to introduce more courses on sustainability and clean energy, said Dr Tan.

"We want to inculcate environmental sustainability, greening, conservation habits from the secondary school curriculum," he added.

Singapore should also welcome talent from abroad who can complement the local workforce by transferring the skills and knowledge they have in the sector, he said. Likewise, an overseas global attachment scheme will be set up so local workers can learn from energy institutes abroad.

Dr Tan similarly addressed concerns that the slate of tax and foreign manpower policy changes announced in the Budget could translate to higher business costs.

While these may add a lot of stress to businesses in the short term, the Budget measures aim to strengthen Singapore's social compact in the longer term so that the country can weather future storms and crises, he said.

This would then, in turn, make Singapore a more attractive destination for companies to invest in and for talent to come in, he added.

And even as costs rise, productivity should rise as well, he said, noting that current inflationary pressures make it even more important for productivity gains to outstrip cost rises.

The government will not hesitate to step in and support firms which require assistance during the transition period, he added.

As for the digitalisation journey that businesses have embarked upon since the start of the pandemic, Tan said it is "not possible" for firms to backtrack, given that digital tools such as Zoom and Microsoft Teams have become commonplace.

Instead, he foresees that firms will further leverage technology to improve their processes, for instance, harnessing artificial intelligence and data analytics in their business development.

"I think that companies will move along those lines. There'll be a lot more automation, they'll pivot into deep tech, trying to be predictive and pre-emptive before the problem actually comes up. (That) will be the order of the day," he said.

READ MORE:

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