It is quite evident that the climate change is impacting us all. But we can see that corporate world are not sitting idle. The entire industry is undergoing with a painful transition. Industries across various sectors are phasing out old machines & technologies and adopting clean technology in order stay competitive and compliant with the new green laws.
Singapore is one of the earliest countries to ratify the Paris Agreement. On 31st March 2020, Singapore shared its pledge to reduce the carbon emissions, in accordance with the Paris agreement. Singapore aims to contain the emissions to 65 MtCO2e by around 2030. It is also known as enhanced Nationally Determined Contribution (NDC).
The long-term goal is to contain the emission to 32MtCO2e by 2050. It is also known as Long-term Low-Emissions Development Strategy (LEDS).
Carbon Emission Growth in Singapore
Carbon emission growth in Singapore is shown in the below 2 diagrams. The emission has increased from 40Mt in 2007 to 77Mt in 2020.
In diagram-1, total carbon emission was projected to reach 75Mt but in another projection by NTU, it is expected to grow a little more to 77.2 Mt in 2020.
Diagram-1 (Source: AsiaIsGreen)
Out of 77.2Mt expected emissions in 2020, almost 60% was contributed by Industries, 14.5% by transport, almost 14% by buildings and almost 8% by households.
Diagram-2 (Source: NTU)
In 2018 budget, Singapore has imposed a carbon tax to curb the carbon emission. The carbon tax is set at S$5 per ton of greenhouse gas emissions from 2019 to 2023. There will one review of this carbon tax in 2023 after that it may be increased further (between S$10-15 per ton by 2030). A tax on carbon emission will encourage the emitters to take into account the costs of their emissions (owning to existing technology) in their business decision making. So going forward, the emitters will become more cautious about their carbon footprints.
Below is how the carbon tax has been imposed in other major countries (below carbon tax figure is as of year 2017). Sweden is the strictest country.
Impact of Carbon tax on Economy
As we saw in the above pie-chart diagram that around 60% of overall emissions are originated from industries. Carbon tax will definitely deter large emitters and encourage them to adopt the clean technology, which is more environment friendly and sustainable. It will give an impetus to further investment in clean technology R&D activities related to high-value manufacturing and engineering.
Having said this, the monetary impact of carbon tax will vary by sectors. Sectors that are relatively more exposed to exports related activities are less likely to pass cost increases to consumers. These companies may have to absorb these incremental costs themselves by sacrificing their profit margin. The most impact will be felt by the companies operating in petroleum, chemical and semiconductor industries, these industries are perceived as large emitters of carbon.
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