The low carbon transition is no longer just an option, but something S'pore must do to thrive: Grace Fu

But there is also opportunity in adversity.

Sulaiman Daud | Ashley Tan | January 12, 2022, 11:11 PM

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In response to a climate change motion filed by Members of Parliament (MPs) from the Government Parliamentary Committee (GPC) for Sustainability and the Environment, Minister for Sustainability and the Environment Grace Fu agreed that the MPs' proposals to help Singapore transition into a low-carbon society are a timely one.

And even though it will not be an easy journey ahead, moving towards that goal is key to mitigating the climate crisis.

Singapore will do its part

On Jan. 12, Fu reiterated the urgency of the current situation — global temperatures are predicted to rise by more than 2°C within this century, and Singapore as an island-state will be vulnerable to its accompanying impacts such as sea-level rise.

Singapore is one of the countries pledging to halt and reverse deforestation and land degradation by 2030, and is part of the Glasgow Climate Pact, which requests for parties to revisit their 2030 climate pledges.

Singapore also worked together with Norway during the United Nations Climate Change Conference (COP26) in Glasgow, Scotland to finalise Article 6 of the Paris Agreement, which covers the rules for the global carbon market to function and was left unresolved since 2015.

Said Fu:

"Singapore will do our part to meet our international obligations. We will review our policies and actions under the Green Plan, while managing our inherent constraints and trade-offs.

We will also expand our options for reducing emissions through international partnerships, and in step with global advancements in low-carbon technologies. We will review our targets and raise our climate ambition, and as Professor Koh Lian Pin highlighted, ensure that our targets are backed by the right strategies, policies and actions."

On the national level, Singapore businesses are also critical in driving the green transition, as an increasing number of businesses focus on Environmental, Social and Governance (ESG) issues.

Fu also noted the importance of civil society and community organisations, which help raise awareness on climate action on the ground.

Transition will lead to changes, good and bad

Fu highlighted that going green "is no longer an option" but instead a "strategic transition" that Singapore must undertake to thrive in a resource-constrained future.

The motion filed thus helps to build the necessary foundations to transition to a low-carbon society, and the government, Fu said, has every intention to partner with the private sector, civil society and community to make the sustainability goals a reality.

And if done right, this transition can provide numerous opportunities and rewards.

As with any major change, disruptions and trade-offs will follow. Businesses and households may face temporary cost increases, Fu said.

However, it is necessary to continue moving forward as "inaction will cost us even more dearly", in the form of climate change impacts like floods, supply chain disruptions, and maladapted businesses becoming obsolete.

"It is therefore in the best interests of businesses, the economy, and the nation at large to make this crucial transition," Fu concluded.

Fu proceeded to touch on three key areas raised by MPs.

1. Raising carbon pricing

Some MPs such as Louis Ng supported an increase in carbon taxes, while others like Liang Eng Hwa and Mariam Jaafar emphasised the need to preserve Singapore's competitiveness.

Fu agreed with MPs that over time, a stronger price signal is needed to move towards a low-carbon society.

This is because a carbon tax is central to Singapore's climate mitigation strategy by incentivising businesses to implement energy efficiency improvements and other emissions reduction solutions.

The carbon tax is currently priced at S$5 per tonne of greenhouse gas emissions (tCO2e) generated, and the existing carbon tax threshold is 25,000 tonnes.

To support businesses along their decarbonisation journey, Fu said the government is prepared for the first five years to spend more than what is collected to incentivise the adoption of energy-efficient processes and other worthwhile abatement projects.

The government has also invested in low-carbon technologies and other green solutions.

To come to a decision on whether to raise the carbon tax, the government has consulted businesses and engaged the public over the past few months as part of its review of the post-2023 carbon tax level and trajectory.

The outcome of the review will be announced during Budget 2022, Fu revealed.

2. Leveraging carbon markets

Fu said that leveraging carbon markets is an option that can boost Singapore's efforts.

Carbon markets allow companies to buy and sell "credits" that are produced by cutting back on carbon emissions.

Over time, the idea is to incentivise companies to cut back on carbon emissions to save money.

This allows companies to contribute in the short term while they prepare long-term efforts to reduce emissions and become more sustainable.

Article 6 of the Paris Agreement provides a framework for such carbon markets.

While Singapore can explore advanced technology to reduce emissions, in the short term, such carbon markets can be a way for it to meet climate change targets.

Fu acknowledged that carbon markets are currently subject to concerns of effectiveness and an unfortunate proliferation of credits that don't represent tangible efforts to cut emissions.

Therefore Fu said robust rules and clear guidelines must be established based on environmental integrity. To help in this effort, Singapore has agreed to co-facilitate discussions on Article 6 to provide a common rules-based global framework.

3. Strengthening corporate accountability

Fu also expounded on measures to strengthen sustainability accounting and procurement practices.

In Dec. 2021, SGX rolled out mandatory climate-related disclosures for financial and energy issuers (from 2023).

This allows the public to be aware of which companies are exposed to climate risks.

Fu encouraged all companies to begin building capabilities in sustainability reporting and auditing.

By understanding the climate impact of their supply chains, companies can also effect positive change by procuring their materials from more sustainable sources.

As a major buyer of goods and services, Fu said that the Singapore government is also doing its part.

"Under the Green Gov SG initiative of the Green Plan, the public sector has introduced procurement measures to encourage our service providers and suppliers to be more sustainable. For example, public agencies will purchase products that meet high resource efficiency or sustainability standards."

Fu cited a recent SEC Newgate report that said 81 per cent of respondents listed whether or not companies are taking responsibility for their supply chain as their top concern.

The government will push ahead with developing standards and accreditation so the public can make a more informed choice when assessing a company's sustainability efforts.

Turn adversity into opportunity

Fu concluded her speech by noting that the climate challenge is another inflection point that Singapore must tackle, as it has with other challenges in the past.

However, she said it also affords tangible opportunities across the people, public and private sectors.

She ended her speech by calling on the "whole of nation" to join in efforts to forge ahead with this "exciting" transition.

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