Speech by Ms Grace Fu, Minister for Sustainability and the Environment, at the National Energy Efficiency Conference on 4 October 2023
Ladies and gentlemen,
1 A very good morning. I am glad to speak to you here at the National Energy Efficiency Conference.
2 We are witnessing the ever-accelerating impacts of climate change on our environment, economies, and societies. At the same time, the call for sustainable business practices has also become more resounding, not only among consumers, but also shareholders and investors worldwide. Decarbonisation is coming to the fore, as more countries around the world introduce carbon pricing mechanisms. And more businesses factor in the cost of carbon in their corporate strategies and new investments. The commitment to a low-carbon future has become an imperative, not just for the well-being of our planet and humanity, but also for the prosperity and survival of our industries and businesses.
3 Today’s theme of “Towards Net Zero and Stewardship in Industrial Energy Efficiency” will inspire us with insights, success stories and relentless attempts – all good takeaways in our decarbonisation journeys.
Carbon tax in support of Singapore’s net zero ambitions
4 Nationally, Singapore is committed to do our part in climate action. We have set ourselves the ambition to reach net zero emissions by 2050. Our carbon tax is a key enabler to support this ambition. Our carbon tax rate will rise from $5 per tonne of emissions to $25 next year, $45 in 2026 and eventually $50-80 by 2030. We introduced the International Carbon Credits Framework, or ICC Framework, to allow companies the option to use eligible ICCs to offset up to 5% of their carbon tax liability.
5 The development of well-functioning carbon markets, which effectively matches the demand and supply of high-quality carbon credits, is a vital part of global efforts to get to net zero. It allows companies to access an alternative decarbonisation pathway for hard-to-abate emissions, and avails much-needed finance to support emissions reduction or removal projects globally.
6 To this end, I am pleased to provide a few updates.
Fostering international partnerships in the global carbon market
7 First, we have been building international partnerships to open new sources of high-quality ICCs.
8 Singapore has signed memorandums of understanding (MOUs) with over a dozen countries to collaborate on carbon credits, and substantively concluded negotiations with Ghana and Vietnam on implementation agreements that are Article 6 compliant. ICCs generated under these implementation agreements can be used to offset carbon tax obligations. We are working on similar agreements with other countries, such as Bhutan, Mongolia, Papua New Guinea, and Peru.
9 We also hosted the 7th Meeting of the Article 6.4 Supervisory Body in September, advancing the implementation of the Paris Agreement.
Ensuring high environmental integrity
10 Second, we have developed a set of robust eligibility criteria to ensure that the carbon credits are of high environmental integrity.
11 We consulted more than 70 stakeholders across the industry and non-governmental organisations in developing the criteria. They take reference from international standards, including the Carbon Offsetting and Reduction Scheme for International Aviation, or CORSIA.
12 We are developing the market and rules in parallel, with the aim of publishing a list of eligible carbon credit programmes, methodologies and host countries later this year. This will provide guidance to companies on the environmental integrity requirements of ICCs that will be accepted as carbon tax offset.
Developing enabling infrastructure and the carbon services ecosystem
13 Third, we have made significant progress in developing the market infrastructure, and the capabilities of our carbon services ecosystem.
14 We are currently developing our ICC Registry, which will account for the ICCs surrendered by taxable facilities and track them under Article 6 rules.
15 We have signed MOUs with five carbon credi programmes to leverage on their capabilities.
16 Finally, we are developing the Climate Action Data Trust Data Dashboard which will be launched later this year. The Dashboard will provide an open-source system to link and harmonise information about carbon credits and projects across registries globally.
17 As we build and grow a carbon market locally, the carbon services industry will benefit from green growth opportunities, creating green jobs for Singaporeans while contributing to the global climate agenda.
18 Today, we recognise the progress made by our companies, large and small, in their energy efficiency and decarbonisation journeys. However, we cannot afford to rest on our laurels when it comes to tackling climate change.
19 I urge all businesses to continue to take active steps to decarbonise and invest in a low-carbon future, as we progress towards the Singapore Green Plan 2030.
20 I wish you all a day of fruitful discussions ahead. Thank you.