Big decarbonisation signals were set off with Budget 2022 – on the carbon tax front and revised pledge to achieve net zero “by or around mid-century” – as Singapore makes a decisive move towards charting net zero future.
Following the world’s governments commitment of Nationally Determined Contributions to the Paris Agreement – there are currently 189 signatory countries – we can observe an increasing trend of corporates setting net-zero targets, as consumers and investors alike become more eco-conscious.
The promise of net-zero ambitions requires concrete strategy and roadmap planning, and we need to recognise that these strategies take time to implement — oftentimes, for corporates, as these changes have an impact on the operations, business-as-usual and the company’s financials.
Singapore has taken important steps to contribute to global efforts to tackle today’s most pressing existential crisis – climate change.
With the developments at COP26 marking it as the inflection point, Singapore has raised its climate ambitions by pledging to achieve net zero emissions “by or around mid-century” – a move that will put Singapore in line with the timeline recommended in the Glasgow Climate Pact at COP26.
Carbon credits are verified certificates for a unit of emissions reduction, enabling carbon offsets to be bought and sold in a carbon marketplace.
A carbon tax however, directly sets a price on carbon by defining an explicit tax rate on GHG emissions, or more commonly, on the carbon content of fossil fuels, i.e.
While the other sets out a mechanism to approve project types, setting baselines against which projects can claims reductions, and registering the creation and transfer of credits – to be supervised by a body set up by the UN Framework Convention on Climate Change, much like the Kyoto Protocol’s Clean Development Mechanism .
“In many ways, we believe we are well-positioned to serve as a carbon services and trading hub for Southeast Asia and the Asia Pacific, given our foundation as a regional centre for professional services, commodity trading and financial services,” The Singapore Finance Minister Lawrence Wong said at the Singapore Apex Corporate Sustainability Awards Ceremony in December 2021.
Singapore is already at the forefront of global efforts in creating a carbon economy, having taken the first steps towards carbon pricing via the introduction of carbon tax in 2019, marking itself the first nation in Southeast Asia to do so.
With this new development, Singapore will be on par with the International Monetary Fund ’s recommendation for high-income emerging-market economies – USD$50 for 2030 price floor.
Singapore has also taken a significant step towards realising the goal of creating a carbon trading hub through the announcement of the establishment of Climate Impact X and McKinsey, the global carbon credit market is predicted to grow upwards of USD$50 billion by 2030.
In the border decarbonisation perspective, carbon credit offset should not be abused and should instead be reserved as a last resort as a short-term emission reduction strategy – where possible, companies should opt for strong emission reduction plans.
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