THE carbon tax to be introduced from next year is part of a national strategy to reduce carbon emissions in Singapore. It is expected to encourage businesses here to improve their energy efficiency, to become sustainable, and to reduce their operating costs in the process. The carbon tax is an important step to sustain the country's clean, green and liveable environment, and to help Singapore transform into a low carbon economy.
The plan to introduce the carbon tax from 2019 was announced by the Minister for Finance in Budget 2017. The tax will be applied on facilities that emit 25,000 tonnes or more of greenhouse gas (GHG) emissions in a year and cover the six GHGs that Singapore currently reports to the United Nations Framework Convention on Climate Change, which is an international environmental treaty.
"The government is building a low carbon future for Singapore through climate change policies and carbon pricing. Globally, there is also an increasing impetus for companies to re-think their traditional energy intensive practices, and adopt better processes and innovation to use energy more efficiently," Tan Meng Dui, chief executive officer of National Environment Agency (NEA), told The Business Times.
"Singapore companies should put in place structured energy management systems and regularly assess their facilities to identify feasible ways to reduce energy consumption. Companies can also leverage platforms such as the Energy Efficiency National Partnership (EENP) programme for thought leadership and new ideas in energy management. By taking these steps early and proactively, Singapore companies will be better positioned for sustainable growth and to maintain their competitiveness internationally."
As for the carbon tax, to give the industry more time to adjust and implement energy efficiency projects, the tax will start at S$5 per tonne of emissions in the first instance, from 2019 to 2023. The government will review the tax rate by 2023, according to the National Climate Change Secretariat in the Prime Minister's office.
The intention is to increase the carbon tax to between S$10 and S$15 per tonne of emissions by 2030. In doing so, the government will take into account international climate change developments, the progress of the country's emissions mitigation efforts, and its economic competitiveness. The first payment of the carbon tax will be in 2020, based on emissions in calendar year 2019.
On its part, the government will help companies improve energy efficiency as highlighted by the Minister for Finance and the Minister for the Environment & Water Resources during this year's budget debate. The Finance Minister said that in introducing a carbon tax of S$5 per tonne of emissions from 2019 to 2023, Singapore joins many countries that have done so to step up global efforts to address climate change.
To help businesses to reduce carbon emissions the government is setting aside funds from 2019 to 2023 to support them in improving energy efficiency. The Minister for Finance said in parliament that he is prepared to spend more than what is collected as carbon tax in the first five years to support worthwhile projects. This will help businesses lower their energy costs and potentially more than offset the impact of the tax. This means that by taking early action, companies that improve energy efficiency and reduce emissions can become more competitive internationally.
At the same time the Energy Conservation Act (ECA) has been enhanced to improve energy efficiency in the industrial sector. This includes strengthening the measurement and reporting requirements for greenhouse gas emissions, requiring companies to undertake regular energy efficiency opportunity assessments and introducing minimum energy performance standards for common industrial equipment and systems.
These new measures will help Singapore to achieve its pledge under the Paris Agreement on climate change to reduce emissions intensity by 36 per cent from 2005 levels by 2030, and to stabilise greenhouse gas (GHG) emissions with the aim of peaking around 2030.
Based on the energy use reports submitted by companies regulated under the ECA, electric motors accounted for about 80 per cent of their electricity consumption in 2015. Electric motors are found in almost every industrial application such as crushing, grinding, mixing, pumping, conveying, compression, cooling and refrigeration.
The Minimum Energy Performance Standards (MEPS) has been extended to motors. This will lead to the phasing out of inefficient motor models from the market and push the market towards more efficient models. Besides enjoying life cycle cost savings from lower electricity consumption, companies will also reduce their carbon footprint.
At the same time, to encourage companies to design facilities to be energy efficient, from Oct 1, 2018, NEA requires companies investing in new facilities or major expansion that are designed to consume 54 tera-joules (TJ) or more of energy annually to: review the facility design for energy efficiency; identify economically feasible energy efficiency opportunities for incorporation into the facility design; and report the findings to National Environment Agency (NEA).
The national effort to promote energy efficiency got a big boost when the NEA, together with the Economic Development Board (EDB) and the Energy Market Authority (EMA), launched the Energy Efficiency National Partnership (EENP) programme in 2010. It is a voluntary partnership initiative for companies wishing to be more energy efficient, thereby enhancing their long-term business competitiveness and reducing their carbon footprint. The EENP programme aims to support companies in their energy efficiency efforts through learning network activities, provision of energy efficiency related resources, and recognition.
A key component of the EENP programme is the annual EENP Awards which aims to foster a culture of sustained energy efficiency improvement in the industry and public sectors. The EENP Awards also aims to encourage companies to adopt a proactive approach towards energy management by identifying and sharing best practices with other companies.
There are four award categories for industry: Excellence in Energy Management; Best Practices; Outstanding Energy Manager of the Year; and Outstanding Energy Services Provider of the Year. The EENP Awards also gives recognition to public sector individuals and organisations that demonstrate a high level of commitment towards sustained energy efficiency improvements and practices.
For instance, the award in the Excellence in Energy Management category recognises companies that have demonstrated a high level of commitment to excellence in energy management. The award recipient in this category this year is BASF South East Asia Pte Ltd. "Creating chemistry for a sustainable future is at the heart of what BASF does," Dieter Vanneuville, site manager, Performance Chemicals, Jurong Island, BASF South East Asia Pte Ltd, told The Business Times.
In 2015, BASF set a global energy efficiency goal to achieve 90 per cent coverage of its primary energy demand through certified energy management systems at its production sites by 2020. Last year the company's site in Jurong Island became the first BASF site in Southeast Asia to attain this goal - three years ahead of the target.
One of the two winners of the Outstanding Energy Manager of the Year award is Chen Jiayi, energy manager, SATS Ltd. This award category recognises outstanding energy managers who have demonstrated leadership in driving energy efficiency improvement across the organisation, and played an instrumental role in promoting energy efficiency initiatives within the organisation.
An energy manager at SATS since 2012, Mr Chen convinced the company's senior management to embark on a series of energy efficiency projects like retrofitting of high bay lamps and chilled water systems, and optimisation of boilers. He helped his company management to understand the financial benefits of implementing such projects through life cycle cost analyses, and tapped various government incentive schemes to improve the economic feasibility of the projects. Mr Chen also made an effort to educate and convince the different business units on the benefits of energy efficiency.
Public sector agencies too have been doing their bit to improve energy efficiency. For instance, through concerted efforts by staff and support from management, the Monetary Authority of Singapore (MAS) recorded a huge 23.5 per cent saving in electricity in FY2017/2018 from FY2013/2014 baseline.
Similarly, the Immigration & Checkpoints Authority (ICA) has achieved 30 and 50 per cent energy savings at its Woodlands and Tuas checkpoints. Measures implemented to reduce energy consumption includes: Retrofitting chiller plants at both checkpoints under the Guaranteed Energy Savings Performance (GESP) contracting model, which guarantees ICA a system efficiency of at least 0.601kW/RT and 0.612kW/RT respectively; progressively replacing all the existing non-LED lights with more energy efficient LED lights at both land checkpoints; and installing photovoltaic panels under the HDB's SolarNova leasing scheme.
These measures are part of ICA's energy efficiency improvement plan. Under the plan, ICA also seeks to educate its officers and external stakeholders on energy conservation. All these efforts led to an annual energy savings of about 14 million kWh for both land checkpoints.
The EENP Awards ceremony will be held today (Oct 11) at the Devan Nair Institute of Employment & Employability and it will be followed by an industry energy efficiency sharing session. Throughout the day, there will also be an exhibition featuring energy efficiency training providers, latest technical innovations and other energy solutions.
This year's industrial energy efficiency sharing session will have talks by experts from Canada, Japan and the USA, sharing a range of energy efficiency related topics from the efficient operation of common industrial systems such as compressed air systems, to topics such as digital transformation and the use of Internet of Things (IoT).