This blog series, titled "I'm a Climate Advocate," aims to delve into the topic. We will explore practical steps on how individuals and small businesses can achieve carbon-neutrality through the utilisation of renewable energy certificates (RECs) and carbon credits, and how these efforts can contribute to the development of environmentally friendly brands for businesses.
Yes, there is a carbon tax in Singapore.
Singapore introduced a carbon tax in January 2019. To support our 2050 net zero target, carbon tax will be raised to S$25/tCO2e (tonnes of carbon dioxide equivalent) in 2024 and 2025, and S$45/tCO2e in 2026 and 2027, with a view to reaching S$50-80/tCO2e from 2030 onwards1. Under the Carbon Pricing Act, business facilities that produce an annual total amount of direct Greenhouse Gas (GHG) emissions of 25,000 tCO2e or more are subject to carbon tax. Here, GHGs refer to gasses like carbon dioxide, methane, and nitrous oxide. Business facilities with direct emission of 2,000 tCO2e or more annually are not subject to the tax, but will still have to be registered as reportable facilities. Individuals and SMEs with less than 2,000 tCO2e of direct emission are not impacted under the CPA, but can still actively recognise and reduce their carbon footprint on a voluntary basis. Singapore is not alone - Japan plans to initiate a carbon tax in 2028. Other countries that have already implemented carbon taxes include Canada, Sweden, and the United Kingdom.
Individuals and businesses should start thinking about carbon footprint.
The GHG Protocol Corporate Accounting and Reporting Standard is the most widely used greenhouse gas methodology for measuring and reporting carbon footprint, which is also commonly used by businesses in Singapore to prepare a corporate-level inventory of greenhouse gas emissions. Carbon emission activities can be divided into 3 main scopes - (a) Scope 1 direct emissions from owned/controlled assets; (b) Scope 2 indirect emissions from purchased electricity; and (c) Scope 3 indirect emissions from other value chain activities.
Businesses in Singapore can also refer to other standards or methodologies to assess their carbon footprint such as the International Organisation for Standardisation (ISO) 14064 Standard and the Carbon Disclosure Project (CDP). Each of these methodologies has its strengths and weaknesses, and there are many online resources to help individuals and small businesses when it comes to calculating their carbon footprint. For example,
The basics of carbon footprint.
Be it individuals or businesses, the starting point for measuring carbon footprint lies in the emission factor, which is essentially a factor that converts activity data (e.g. quantity of fuel used, kWh of electricity used) into an output value measured in Kg CO2e (kilograms of carbon dioxide equivalent). There are many different carbon emission factors depending on the fuel type (petrol, diesel, coal, jet fuel, natural gas, etc.) and they form the baseline for computing carbon emissions involving direct combustion of fossil fuels (essentially Scope 1 activities). Emission factors are generated by national environmental agencies, research institutions, or can be found in the technical guidelines of the GHG Protocol itself.
For example, burning 1 litre of liquid motor gasoline will release 2.3 kg of carbon dioxide using the GHG Protocol’s carbon emission factor of 2.3. So assuming you drive a Toyota Corolla Altis in Singapore which uses an average of 6.5 litres of petrol per 100 km, and the annual mileage is 18,000 km, the annual carbon emission from your transportation will be 6.5 * 18,000 / 100 * 2.3 / 1000 = 2.7 tCO2.
A significant amount of Scope 2 carbon emissions are driven by electricity usage (which is measured in kilowatt-hour, kWh). The Singapore Electricity Market Authority (EMA) publishes annual grid emission factor data, which is approximately 0.4kg CO2 / kWh today. Assuming the average household annual electricity usage is 4,800 kWh, the corresponding annual carbon footprint would be 4.8 * 0.4 = 1.92 tCO2. Mathematically, carbon footprint is calculated using:
Broadly, there are 4 steps for calculating and reporting carbon footprint:
1. Identify activities or business operations that generate greenhouse gas (refer to Table A below)
2. Collect activity or business operations data
3. Find the emission or conversion factors
4. Calculate the carbon footprint (Scope 1, Scope 2, or Scope 3)
A typical office-based organisation will likely not incur Scope 1 emissions if it does not own assets that generate direct emissions (e.g. on-site facilities that burn fuels, vehicles owned or leased, cold storage facilities, purchasing greenhouse gas for industrial use) and have more Scope 2 emissions mainly from electricity usage. Scope 2 activities are relatively easy to understand but there is an on-going debate between the adoption of location-based or market-based accounting. One argument against market-based accounting is that it does not increase renewable energy generation, and hence companies should not purchase electricity or instruments such as RECs from outside its business jurisdiction. Singapore adopts a market-based approach based on Singapore Standard 673, which was introduced in 2021, to provide guidance for companies on the use of RECs for renewable energy claims in Singapore. Singapore Standard 673 has requirements that define the types of renewable energy sources (e.g. solar, biomass, wind energy) that may qualify to generate RECs tracked in registries. It also specifies that renewable energy installations be connected to a grid operated by a regulator or a regulator-appointed party, and that energy output must be in the form of electricity delivered to a grid or grid-connected load. The installation also has to be located in Singapore, or contractually supplying electricity in Singapore, or located in Southeast Asia.
Scope 3 measures a company’s indirect emission footprint along its value chain where data can be very difficult to obtain or verify. InterOpera works with educational, advisory and accounting firms in Singapore and South-East Asia, such as InCorp Global to help businesses better tackle their carbon footprint needs.
In conclusion, by understanding your carbon footprint, individuals and businesses can better align and prepare themselves as Singapore transitions to a greener economy. Recent amendments to the country’s carbon tax further emphasises the importance of understanding the measurement and reporting of carbon emissions.
InterOpera operates OperaX, an exchange for RECs and carbon credits. We can support individuals and businesses who are interested in addressing climate change and mitigating their carbon impact. Click here and start your Climate Advocacy journey today!
1. National Climate Change Secretariat: Singapore Will Raise Climate Ambition to Achieve Net Zero Emissions By or Around Mid Century, and Revises Carbon Tax Levels from 2024 https://www.nccs.gov.sg/media/press-release/singapore-will-raise-climate-ambition/