Singapore has plans to implement a carbon tax starting in 2019 and big industry says that it supports the measure.
Bloomberg is reporting that it would be Southeast Asia’s first such effort and that it would raise energy costs there. Still, the story says that the country’s 30 biggest polluters will pay a levy, all to help the low-lying island nation mitigate the effects of climate change.
The proposal would price a ton of carbon anywhere between $7 and $20. It would raise electricity prices as much as 4%, the story says.
The US Treasury Department has said that to meet the aims of the Paris climate accord that the price needs to be around $48 a ton. The goal there is to keep global temperatures from rising more than 2 degrees Celsius by mid century.
“The most economically efficient and fair way to reduce greenhouse gas emissions is to set a carbon tax, so that emitters will take the necessary actions,” said Finance Minister Heng Swee Keat, in a speech outlining the government’s 2017 budget. “Singapore is vulnerable to rises in sea level due to climate change. Together with the international community, we have to play our part to protect our living environment.”
Revenues from the plan would go in part toward new technologies that are designed to help industry reduce its emissions. Separate carbon tax plans in the US, by comparison, would go toward either reducing corporate taxes or be given as a dividend to consumers to offset higher energy cost.
The major industries there to feel the effects of a carbon tax are oil refineries and power generators. Royal Dutch Shell operates in Singapore and said it supports the tax. Ditto for Exxon Mobil, which told Bloomberg that a “uniform price of carbon” is “sensible.”
“We would emphasize the critical importance of a policy design which addresses strong economic growth and the competitiveness of Singapore companies in the international market place,” a Shell Singapore spokeswoman said in an e-mailed statement, to Bloomberg. “It must ensure companies can compete effectively with others in the region who are not subject to the same levels of CO2 costs.”
Meantime, Standard & Poor’s Ratings Services had earlier issued a report saying that the credit ratings of sovereign countries would be affected by global warming. Low-lying nations are especially vulnerable. As examples, it had pointed to Typhoon Haiyan in the Philippines and heavy flooding in Great Britain, all of which caused economic damages and disrupted business practices.
But it then added that the developing nations in Africa and Asia are most at risk, namely because they are low-lying regions that are heavily reliant on farming and agriculture. At the same time, they are not in a financial position to handle catastrophic events.
“Climate change is likely to be one of the global mega-trends impacting sovereign creditworthiness, in most cases negatively,” says S&P, in its report. It’s a view generally supported by Lloyd’s of London, which just said that climate-associated risks must be considered when underwriting policies.