The call to combat climate change grows undeniably louder each day. As nations attempt to reduce their carbon footprints, industries, particularly the manufacturing sector, find themselves under the spotlight, and rightfully so.
Historically, the manufacturing and production sectors have been significant contributors, amounting to one-fifth of global carbon emissions.
With the ambitious goal of achieving net-zero emissions by 2050, as per the United Nations’ Paris Agreement in 2015., the urgency for change is undeniable.
This article delves deep into Singapore’s proactive measures, offering a comprehensive understanding of the nation’s commitment to a greener future, and what it means for businesses in the region.
The Current Carbon Landscape in Singaporean Manufacturing
The manufacturing sector has been a cornerstone of the nation’s economy since the 1960s. In fact, as a pillar that generates one-fifth of its total economic output, it is expected to expand by 50% over the next decade.
However, the industry also contributes significantly to its carbon footprint, and with its growth, emissions are expected to follow in tandem. The challenge lies in striking a balance — how can manufacturers reduce carbon emissions without compromising productivity and profitability?
The answer is not straightforward by any stretch of the imagination. Carbon emissions from manufacturing arise from various sources, including energy consumption, waste production, and transportation.
Tackling each source requires a nuanced approach, understanding the intricacies of manufacturing processes and the external factors that influence them.
Singapore’s Proactive Approach to Tackling Carbon Emissions
Recognising the pivotal role of manufacturers in the carbon equation, Singapore has been proactive in its approach. The government has rolled out a series of initiatives, policies, and grants, each designed to address specific challenges faced by manufacturers.
Industry-Wide Collaborative Initiatives
JTC, for example, has rolled out several schemes to reduce carbon emissions in the manufacturing industry. Some clean energy initiatives include their SolarRoof and SolarLand programmes that involve industry collaborations with Sembcorp Solar and Terreneus Energy, for example.
Other initiatives include the Jurong Island (JI) Renewables Open Call, JI Circular Economy Study, and a few greenery and biodiversity projects. They are also working on introducing an industry sustainability framework.
Singapore first introduced carbon tax under the Carbon Pricing Act (CPA) in 2019. This tax applies to all industrial facilities that have yearly GHG emissions of 25,000 tonnes of carbon dioxide equivalent.
At present, the carbon tax is set at S$5 per tonne, and will be raised progressively to S$25 from 2024 to 2025 and S$45 from 2026 to 2027, up to S$80 by 2030. The carbon tax revenue obtained is used in a variety of ways:
- To mitigate the impact on households
- To support decarbonisation efforts
- To support the shift to a green economy
From 2024 onwards, companies can use high-quality international carbon credits to reduce up to 5% of their taxable emissions.
Resource Efficiency Grant for Energy (REG(E))
One of the standout initiatives is the Resource Efficiency Grant for Energy (REG(E)). This grant is more than just financial aid; it is a testament to Singapore’s commitment to a sustainable future.
The REG(E) is designed to bolster energy efficiency among manufacturing facilities and data centres in Singapore. By providing financial support, the grant aims to incentivise businesses to adopt greener practices, ensuring they remain competitive in a carbon-constrained future.
To be eligible, companies must be registered in Singapore and own or operate an industrial facility within the nation. They should have a group annual sales turnover exceeding S$500 million. Additionally, the projects undertaken should result in measurable carbon abatement and achieve a minimum carbon decrease of 500 tonnes per annum.
How It Works
The grant quantum is calculated based on the carbon reduction achieved by the project. Projects can receive funding support of up to 50% of qualifying costs. Once the project is completed and meets the award conditions, a one-time disbursal of the full grant amount is provided.
The (REG(E)) represents Singapore’s strategic commitment to sustainability. By incentivising energy-efficient practices, the grant aligns economic competitiveness with environmental responsibility.
With its focus on tangible carbon reduction, REG(E) ensures that manufacturers contribute directly to a sustainable future, balancing growth with ecological preservation.
The Backup Plan — Carbon Credits and Nuclear Energy
Achieving net-zero carbon emissions by 2050 is a commendable goal that Singapore has set for itself. However, the path to this target is fraught with challenges, especially for a nation with limited land and natural resources.
Senior Minister of State for Finance and Transport, Chee Hong Tat, acknowledged this reality, admitting that Singapore might fall short of this goal without leveraging strategies like carbon credits and nuclear energy.
Carbon credits are measurable and verifiable, and can be used to reduce carbon emissions. As mentioned above, manufacturers in Singapore can purchase international carbon credits to cut down on their taxable emissions from 1 Jan 2024.
This offers companies a means to access alternative decarbonisation methods for emissions that are difficult to diminish. In the process of doing so, it also channels financial resources to enable emission reduction or removal initiatives.
Carbon credits support the development of carbon markets as well, forming an integral part of the nation’s efforts to reach net zero emissions by 2050.
Related Read: How Does Singapore Ensure High-Quality Carbon Credits?
Historically, the mention of nuclear energy has evoked concerns, primarily centred around safety and waste management. Yet, with technological advancements, modern nuclear reactors are not only more efficient but also considerably safer.
For Singapore, a nation constrained by land, nuclear energy might emerge as a pivotal clean energy source. Its potential to deliver consistent power, devoid of the intermittency issues that some renewables face, makes it a compelling option to consider.
In light of these insights from Senior Minister Chee Hong Tat, it is evident that while Singapore remains steadfast in its sustainability efforts, the pragmatic approach might involve a combination of traditional sustainable practices bolstered by carbon credits and, potentially, nuclear energy.
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Where to Next for Singaporean Manufacturers in a Carbon-Cutting Future
For businesses operating in Singapore, the evolving landscape towards sustainability signals a pivotal shift. As the nation intensifies its efforts to achieve carbon-cutting objectives, industries, especially manufacturers, are presented with a dual narrative of challenges and unparalleled opportunities.
The government’s proactive initiatives, ranging from financial incentives to decarbonisation strategies, underscore the robust support framework available for businesses ready to innovate and adapt. With expert entities like InCorp offering guidance, the complexities of ESG reporting become less daunting.
In essence, the future for Singapore’s business sector is not merely about adaptation but about harnessing sustainability as a strategic differentiator. By embracing these shifts, businesses can position themselves at the vanguard of a greener, more sustainable economic future.
- Singapore aims to achieve net-zero carbon emissions by 2050, aligning with the United Nations’ Paris Agreement.
- The REG(E) provides financial incentives to manufacturers for projects that result in measurable carbon abatement, promoting energy-efficient practices and sustainability.
- InCorp offers expertise in ESG and climate reporting, guiding businesses through the process to ensure accurate, clear, and regulatory-compliant reports. They provide tailored solutions to meet specific business needs in sustainability reporting.