Notes from a Warming Island*

Singapore's Prime Minister, Lee Hsien Loong, wasn’t pulling any punches in a recent National Day Rally speech. But his target wasn’t an opposition party or a regional rival. Instead, it was the reality of a changing climate. "Climate change may seem abstract and distant for many of us, but it is one of the gravest challenges facing humankind," said PM Lee. His comments coincided with a Public Consultation by Singapore's National Climate Change Secretariat seeking feedback on the country's long-term low emissions strategy. The Public Consultation Document (PCD) summarizes Singapore's 2016 Climate Action Plan while posing questions for citizens on how to respond to climate change. It's clear that Singapore has already made real progress in thinking about and responding to climate change. But since the NCCS asked, here are some suggestions I came up with:

1) Set ambitious goals for the crucial post-2030 period.

a) The country's current decarbonization plan will not meet the goals of the Paris Agreement. Currently, Singapore has pledged "to reduce [its greenhouse gas emissions per dollar of GDP] by 36% from 2005 levels by 2030, as well as to stabilise [its absolute level of] emissions with the aim of peaking around 2030." However, the PCD also notes that "to limit global warming to 1.5C, global net human-caused emissions of carbon dioxide (CO2) would need to fall by about 45% from 2010 levels by 2030, and reach 'net zero' around 2050." Singapore's goal of having emissions peak in 2030 is clearly out of the step with the 1.5C target unless accompanied by a more aggressive package of carbon reduction policies after that. Many countries and cities have already set out ambitious targets for reaching net zero emissions by 2050. As a country blessed with the ability to plan for the long term, Singapore should articulate its goals for the crucial 2030-2050 period, and should resolve to lead Southeast Asia in this respect.

b) Singapore's carbon price path doesn't capture the full social cost of carbon pollution. The current trajectory of carbon prices ($5/tonne till 2023 and $10-15 by 2030) is quite low compared to most calculations of the cost to society of emitting this carbon. While the Government is understandably cautious about maintaining Singapore's industrial competitiveness, taxes and incentives can be used more aggressively over the long term to reduce emissions and promote innovative technology such as Carbon Capture, Use and Storage (CCUS).

2) Outline how to achieve the greatest emission reductions at the lowest cost. The PCD does an excellent job of laying out various options for decarbonization in Singapore. What is lacking, though, is a sense of how large each of these opportunities is and how much each of them would cost. For example, the PCD notes that Singapore faces several challenges in decarbonizing its power sector. Given that power accounts for a whopping 39% of Singapore's greenhouse gas emissions, it is a crucial component of emissions reductions. A fossil fuel-dependent grid also prevents Singapore from unlocking the full range of decarbonization options. Electric vehicles, for example, do not make much sense if the electricity comes from fossil fuels like natural gas. Yet a casual reader of the PCD may not grasp the scale of this compared to steps like residential energy efficiency. Laying out the cost and scope of potential reductions will help Singaporeans better understand the logic of future decarbonization choices.

3) Craft regional solutions. Except for the section on clean electricity imports, the PCD focuses on low-carbon solutions within Singapore's borders. However, it would be valuable to hear where regional solutions may help lower emissions more cheaply, at greater scale and with co-benefits. Take, for example, possible initiatives to reduce deforestation in neighbouring countries. This offers a major decarbonization opportunity and would have the happy side effect of reducing the haze that affects Singapore from time to time.

4) Apply the best of ESG thinking to the country's investments. The PCD mentions the importance of green financing, focusing on the creation of green financial products. But it is worth noting that national investment vehicles such as GIC and Temasek are particularly well-placed to consider investments with a multi-generation horizon. There will be understandable concern at the thought of mixing financial return goals with social and environmental goals. But it would be strange to ignore the climate change implications of the nation's financial investments today only to require higher outlays in the Government's budget in the future. Thankfully, ESG ("Environmental, Social & Governance) investing is an increasingly sophisticated discipline and can be applied to a country's investments as well as an individual's portfolio.

5) Design a socially equitable transition. There's no denying that the low-carbon transition entails costs, even if these are better thought of as investments which produce benefits in the future. Therefore, it is important to ensure that these costs are not borne disproportionately by low-income Singaporeans who may already be struggling to pay their electricity and transportation bills. By addressing these equity concerns directly, the Government can allay fears that the low-carbon transition will become an untenable burden.

Despite some current headwinds, Singapore’s economy remains the envy of many other countries. This is the result of ambitious long-term goals coupled with outstanding execution. Indeed, PM Lee's National Day rally speech outlined the impressive array of projects that the Government intends to complete over the coming decades. Formulating and implementing an ambitious low-carbon plan will be even more challenging than the mega-projects PM Lee mentioned, but there’s no alternative to defending our small, warming island from the ravages of climate change.

* With apologies to Bill Bryson and Neil Humphreys