Carbon offsets

China vows new financial tools to support drive to carbon neutrality

A woman walks across a bridge in front of a chimney billowing smoke from a coal-burning power station in central Beijing February 25, 2011. Image: REUTERS/David Gray

From Reuters

SHANGHAI : China’s government said it will expand its range of financial tools and make greater use of fiscal and taxation policies to support the shift towards carbon neutrality.

China aims to create a basic financial policy framework by 2030 to support green and low-carbon development, and will also aim to give more play to market mechanisms like carbon and pollution discharge trading, according to policy recommendations from the Ministry of Finance published late on Monday.

The world’s biggest producer of climate warming greenhouse gas has pledged to bring its emissions to a peak before 2030 and to become fully carbon neutral by around 2060.

It has already vowed to start cutting coal consumption from 2026 and bring wind and nearly double solar power capacity to 1,200 gigawatts by the end of the decade.

The new guidelines are aimed at creating “a fiscal and taxation policy system that promotes the efficient use of resources and green, low-carbon development,” the ministry quoted an unnamed official as saying.

The ministry also aims to build an “incentive and restraint mechanism” to encourage green and low-carbon practices among local governments, the official said.

According to the recommendations, the tax system will be adjusted to include more preferential policies encouraging energy and water conservation as well as carbon emission cuts. Import tariffs should also be adjusted to meet low-carbon development requirements, it said.

As well as focusing on key sectors such as energy storage and the shift to renewables, new financial tools will also be developed to help transform the transportation sector and promote new energy vehicles, and encourage recycling and the comprehensive use of resources.

The ministry also said more financial policy support would be given to the construction of carbon sinks, the protection of forests and grasslands, as well as climate change adaptation.

DBS forges on with net-zero goals in 2022

Development Bank of Singapore building. Image: DBS

It is transforming its data centres and server rooms into carbon-neutral assets.

From Singapore Business Review

Development Bank of Singapore (DBS) is forging on with its sustainability goals, amongst its target being to achieve net-zero carbon emissions within its own operations by the end of 2022.

In its latest sustainability report, the bank outlined its biggest environmental-related moves in 2021, which include ceasing the acceptance of new customers who derive more than 25% of their revenue from thermal coal in 2021. 

The bank also pledged to progressively phase out thermal coal financing by 2039.

“There are many environmental challenges in front of us, but we have chosen to prioritise action on climate change as the most immediate issue given the urgency and how it is interrelated with other environmental and social concerns,” CEO Piyush Gupta said in the report.

The bank recently became the first Singapore bank to establish a Board Sustainability Committee.

As part of their goal for their Singapore offices to rely solely on renewable energy by 2030, DBS is transforming their data centres and server rooms into carbon-neutral assets.

Self-service branches and kiosks are also being redesigned to leverage solar power for their energy needs. DBS has also retrofitted its office for net-zero energy consumption.

Beyond the greenification of their physical operations, DBS committed S$20.5b to sustainable financing deals in 2021, more than double the amount from the previous year, the bank said.

DBS was also involved as a bookrunner in a combined S$23.5b of ESG bonds raised.

Large emitters can buy carbon credits to offset carbon tax bill from 2024

Businesses will be able to use “high quality, international carbon credits” to offset up to 5 per cent of taxable emissions, in lieu of paying the carbon tax. Source: ST FILE

From The Straits Times

SINGAPORE – Large emitters in Singapore will from 2024 be able to buy international carbon credits to reduce the carbon tax they have to pay.

Finance Minister Lawrence Wong said on Friday (Feb 18) that businesses will be able to use “high-quality, international carbon credits” to offset up to 5 per cent of taxable emissions, in lieu of paying the carbon tax.

“This will moderate the impact for companies,” he said. “It will also help to create local demand for high-quality carbon credits and catalyse the development of well-functioning and regulated carbon markets.”

Singapore’s carbon tax applies to all facilities producing 25,000 tonnes or more of greenhouse gas emissions in a year.

The current rate, which will be in place until next year, is $5 per tonne of emissions. But this will go up to $25 in 2024 and 2025, $45 in 2026 and 2027, before reaching $50 to $80 per tonne by 2030, Mr Wong announced on Friday.

“I appreciate that some businesses and households may require support as they adjust to the carbon tax increase,” he said.

Partially offsetting tax liabilities with international carbon credits would mean that firms can shrink their tax bill if they buy credits generated by, say, a forest conservation project in Indonesia.

Essentially, it means that a company here would have the option to pay another entity to reduce emissions in another jurisdiction where it may be cheaper to do so.

Mr Wong also said the Government is mindful that firms in emissions-intensive and trade-exposed sectors may face higher costs than those in countries with lower or no carbon tax.

Such sectors include, for instance, the petrochemical sector. Singapore is one of the top 10 exporters of refined oil products in Asia, according to the Economic Development Board.

“Some firms will also need a little more time to make the necessary reduction in emissions or investment in cleaner technologies,” he said.

To this end, the Government will in 2024 be implementing a transition framework to support such firms and manage the near-term impact of the carbon tax on their competitiveness, said Mr Wong.

The framework provides existing companies with allowances for a share of their emissions, which means they would not have to pay carbon taxes for these allowances.

“The allowances will be determined based on efficiency standards and decarbonisaton targets,” Mr Wong said.

“This will help mitigate the impact on business costs, while still encouraging decarbonisation.”

For households, Mr Wong said the higher carbon tax will be felt mainly through an increase in utility bills. At a carbon tax rate of $25 per tonne of emissions, a household living in a four-room Housing Board flat can expect to see a $4 increase in monthly utility bills, he said.

“We will provide support, such as additional U-Save rebates, to help cushion the impact during the transition,” he said.

More details will be announced next year ahead of the carbon tax increase in 2024, Mr Wong said.

The National Climate Change Secretariat urged households to practise energy-saving habits and switch to energy-efficient appliances to mitigate cost impact.

Eligible households can tap the Climate Friendly Households Programme to make the switch to more energy- or water-efficient appliances.

Author: Audrey Tan