Singapore may not have a carbon tax regime yet but being a financial hub, it may be poised to be a centre for water and carbon trading.
This is according to the inventor of carbon trading, Dr Richard Sandor, who was speaking at a Singapore Exchange (SGX) lecture.
Governments around the world are attempting to cut carbon emissions and reduce the effects of global warming.
Regional countries are reassessing their entire energy policy to be in line with global demands to cut carbon emissions.
Japan and Australia have already introduced carbon taxes.
Meanwhile, South Korea has made low carbon, green growth a national priority.
While Singapore is still considering its options in this area, it may be ready to play a part in promoting the trading of such products.
Singapore’s infrastructure as an international financial centre with the largest market for equity futures makes it suitable to become a trading centre for carbon tax credits.
Dr Sandor mentioned in a special lecture this form of permit trading will help countries to meet their obligations to reduce carbon emissions.
“It (Singapore) got enough carbon footprint to participate perhaps with other countries like Australia in some kind of international agreement with countries in the region. By itself, it could probably be a market but not a large market,” said Dr Sandor who is the chairman and chief executive officer of Environmental Financial Products.
Experts said the recent move by the SGX to acquire a 49 per cent stake in the country’s “Energy Market Company” (EMC) may be seen as taking a step closer towards this development.
Yet, the SGX said it is still early days.
EMC operates the National Electricity Market of Singapore — the country’s market for “wholesale electricity trading.”
SGX’s chief executive officer Magnus Bocker said: “Out of energy pricing, comes the price of the emission rights and carbon trading. I think it may be a little bit early to see where we will take that but if you look into other countries like in Europe, you have seen electricity market and carbon trading over time have come very close to each other and how they are traded together.”
Supporters of sustainable energy think Singapore will make an ideal carbon emission trading centre.
This is because most of the sustainable and renewable projects are funded from the green city state.
Sustainable Energy Association of Singapore’s chairman Edwin Khew, said: “A lot of sustainable or renewable projects within the region is around Singapore. It is the fastest growing area particularly for renewable projects that Singapore fits well as a centre to trade carbon.”
However, supporters of carbon emission trading do not think such product will take off so soon as most countries have yet to agree an international climate change agreement - the Kyoto Protocol.
They think countries will achieve their own objectives and goals and then find bilateral ways to link to this international agreement.
In Singapore, the government has embarked on various measures to reduce emissions, which is expected to reach 77.2 million tonnes by 2020 under a business-as-usual scenario.
Singapore aims to reduce its carbon emissions by 7 to 11 per cent below the 2020 business-as-usual levels. The business-as-usual level refers to Singapore’s projected greenhouse gas emissions without policy intervention.
