Understanding Singapore’s Climate Regulations and How Terrascope Helps Businesses Navigate Them
As sustainability takes centre stage on a global level, Singapore has emerged as a regional leader in Southeast Asia, committing to establishing climate regulations which are unprecedented in this region. Businesses which operate in Singapore must navigate an increasingly complex regulatory framework, which presents multiple potential opportunities and risks. By understanding the implications of net zero legislation, carbon pricing mechanisms and climate disclosure regulations, companies can gain a competitive edge while contributing to a sustainable future. Terrascope can help businesses uncover the path towards climate resilience.
National Targets and Net Zero Legislation
According to its Nationally Determined Contribution, Singapore aims to peak its carbon emissions before 2030, reach (below) 60 MtCOe in 2030 and achieve net zero by 2050. The country is also working on quadrupling its solar energy deployment by 2025 and aims to achieve at least 2 GWp of solar energy by 2030. Singapore also wants to increase the output of sustainable products from its Energy and Chemicals (E&C) sector by 1.5 times from 2019 levels by 2030.
As part of its “80-80-80 in 2030” plan, Singapore aims to have 80% of its buildings’ gross floor area become green by 2030, ensure that 80% of new developments are super low energy from 2030, and achieve 80% improvement in energy efficiency (from 2005 levels) for best-in-class buildings by 2030. From 2030, all newly registered cars in Singapore must also be cleaner-energy models, while all vehicles in the country are expected to run on cleaner energy by 2040. Moreover, at least 20% of schools are also expected to be carbon neutral by 2030.
With Singapore having set ambitious climate targets, businesses must consider how to future-proof themselves against them. Businesses should seize the opportunity to use decarbonisation to expand their revenue streams or pivot towards more sustainable processes and products/services. On the other hand, companies that are not prepared to decarbonise operations are likely to face regulatory and reputational challenges in the future.
The implementation of carbon pricing regulations plays a pivotal role in Singapore's climate framework. In fact, Singapore is the first country in Southeast Asia to implement a carbon tax. While the rate has been S$5/tCO2e since 2019, it is set to increase five times in 2024 to S$25/tCO2e. The rate will increase even further to S$45/tCO2e starting from 2026, and S$50-80/tCO2e by 2030.
While Singapore currently does not have a cap-and-trade emissions trading system, carbon credits can be traded voluntarily. Starting in 2024, companies may purchase high-quality international carbon credits to offset up to 5% of their taxable emissions. Singapore’s carbon tax is applicable for facilities that emit more than 25,000 tCO2e Scope 1 operational GHG emissions annually. It currently covers fifty facilities from the manufacturing, power, waste, and water sectors. Even though Singapore’s carbon tax is not applicable to Scope 2 emissions, facilities - including those from other sectors - would also face higher costs for Scope 2 emissions, which refer to emissions from purchased electricity. This is because power generation companies are expected to pass on some tax burden through increased electricity tariffs.
To avoid exponential increases in business costs due to Singapore’s carbon pricing mechanisms, companies ought to prioritise decarbonising operations. This means starting to accurately measure their GHG emissions as a first step.
To fulfil its climate ambitions, Singapore needs to drive transparency and accountability among businesses. In this regard, carbon disclosure regulations play a pivotal role - by mandating the measurement and reporting of carbon emissions, these regulations enable informed decision-making, encourage emission reductions, and facilitate the transition to a low-carbon economy.
All Singapore Exchange (SGX)-listed companies must share sustainability reports on an annual basis. The sustainability report needs to include Task Force on Climate-Related Financial Disclosures (TCFD) reports on compliance or explain basis. Starting from 2024 (i.e., reporting for FY2023), TCFD reports will be mandatory for listed entities in high-climate risk industries such as finance, agriculture, food, forest products, and energy. This mandatory TCFD reporting will extend to SGX-listed companies in the materials and buildings, as well as transportation sectors from 2025 (i.e., reporting for FY2024).
Furthermore, the Accounting and Corporate Regulatory Authority (ACRA) and SGX Regulation have set up a Sustainability Reporting Advisory Committee (SRAC), which comprises industry, financial institutions, and accounting firms. It aims to provide recommendations on a pathway for Singapore companies, including publicly listed as well as privately held entities, to adopt the International Sustainability Standards Board (ISSB) standards.
Businesses face the risk of penalties if they fail to comply with Singapore’s disclosure regulations, but they can mitigate this risk by embarking on their decarbonisation journey with a trusted platform like Terrascope. The evolving regulatory landscape also presents an opportunity for businesses to align their sustainability reporting with TCFD and other international frameworks, which can enable greater access to green finance.
The Terrascope Solution
Terrascope is an end-to-end decarbonisation platform that helps businesses measure and manage their carbon emissions. Using machine learning and AI capabilities, Terrascope assimilates data from across complex supply chains and fills gaps in data to provide accurate and comprehensive carbon emission calculations across Scopes 1, 2 and 3. By working with Terrascope, businesses can get a thorough understanding of their carbon emissions, broken down by product, geography, process, and more. This, in turn, can drive actionable change in operations and can also help them avoid legal or regulatory penalties.
The SRAC’s recommendations spell some major changes for Singapore companies, and Terrascope can help make those transitions easier.
Find out more in the first episode of Climate Cafe Express - ‘What’s brewing with the SRAC?’ where our Climate Regulations and Reporting Specialist, Ching Hu, breaks down the impact of SRAC’s new recommendations on the future of sustainability reporting in Singapore.