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Singapore government unveils 2021 budget with sustainability focus

Singapore has announced myriad sustainability measures under this year’s government budget. Will they go far enough?

Singapore Finance Minister
Deputy Prime Minister Heng Swee Keat delivers his Budget 2021 speech on Tuesday (16 February). Image: Ministry of Finance

After a year that saw the nation’s pandemic-hit economy suffer its worst recession since independence, Singapore’s public spending will focus on its recovery from the Covid-19 crisis, but measures to tackle the climate emergency, too, will be front and centre, according to a top minister.

In his Budget 2021 speech delivered on Tuesday (16 February), Deputy Prime Minister Heng Swee Keat highlighted the lingering uncertainty in the months ahead, cautioning that the public health and economic situation brought about by the pandemic may yet deteriorate.

Singapore’s economy contracted by 5.4 per cent in 2020, and a recent paper by the country’s Ministry of Finance suggests without support measures rolled out to cope with the impact of the coronavirus, the economy would likely have weakened twice as much last year.

This year’s government budget, titled Emerging Stronger Together, covers a slew of measures to further cushion the blow of the pandemic, including help for workers and businesses, targeted support for worst-hit sectors, and a Covid-19 resilience package worth S$11 billion to address Singapore’s immediate needs, protect public health, and reopen safely.

But Singapore must also “focus on what lies ahead” and “think long-term”, said Heng. “On this little red dot, we must strengthen efforts to tackle climate change, and build a sustainable home for generations to come,” he said.

Heng, who is also Singapore’s Finance Minister, introduced several sustainability initiatives to help cut transport emissions, grow more food locally, and spur green infrastructure development, stressing the need for the country to “invest in new areas” in order to benefit from global structural changes.

Among the measures unveiled are green bonds, which are to be issued for select public infrastructure projects. The minister said Singapore will catalyse capital flows towards sustainable development in the city-state and beyond, and the government has already identified eligible projects worth up to S$19 billion.

One such green project to be financed is Tuas Nexus, Singapore’s first integrated water and solid waste treatment facility, which is set to be completed in phases from 2025 onwards.

Singapore will also step up efforts to incentivise the early adoption of electric vehicles (EV) and cut transport emissions, said Heng.

The country plans to deploy 60,000 EV charging points at public car parks and private premises by 2030, marking a significant increase from the previous target of 28,000. Singapore’s sparse charging infrastructure has been cited as a major barrier to its shift to EVs.

About S$30 million will also be set aside for EV-related initiatives over the next five years, while the cost differential between EVs and internal combustion engine cars will be narrowed further to make electric models more affordable.

Moreover, the government will lower the Additional Registration Fee (ARF) floor to zero for EVs from January 2022 to December 2023. The ARF is paid when registering a car and the rate is determined by the vehicle’s open market value.

Besides dangling various carrots to encourage more car owners to make the switch to cleaner cars, Singapore will also increase petrol duty with immediate effect, hitting those in the pockets that stick tenaciously to their beloved gas guzzlers.

In addition, Singapore will establish a S$60 million Agri-Food Cluster Transformation Fund to support the adoption of technology in the agri-food sector and help hit the country’s target of raising the level of food self-production from the current 10 per cent to 30 per cent of total food needs by 2030.

Green enough?

The budget statement comes five months after Singapore’s Minister for Trade and Industry, Chan Chun Sing, announced that the nation had set aside S$49 million to fund low-carbon energy research and test-bedding efforts in hydrogen and carbon capture and storage.

It also follows on the heels of the newly announced Singapore Green Plan, a wide-ranging sustainable development strategy that cuts across all sectors of society to chart the country’s path towards a greener future this decade.

Released by five ministries last week, the initiative includes infrastructure development, research and innovation, educational efforts, and training opportunities.

Some environmentalists such as a group of SG Climate Rally organisers, however, have criticised the new plan, pointing out that it is merely a compilation of efforts announced previously rather than a strategy ambitious enough to address climate change, an existential threat to the low-lying island-nation.

They highlighted that only three targets—the decarbonisation of schools, the doubling of EV charging stations, and the Entreprise Sustainability Programme—are new, while every other goal included had been discussed or announced in recent years.

More details on the Entreprise Sustainability Programme, which will help companies develop “capabilities in sustainability”, are expected to be released during the debates held by Singapore’s Committee of Supply following Tuesday’s budget statement.

The biggest problem, the group of SG Climate rally organisers observed, is that the Green Plan failed to ratchet up Singapore emissions targets, which have been rated as “highly insufficient” by research group Climate Action Tracker.

Others have pointed out that the involvement of five different ministries—Education, National Development, Sustainability and the Environment, Trade and Industry, and Transport—sends a clear signal that sustainability is a national priority that has a bearing on all sectors, and not just the environment.

Experts have also applauded the initiative for laying out plans to transform Jurong Island, the heart of the country’s petrochemical industry, into a “sustainable energy and chemicals park”.

In a statement, the Singapore Environment Council (SEC), a Singapore-based non-profit organisation, said the announcements of the Green Plan and Budget 2021 were “timely” as not only would they “serve as catalysts” in Singapore’s post-pandemic recovery but ensure that the country is “future-ready and resilient for continued growth”.

Isabella Loh, chairman of SEC, said the new measures signalled a “whole-of-government effort” and would spur the “next bound of sustainability” in Singapore, enabling businesses to move towards a low-carbon future, and accelerating green technology development and adoption.

Earlier this month, six members of parliament filed a motion on climate change—a first in Singapore—urging the government to conduct regular reviews to raise the carbon tax, expand climate education in schools, and add climate defence as a seventh pillar of total defence.

The parliamentarians behind the proposal noted that Singapore’s current carbon tax is low at S$5 per tonne of emissions and highlighted the lack of plans beyond increasing the tax to a maximum of S$15 by 2030. According to Climate Action Tracker, Singapore’s carbon tax needs to be “considerably higher” to be compatible with international climate goals.

A 2020 study by Dutch financial services firm ING Group on Asia’s Covid-19 recovery plans found that Singapore had shirked from a bolder environmental push in its initial response to the pandemic. Climate Action Tracker noted the nation’s stimulus packages announced in June 2020 did not indicate that the funds would be used to accelerate the transition to a low-carbon future.

Singapore aims to halve the amount of greenhouse gas emissions it generates from its 2030 peak by 2050, with the goal of achieving net-zero emissions “as soon as viable in the second half of the century”.

Climate Action Tracker has said that Singapore needs to substantially strengthen its 2030 climate target—which could form the basis for a tougher long-term target—to be in line with the Paris Agreement’s goal of keeping global heating below 1.5 degrees Celsius.

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