Research Database

Pricing carbon is a widely used policy instrument for climate change mitigation. Quantitative analysis of carbon pricing are mainly conducted at the regional and national level, rarely at the city level due to data availability. As a representative of coastal megacities that are vulnerable to both climate change and climate policies, Singapore has announced to impose carbon tax on large direct emitters as a complementary mitigation option to technical measures. A city-level Computable General Equilibrium (CGE) model is developed to simulate potential impacts of carbon pricing on the city, including paying border-carbon-adjustment (BCA) on exports or introducing a domestic carbon tax. Different sector coverages and carbon tax revenue recycling schemes are investigated for domestic carbon tax. The simulation results show that a domestic carbon tax is a more cost-effective option than paying BCA. Given an identical carbon price at S$10/t-CO2, GDP, total exports and household consumption would decline less and average abatement cost is much smaller in the carbon tax scenarios compared to the BCA scenario. In terms of absolute emissions reduction, a carbon tax that covers energy, manufacturing and land transport sectors would be preferred, making emissions around 2.7% lower than 2010 baseline level.

Singapore is an island city-state. It lacks conventional energy resources and is alternative energy disadvantaged. In the past decade (2000-2010), its energy-related carbon emissions increased from 37.8 to 44.4 million tonnes of CO2. This paper analyses the city state’s carbon emissions from the demand perspective using the input-output (I-O) method and investigate the drivers of emission changes using structural decomposition analysis (SDA). It is the first comprehensive analysis of Singapore’s emissions using the I-O framework. The results obtained show that exports accounted for nearly two-thirds of its total emissions and growth in its emissions in the last decade was largely export-driven. Emissions increased as export-oriented industries and export volume expanded. Fuel switching and energy efficiency, however, helped to lower growth in emissions. Besides exports, household-related emissions accounted for about a quarter of Singapore’s total emissions. The emissions related to different household groups remained fairly stable as increases in embodied (indirect) emissions were offset by decreases in direct emissions. The high-income household group registered the largest increase in direct emissions, while the middle-income household group registered the largest increase in embodied emissions. The policy implications of our findings are discussed.