Workers move blocks of ice into a storage unit at a market during a heatwave in Bangkok on April 25. Scientists say global warming is exacerbating adverse weather, with many countries experiencing deadly heatwaves and temperatures hitting records across Southeast and South Asia in recent weeks. Photo: AFP
Opinion
Macroscope
by Chee Yik-wai
Macroscope
by Chee Yik-wai
Climate change: region must follow Singapore’s example and enact carbon tax strategy
A region-wide carbon tax is long overdue to pave the way for a speedy reduction of emissions to protect the environment and accelerate green innovation
Many people in Southeast Asia are feeling the effects of El Nino, as regional governments struggle to cope with unprecedented heatwaves. Electricity bills have shot up for many families trying to beat the heat, for example.
This raises the question of what can be done to tackle the problem. On that front, the Association of Southeast Asian Nations (Asean) appears to be lagging behind the developed world in the carbon trading market and also in implementing a carbon tax.
The European Union has come up with an ambitious plan: a carbon border tax due to come into force in 2026, and already requires companies to disclose emissions of imported goods. While something that ambitious may not work for Asean economies yet, a region-wide carbon tax is long overdue to pave the way for a speedy reduction of emissions to protect the environment and accelerate green innovation.
In 2019, Singapore became a pioneer in Southeast Asia when it introduced a carbon tax of S$5 (US$3.7) per tonne, which covers 80 per cent of its greenhouse gas emissions. It is on track to reach peak emissions before 2030, and has reduced its carbon emissions target for 2030 to 60 million tonnes, from around 65 million tonnes. Unfortunately, the lacklustre performance by other leading industrialised Asean countries means Singapore’s progress will have a limited cooling effect on the region.
The Asean State of Climate Change Report suggests a region-wide carbon tax could have a positive impact on countries’ economies if its revenues were distributed evenly. It also calls for a proper management, reporting and verification system to assist in determining the level of emissions within all sectors.
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Vietnam suffers through its highest ever temperature as heatwave grips Southeast Asia
Vietnam suffers through its highest ever temperature as heatwave grips Southeast Asia
Despite the findings, Indonesia’s plan to impose a carbon tax of US$2.1 per tonne on coal plants has been delayed again. Malaysia and Thailand have pledged to introduce carbon taxes to meet their net-zero goals by 2050 and 2065 respectively, but there is no clear timeline.
While Vietnam imposes an environmental protection tax on fossil-fuel producers and importers, it has yet to announce a fully fledged carbon tax despite being one of the world’s most vulnerable countries to the effects of climate change. Oil-rich Brunei has yet to announce any carbon tax initiative.
Meanwhile, the Philippines remains the only Asean country without a clear net-zero goal despite its national renewable energy programme plan to shift its power grid to a 50 per cent share of renewable energy by 2040. Neither a carbon tax nor a carbon pricing market exist there yet.
While it is unpopular among many industries, a carbon tax is a necessary evil to tilt the balance of the climate change battle in our favour, rather than the relatively weak and largely voluntary carbon trading market. Both play a role in reaching climate goals, but most Asean countries seem to naively believe relying only on carbon trading can deliver the goods.
It is doubtful that a carbon market can better predict a fair price for environmental damage and independently monitor projects’ impacts than a government backed by comprehensive data and inclusive consultations with all stakeholders in society.
A recent joint investigation by The Guardian, German weekly Die Zeit and the investigative group SourceMaterial has exposed the potential vulnerabilities and ineffectiveness of large-scale carbon trading projects worldwide, many promoted by Verra, the world’s biggest carbon credit provider. It found that investments by Disney, Shell, Gucci and other big corporations into Verra’s carbon credits were largely worthless, and ineffective at stopping rainforest destruction.
It also found evidence of forced evictions of local communities at a forest-based carbon offsetting project funded by Disney and jointly operated by Conservation International in the Peruvian Amazon, leading to Verra CEO David Antonioli’s resignation. This has shaken confidence in the company and the carbon trading industry.
These are the kind of issues an Asean carbon trading market could face. Thus, more collaboration is needed on evaluation standards and rules for exchange to improve pricing mechanisms. However, a sufficiently high carbon tax with steady annual increases would still be the biggest game-changer.
Successful interventions for the global good result from decisive government regulations. Without a carrot-and-stick approach that makes owning internal-combustion-engine vehicles much more costly and inconvenient, electric vehicles would not have become popular in China, Europe and the US.
If companies avoid paying a carbon tax, they should be made to invest in green innovation such as clean energy to help reduce emissions. In this, Asean countries can benefit from Chinese investment and technical know-how to support their clean energy development. Additional carbon tax revenues in the region could be governed by an independent board to ensure they go into a “loss and damage” fund to invest in green initiatives.
To create a thriving and sustainable economic hub, Asean needs a coherent carbon tax strategy, with each regional government determining its own rate. There is no time to waste.
Chee Yik-wai is a Malaysia-based intercultural specialist and the co-founder of Crowdsukan focusing on sport diplomacy for peace and development
