SINGAPORE: Singapore was ranked first by professionals in the energy sector for the second year in a row as leading in energy transition efforts in the ASEAN region. Conducted by the Sustainable Energy Association of Singapore (SEAS) with 250 individuals from the ASEAN energy sector, the annual ‘State of the Energy Transition in ASEAN’ survey saw close to 95% of respondents voting for the city state, with Malaysia ranking second and Thailand and Vietnam tied in the third spot.
However, less than 20% of respondents rate Singapore’s efforts in the transition as ‘very satisfactory’ in terms of advancing towards its renewable energy targets. While a significant portion of respondents (45%) view Singapore’s progress as satisfactory, 32% believe more improvements are needed, indicating that while progress is recognised, there is still substantial room for improvement to meet the nation’s goals.
In terms of enablers to the energy transition, government policies (89%) and economic incentives (59%) are seen as the main drivers, underlining recognition for Singapore’s efforts and the continuing critical role of policy and financial support. A new trend in growing demand for clean energy from large tech corporations (45%) is also a notable finding this year, alluding to the increased focus on AI and data centre investments.
When it comes to challenges, respondents cite limited avenues to offset carbon (40%) indicating that a push towards greater options for verifiable carbon trading could be the answer to accelerating national decarbonisation.
Singapore as a Regional Carbon Trading Hub
The survey also explored how companies have responded to Singapore’s 2024 carbon tax hike. Interestingly, about a third of respondents (36%) reported minimal impact to their companies, with only a small fraction (3%) purchasing more carbon credits. However, close to a quarter of respondents indicated that the tax hike has prompted them to reconsider their long-term sustainability strategies, reflecting a growing awareness of the need for proactive carbon management.
Responding to Singapore’s ambitious goals to become a carbon trading hub, the majority of respondents (67%) believe that a carbon trading system would be effective in reducing emissions, reinforcing Singapore’s strategic push towards playing a central role in the regional carbon market.
The ability to offer greater avenues for carbon offsetting (61%) and the potential economic benefits (58%) of carbon trading were highlighted as primary advantages, suggesting a strong belief in the practical and financial value of carbon trading mechanisms.
There is a clear call for the establishment of comprehensive and reliable carbon accounting systems (69%) and the development of transparent regulatory frameworks (67%). This is seen as essential for fostering trust and ensuring the credibility of carbon credits within the market.
While domestic infrastructure and regulatory frameworks are a priority, forming regional and international partnerships (58%) is also considered crucial for enhancing Singapore’s role in the global carbon market.
Challenges to Singapore’s Carbon Trading Ambitions
Despite these opportunities, the survey also sheds light on several significant challenges that Singapore must address to fully realise its carbon trading ambitions in the region.
A major obstacle identified is the lack of uniform regulations across ASEAN countries (86%), which complicates the implementation of a regional carbon trading system. Additionally, inconsistent enforcement and compliance mechanisms (61%) further hinder progress, emphasising the need for harmonised policies.
Uncertainty about the credibility of carbon credits (50%) and a lack of awareness and understanding of carbon trading processes (40%) are cited as significant barriers to broader participation. This highlights the importance of enhancing market transparency and providing clear regulations on carbon compliance and trading to build confidence among potential participants.
While Singapore’s carbon pricing and trading mechanisms are generally viewed as moderately effective (41%), only a small percentage (5%) of respondents consider them very effective. This suggests that while the framework is in place, there is a pressing need for refinement and continuous improvement to maximise its impact.
To advance its position as a carbon trading hub, survey participants suggest that Singapore needs to focus on robust infrastructure for carbon trading transactions (58%) and enhancing market liquidity and accessibility in the carbon markets would increase participation (54%).
Establishing competitive and attractive carbon pricing mechanisms (63%) is also vital for sustaining interest and participation in the carbon market, while addressing credibility issues surrounding carbon credits and increasing awareness through targeted education and transparent processes will be crucial for long-term success.
Edwin Khew, Chairman, SEAS, commented: “As Singapore continues to lead the region in its energy transition journey, the insights from our survey underscore the critical importance of robust carbon pricing and trading systems as a means to accelerate the Net Zero transition in Singapore. What’s more, the findings highlight the strategic role that Singapore can play as a carbon trading hub, not just in the region but globally, establishing benchmarks in carbon pricing, incentives and mechanisms. This will serve to encourage harmonised regulatory policies in the region, addressing the challenges and seizing opportunities that all ASEAN countries can benefit from. The inaugural Asia Carbon Summit at ACES 2024 is our contribution to the important carbon conversation, which we hope will spark innovation and action amongst both the public and private sectors.”
‘The State of the Energy Transition in ASEAN’ was conducted online in August 2024 and gathered insights from 250 industry professionals from the energy sector based in Southeast Asia.
The Asia Clean Energy Summit (ACES), the flagship conference of the Sustainable Energy Association of Singapore, will return on October 22-24, 2024 at the Sands Expo and Convention Centre, Singapore, during the Singapore International Energy Week (SIEW), with an expanded focus on carbon markets through the inaugural Asia Carbon Summit. The summit will feature keynote speeches, panel discussions, and workshops with experts from around the globe. Topics will include the latest developments in carbon pricing, the integration of carbon markets in corporate strategies, discussions on decarbonising hard to abate sectors and innovative technologies for carbon capture utilisation and storage.
