In this year’s Budget speech, Finance Minister Lawrence Wong discussed raising the carbon price from the current $5 to $80 per tonne of emissions over the next decade. Such bold leadership contrasts with that in many countries that are slow to realise that we need to stop treating our precious atmosphere as one big toilet into which dumping our wastes is “free”.
To put this carbon price in perspective – and assuming broad incidence across all manner of goods and services — $80 per tonne amounts to $400 for an average Singaporean whose consumption emits 5 tonnes per year in the year 2030.
The Singapore government has shown leadership in tackling previous challenges. Realising that access to roads was not free, Singapore pioneered road pricing in the 1970s. In 2020, Singapore’s regulators were again first to allow the sale of meat grown in bioreactors, a step the United States seems likely to follow this year.
The incidence of carbon pricing currently falls on some businesses, for example, electricity generators that use natural gas and emit carbon into the atmosphere. While this makes implementation relatively simple, our view is that eventually all of society needs to engage in the transition from carbon-intensive products to a modern sustainable economy.
In particular, consumers are the trigger to all supply chains and need to participate fully as shoppers. For that, carbon literacy, or understanding the carbon impact of one’s consumption choices, is key. The three sectors in which household choices most influence carbon emissions – that is, have a large carbon footprint – are utilities like electricity and water, transportation, and food (including plastic packaging that ends up incinerated).
We propose that Singapore again consider leading the way in developing a carbon score for individuals. Just as individuals have a credit or health score, they can have a carbon score.
What we are proposing is not easy. There are at least two challenges. First, a consumer’s carbon footprint needs to be accounted for. Building a scorecard that is relatively transparent and accurate will require the collaboration of statutory boards, research institutes at universities and more.
Next, such data needs dissemination to a regulatory authority, such as IRAS, besides of course the consumer. As in the adage “what you don’t measure, you can’t control”, consumers can learn about how their choices drive carbon emissions and adjust their behaviour in response. Changes by consumers will then drive innovation by the private sector, for example, in the development of new, greener food products.
Digital wallets and measurement of carbon footprint
We have to measure consumer activity as it relates to transportation, utilities, and food consumption choices.
Apps for ordering food, transport and electronic payments are proliferating. Our wallets are going digital. This means that most of our activities are being electronically recorded.
We know how much petrol we pump into the car, how many Grab rides we order in a month, how often we tap in and out of a public bus. We know with sufficient accuracy the carbon embedded in each of these choices, for example, from extracting the oil in the Middle East to selling petrol at our local pumping station. A 10 km car ride would emit around 3 kg of carbon dioxide, well to wheels, about 10 times more the amount than that produced from shared public transit. Electricity and water payments are recorded by utility providers or through NETS and bank statements. With some tweaks, we can also capture itemised food purchased at restaurants or through delivery apps.
The food transition
We will inevitably miss out on some spending that is done with cash like food purchases at hawker stalls. But over time, we will capture more and more of such transactions as consumers switch to using electronic wallets like PayLah!.
You may be wondering: is there a difference between the carbon footprints of the foods we eat? Clearly, the answer is yes!
Because the carbon in their choices has been obfuscated, few consumers realise that the difference between eating beef versus a diet rich in plant protein is about 25 times. While not as green as beans and lentils, even chicken and pork fare better than red meats farmed from ruminant livestock. A Singapore-based study ordered by Temasek found that “producing 30% of Singapore’s nutritional needs locally by 2030, adopting optimal health diet, and replacing 50% of red meat with plant-based meat will significantly reduce greenhouse gas emissions by ~26%”. One kilogram of chilled beef from Brazil emits a staggering 38 kg of carbon from farm to table. This contrasts with one kilogram of fresh chicken from Malaysia or one kilogram of locally farmed eggs emitting 3 kg of carbon each.
Usage of the carbon footprint scorecard
Consumers can use the scorecard to learn about their carbon footprint. There will be important considerations to take into account, such as age, gender, race, and other characteristics. There will be health and religious considerations that can cause variation, for example, in dietary requirements. But these accommodations can be debated once all the data are collected and can thus be analysed. Data privacy and sensitivity concerns will also be paramount. Similar protocols will be in place as with credit and health scorecards, or digital mobility tracking in response to another crisis (the pandemic).
As obfuscation gives way to consumers learning and responding to greener alternatives, both monetary and non-monetary incentives such as the carbon price announced in the Budget and the information proposed here, will boost green innovation. This is in line with Minister Lawrence Wong’s idea to have an entrepreneurial society.
At some point, should society choose this path, the carbon scorecard will enable monetary and non-monetary incentives to be integrated. Just like the authorities tax individual income through a progressive tax, in the future households can be taxed progressively according to their carbon footprint. For example, marginal carbon prices can be $0 per tonne up to 5 tonnes per year and rising thereafter. Money helps focus the mind. And because annual “carbon filing” is kept separate from product prices, such a measure is less likely to be inflationary than charging a carbon tax on each individual item on the supermarket shelf.
Carbon inequality
The rich account for most of the carbon that flows into the atmosphere (let alone the stock due to past flows). A recent article published in Nature Sustainability finds that the average United States resident has a carbon footprint over 10 times larger than that of the average citizen in India. The top one-fifth of US emitters have a footprint 400 times that of the bottom one-fifth in sub-Saharan Africa.
What’s more, a growing body of research shows that the poor will bear the brunt of climate damage, as they have the least means to protect themselves. In effect, with absent carbon measurement and carbon pricing, the world’s poor are subsidising the consumption of the rich.
Righting this wrong is precisely what Singapore’s Finance Minister had in mind when delivering his Budget speech.