Budgeting for a Green recovery for Singapore
When it comes to matching ambition with action, recently in Singapore there have been some positive signs that policy makers may be considering joining the growing number of developing countries, such as the US [2] and UK [7] , which are unveiling their ambitious climate plans. Earlier in Feb Parliament passed a resolution to declare climate change a global emergency [8].
The signalling is a noteworthy shift in discourse from dismissive, defensive responses to calls for raising ambition as recent as last year [9]. However, for the moment the policy is status quo which is nowhere near where we need to be as a developed country [10]. There is little new policy changes from the recent Green Plan 2030 [5] according to a comprehensive but concise analysis by local climate advocacy group SG Climate Rally [4].
A real test of whether any real shift in policy towards more serious climate action will be how much of 2021 budget is committed directly to climate action. Commentators are anticipating an additional 2.5% of GDP (~ S$ 11 billion) deficit this year for economic recovery in the wake of the global pandemic [6] and furthermore that some portion of this may go towards climate efforts.
Incentives to encourage wider adoption of low-emission vehicles; as well as support efforts to increase solar capacity and research into other renewable energy
- Yen, Nee Lee 2021 Singapore is set to release its 2021 budget. Here’s why this budget could be an ‘unusual’ one
A draft budget for a just transition was estimated in an earlier report at a total budget of ~ S$ 90 billion over 30 years [1]. Major components of the budget were directed at decarbonizing the largest sources of emissions in the energy and chemicals E&C and power generation. The other major component of that budget is social relief and transition assistance for sunset industry workers. So to keep pace with that effort Singapore should be spending approximately S$ 3 bill per year on the just transition or just less than 1% of GDP which is in line with reports from economists for how to budget for climate action. For comparison the US and UK plans are 2.3% and 0.2% of GDP respectively, although the UK plan assumes much of that 0.2% will come from the private sector.
So where specifically should this green stimulus money go?
Here are a five specific areas totalling S$ 1.4 bil or 12% of the deficit which would be good uses of public funds for climate action and start the decade started off with a clean break from the timid approach from the past.
- 1 bil Decarbonization engineering
- 300 mil CCS pilot plant
- 100 mil Industry Transformation (IT) maps
- 30 mil Transition relief for sunset industry workers
- 50 mil Community engagement
Decarbonization engineering
The critical gap at a policy level is to match policy action with the scale and speed of the infrastructure changes that will be required to meet the goals for limiting global warming to < 1.5C. Specific areas which have received little attention are the largest emissions source in power generation and the energy and chemicals manufacturers on Jurong Island. Together these two sources represents >90% of Singapore’s total emissions. Infrastructure upgrade needs span a wide range from transportation, buildings, expanding solar and storage capacity, grid connectivity and carbon capture facilities. The total budget for these projects is substantial. Using a conservative $S 900/ton/year and 50 Mt/year is S$ 45 billion. The good news is that once these projects are underway they have great job creation potential (up to 100k) to last for at least the next decade or longer. There is a lot of uncertainty and investing in the wrong technology could be a costly decision that is difficult to reverse. This uncertainty can slow down the political process encouraging hesitancy. Taking the first step to get the engineering done has several benefits. The first is that there is a clearer certainty on the range of the total cost from public funds. Another benefit of getting the engineering done soon is that it identifies the technology gap areas which can stimulate new “green growth” business and entrepreneurial activity. The types of jobs involved in the engineering work are good paying, well suited to Singapore’s highly educated workforce and overlap well with those directly affected in the sunset industry. As a rule of thumb engineering, procurement and project management represents 10–20% of total project costs for budgetary purposes. Not all of that would need to come from the public sector and not all of it needs to be spent in year 1. So S$ 1 bil could be a good level to get started at and then refine in future years based on past experience.
CCS pilot plant
There are few technologically ready solutions for Singapore which deal effectively with emissions from industry compared to carbon capture. For the foreseeable future this may be the only option available for these emissions and they are the largest single source for Singapore. This is one component of the larger decarbonization transformation and similar argument can be made for the job creation potential. Pilot plants are a good way to get started at low risk, learn and optimize a solution that is fit-for-purpose for Singapore. As an example, a small CCS pilot plant was built recently in Tomakomai, Japan for S$ 300 mil [3]. Pilot plants create a safe opportunity for the private sector to follow with plans for larger scale-up.
Industry Transformation maps
Similar to the logic of paying for the engineering for infrastructure changes, the equivalent for the workforce would be to invest in the Industry Transformation maps. The maps address an important component for residents which to answer the question of how these changes will affect their careers. The maps provide details of sample career progressions and the skills and certifications to move into these new roles. The Ministry for Trade and Industry has already developed a S$4.5 billion Industry Transformation Map (ITM) program for 23 industries Industry Transformation Map program [11] so S$ 100 million would be a good start to add an ITM for the new green industries.
Transition relief for sunset industry workers
The oil and gas industry in Singapore is starting to show strain from the combined stress of the dropped travel and mobility, demand for transportation fuels from the global pandemic and the anticipated further lost business from climate change. Shell has announced an estimated 500 jobs to be cut as they downsize their operations[12]. These sunset industries that have a much smaller footprint to expect in a future +1.5C world are likely to continue to shed workers both those directly employed and the small-medium-enterprises (SME) which service these majors. While the workers are highly skilled and could eventually recover into new careers earning similar to what they were before, they may need help to make the transition. Transition assistance costs may be for courses, new certifications or temporary assistance for living expenses while searching for a job. While it may not seem like a lot S$6,000 per worker may mean the difference between getting back on track or falling out of the workforce and not able to fully recover. $15 mil would be a generous estimate to budget to cover 1/3 of the total 25,000 workers employed in the energy and chemicals industry today and the actual affected in the first few years may be fewer than that.
Community engagement
The scale and speed of the changes are unprecedented, and the ripple effects may not be easy to predict. Even if there are options for families to make the transition in their personal lives at minimal costs, change is hard and a general lesson of politics is the general reversion to the mean tendency that resists change of any kind and preserves status quo. The strength of a political mandate is often a critical difference between the successes and failures of policy initiatives. Even though surveys indicate that Singaporeans are supportive of more ambitious climate action [14], political leaders cannot assume that the process of bringing society along is automatic by simply providing the right information to justify the changes on the government website or in a media release. Singapore is unique in how deeply they understand this and integrate it into the policy planning process. That is part of what is meant by co-creation. Community organizers are a skill which can be a key role in the two-way dialogue between residents and policy makers. Community organizing can be a resource intensive process depending on how effective the organizers facilitation and communication outreach skills and leveraging digital resources. For a 1:10,000 ratio of community organizers to residents and a budget of 90k per year per community organizer would be a budget of slightly higher than S$ 30 mil for Singapore’s 3.5 mil citizens. Recently the Singapore government announced a S$50 mil grant program — SG EcoFund with similar aims [13]. Some improvements from the SG Eco Fund could be to be better adapted specifically to the consensus building effort would be to cover the cost of community organizers more directly (it’s excluded from the SG EcoFund) and to set the aims of the program to more clearly aimed at facilitating consensus. The aim of the current program is worded vaguely and could apply to a wide range of activities.
These are a few specific baby steps that would start 2021 off in the right direction.
References
- Hickem, 2020 A Green New Deal for Singapore
https://taylor-hickem.medium.com/a-green-new-deal-for-singapore-5602ee5bb69b - Joe Biden , 2020 Climate Change and Environmental Justice
https://joebiden.com/climate-plan/ - Sheldrick, Aaron, Reuters, 2018 Japan carbon capture site shows promise for industrial use
https://www.reuters.com/article/us-japan-carbon-storage/japan-carbon-capture-site-shows-promise-for-industrial-use-idUSKBN1HQ0WZ - Singapore Climate Rally, 2021 Singapore Green Plan 2030 (assessment) https://www.notion.so/Singapore-Green-Plan-2030-823811b5931c44049e93c8b04632217e
- Singapore Ministry of Sustainability and the Environment, 2021 Green Plan 2030
https://www.greenplan.gov.sg/key-focus-areas/our-targets/?fbclid=IwAR2d1kJ28ypHKHKA1iAnX-b15WW4lerq0FKp1gM0pT9ZYjcmed5iReeofmk - Yen, Nee Lee 2021 Singapore is set to release its 2021 budget. Here’s why this budget could be an ‘unusual’ one https://www.cnbc.com/2021/02/15/singapore-budget-2021-unusual-plan-to-help-covid-economic-recovery.html
- Government of UK, 2020 The ten point plan for a Green Industrial Revolution
https://www.gov.uk/government/publications/the-ten-point-plan-for-a-green-industrial-revolution - Kurohi, Rei Straits Times 2021 Parliament declares climate change a global emergency
https://www.straitstimes.com/singapore/politics/parliament-declares-climate-change-a-global-emergency - Ministry of Trade and Industry, 2020 Round Up Speech by SMS Chee Hong Tat at the Second Reading of the Economic Expansion Incentives (Relief from Income Tax) (Amendment) Bill 2020 https://www.mti.gov.sg/Newsroom/Speeches/2020/03/Speech-by-SMS-Chee-Hong-Tat-at-Second-Reading-of-EEIA-Bill-Round-Up
- Hickem, 2019 The crazy rich Paris Agreement free-riders https://taylor-hickem.medium.com/the-crazy-rich-paris-agreement-free-riders-2988bfb01532
- Singapore Ministry of Trade and Industry, Industry Transformation Maps https://www.mti.gov.sg/ITMs/Overview
- Subhani, 2020 Shell Singapore to cut 500 jobs next year as it downsizes Pulau Bukom operations
https://www.straitstimes.com/business/companies-markets/shell-singapore-to-cut-500-jobs-in-next-three-years-as-it-downsizes-pulau - SG Eco Fund, 2020
https://www.sgeco.gov.sg/ - Mahmud 2019 More than 9 in 10 in Singapore concerned by climate change; most agree to use of taxes to fight impact: Mediacorp survey https://www.channelnewsasia.com/news/singapore/9-in-10-singapore-concerned-climate-change-use-taxes-impact-11785048