Climate change is one of the greatest challenges of our time, and countries worldwide are stepping up efforts to curb greenhouse gas (GHG) emissions. Singapore is no exception. With the Carbon Pricing Act (CPA) introduced in 2019, the country has taken a bold step toward regulating carbon emissions.
The CPA doesn’t just impose rules—it’s designed to encourage accountability, sustainability, and innovation among businesses. For companies, understanding and complying with this act is not just a regulatory necessity but a move toward environmental responsibility.
In this guide, we’ll explore the key elements of the CPA and what they mean for businesse
What Is a Product Carbon Footprints?
A product’s carbon footprints is the total amount of greenhouse gases (GHGs) it generates—from the time raw materials are extracted, through production and shipping, all the way to when it’s used and thrown away.
Reducing this footprint isn’t just about being eco-friendly—it’s also about making smarter, safer decisions for your business and your team.
What is the Carbon Pricing Act?
The Carbon Pricing Act is Singapore’s legal framework for managing greenhouse gas emissions. It introduces structured Measurement and Reporting (M&R) requirements for industrial facilities and enforces a carbon tax for large emitters.
Why Was the CPA Introduced?
Singapore is highly committed to global climate agreements, including the Paris Agreement, which seeks to limit global warming to well below 2°C. By introducing the CPA, Singapore aims to:
- Improve transparency: Accurate data on GHG emissions helps the government and industries track progress.
- Encourage accountability: Businesses are incentivized to take ownership of their carbon footprints.
- Implement a carbon tax: Facilities that emit higher levels of greenhouse gases pay more, promoting greener practices.
Who Needs to Comply?
Only some facilities are subject to the CPA, but those that are fall into two main categories based on their annual emissions.
1. Reportable Facilities
Facilities emitting between 2,000 and 25,000 tonnes of CO₂ equivalent (tCO₂e) annually must register as reportable facilities. These facilities are required to:
- Submit an annual Emissions Report detailing their emissions.
- Monitor their emissions to ensure accurate reporting.
Unlike taxable facilities, reportable facilities are not subject to a carbon tax.
2. Taxable Facilities
Facilities emitting 25,000 tCO₂e or more annually are classified as taxable. These facilities have stricter obligations:
- They must submit both a Monitoring Plan and an Emissions Report, verified by an independent third party.
- They are subject to the carbon tax, calculated based on their verified emissions.
What Greenhouse Gases are Covered?
The CPA applies to a range of greenhouse gases, including:
- Carbon dioxide (CO₂)
- Methane (CH₄)
- Nitrous oxide (N₂O)
- Sulphur hexafluoride (SF₆)
- Hydrofluorocarbons (HFCs)
- Perfluorocarbons (PFCs)
- Nitrogen trifluoride (NF₃)
These gases are categorized based on their contribution to global warming, measured in terms of Global Warming Potential (GWP).
The Process of Measurement and Reporting
The M&R framework ensures emissions are tracked and reported consistently across all facilities. This involves several critical steps:
Step 1: Monitoring Emissions
Facilities must monitor emissions from two primary sources:
- Fuel Combustion: Emissions generated by burning fuels such as coal, natural gas, or diesel.
- Industrial Processes and Product Use (IPPU): Emissions that occur during manufacturing or chemical reactions, independent of energy use.
Step 2: Categorizing Emissions
Emissions are further divided into:
- Reckonable emissions: These include direct emissions from fuel combustion and industrial processes. They count toward the CPA’s emissions thresholds.
- Non-reckonable emissions: These are emissions excluded from threshold calculations, such as those from biogenic fuels or electricity consumption.
Step 3: Submitting the Emissions Report
Each year, facilities must compile and submit an Emissions Report to the National Environment Agency (NEA). This report should include:
- Activity data for all emission sources.
- Calculations for each type of GHG emitted.
- Supporting documents to validate the data.
For taxable facilities, the report must also be verified by an independent third party.
The Role of GHG Managers and Designated Representatives
Compliance with the CPA requires facilities to appoint specific personnel to oversee reporting and communication.
The GHG Manager
The GHG Manager is responsible for:
- Collecting and analyzing emissions data.
- Ensuring accurate measurement and reporting.
- Submitting the Emissions Report to the NEA.
To qualify, a GHG Manager must have:
- Certification as a Singapore Certified Energy Manager or equivalent qualifications.
- At least three years of experience in energy management, GHG accounting, or facility operations.
The Designated Representative
The Designated Representative serves as the primary contact for all regulatory matters related to the CPA. Unlike the GHG Manager, no specific qualifications are required for this role.
What Happens if a Facility Fails to Comply?
Non-compliance with the CPA can result in significant penalties, including:
- Fines for failing to submit required reports.
- Legal consequences for submitting false or misleading information.
- Additional scrutiny and potential audits by the NEA.
Facilities are also required to ensure continuous compliance. If a GHG Manager resigns, a replacement must be appointed within three months to avoid penalties.
The Carbon Tax: An Incentive for Sustainability
One of the CPA’s most significant components is the carbon tax. This tax applies to facilities emitting 25,000 tCO₂e or more annually.
How is the Tax Calculated?
The tax is calculated based on a facility’s verified reckonable emissions. By linking tax liability to emission levels, the CPA creates a strong financial incentive for businesses to adopt cleaner technologies and reduce their carbon footprints.
The Challenges of Compliance
Adhering to the CPA can be complex, particularly for facilities new to emissions reporting. Common challenges include:
- High initial costs: Setting up monitoring systems and training staff can require significant investment.
- Data accuracy: Ensuring emissions data is reliable and complete requires meticulous record-keeping.
- Regulatory complexity: Understanding and following the CPA’s detailed guidelines can be daunting.
However, the government provides several resources to help facilities navigate these challenges, including the Emissions Data Monitoring and Analysis (EDMA) system.
The Benefits of the Carbon Pricing Act
While the CPA introduces new responsibilities, it also offers clear advantages for businesses and the environment:
- Encourages Innovation: Facilities are motivated to explore energy-efficient technologies and processes.
- Builds Reputation: Demonstrating compliance with the CPA can enhance a company’s image as a responsible and sustainable business.
- Aligns with Global Standards: The CPA ensures Singapore’s industries are on par with international sustainability practices.
- Saves Costs in the Long Run: Improved energy efficiency often leads to lower operational expenses over time.
Practical Steps for Compliance
For businesses preparing to comply with the CPA, the following steps can simplify the process:
- Evaluate Your Emissions: Assess whether your facility meets the thresholds for reporting or taxation.
- Set Up Monitoring Systems: Establish systems to track emissions data accurately.
- Appoint Qualified Personnel: Ensure you have a certified GHG Manager and a Designated Representative.
- Use Government Resources: Leverage tools like the EDMA system for reporting and compliance.
- Plan Ahead: Regularly review your processes to stay updated on CPA guidelines and ensure ongoing compliance.
Looking Ahead: The Future of Sustainability in Singapore
The Carbon Pricing Act is more than a set of regulations—it’s a call to action. By holding businesses accountable for their emissions, Singapore is fostering a culture of sustainability that benefits everyone.
For companies, compliance isn’t just about avoiding penalties; it’s an opportunity to innovate, cut costs, and lead the way in environmental stewardship. With the CPA, Singapore is proving that economic growth and sustainability can go hand in hand.
If your facility hasn’t yet started its compliance journey, now is the time to act. With clear guidelines, accessible tools, and a wealth of support, the CPA makes it possible for businesses to contribute meaningfully to a greener future.
