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Case Study 8 - Shein (Sustainable Supply Chain) 

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Case Study 8 - Shein (Sustainable Supply Chain) 

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Shein's Massive Popularity Comes at a Huge Cost to Us All

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Shein was 2022's most popular fashion brand. It's also a nightmare for workers' rights and the environment.

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Case Study 7 - Patagonia (Sustainable Supply Chain) 

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Case Study 7 - Patagonia (Sustainable Supply Chain) 

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Written by Gabby Land
As the world becomes increasingly more concerned about social justice, inequality, and sustainability issues, many consumers are looking for accountability in the companies that they buy from. Alas, the concept of benefit corporations, or "B Corps" offer a vehicle for companies to demonstrate their commitment to social and environmental performance and accountability, transparently. To become a certified B Corp, a company must meet certain social and environmental responsibility standards with the goal to create value for the broader society versus just traditional shareholders (Usher, 2023). Some standards include passing a B Impact Assessment, being risk-reviewed, and meeting an annual revenue requirement of $5 billion, all of which are assessed every three years to ensure consistent commitment to sustainability (B Corporation, n.d.). This model that balances the generation of profit with benefiting the public is one that more corporations should consider. The clothing company and certified B Corp Patagonia serves as a real-world example proving how sustainable business models can be not only profitable but also create social value.

Patagonia's performance over its time being a certified B Corp demonstrates that sustainable business models can be successful. Patagonia's revenue has been consistently growing throughout the years. The company has an estimated value of about $3 billion dollars and brings in $100 million in revenue annually (Pereira, 2023). Further, its sales have quadrupled in the past decade to around $1 billion annually (Semuels, 2019). On top of this healthy revenue growth, Patagonia has managed to maintain its focus on ethical sourcing and employee well-being. This can be seen through its donation of 100% of its Black Friday sales to environmental causes in 2016, to providing many employee benefits (Semuels, 2019). It's no surprise that Patagonia earned a 151.4 on the B Corp Impact Assessment, while the median score for all B Corp companies is 50.9 (B Corporation, n.d.). Clearly, sustainability can and should go hand and hand with generating revenue and profit.

Examining Patagonia's overall popularity shows consumers' demand for more ethical and sustainable companies is increasing. Nowadays, consumers have become increasingly interested in the impacts of what they consume and are beginning to gravitate towards more sustainable products and companies who prioritize ethical sourcing and sustainability (Faire, 2023). For example, in a recent report by NielsenIQ, it was found that 95% of consumers try to take some action to live sustainably (Faire, 2023). Also, internet searches with words including "eco-friendly" or "reusable" have increased dramatically in the past year (Faire, 2023). These data points have a direct correlation with consumer's spending habits. It appears that in today's day and age, when given the option, consumers will likely choose a more sustainable product if they have an option. Because a company's stance on sustainability and transparency on sourcing and other operational decisions has become an element in a consumer's product choice, it is logical that companies who adopt a more sustainable business model have the potential to be more successful.

Transparency is another key to Patagonia's success with their marketing of their sustainability efforts, such as offering Fair Trade sustainable clothes since 2014 or and clothing made from recycled materials. The company has maintained an effective branding campaign, as a sustainable brand that offers high quality products which has generated a loyal customer following. For example, according to a 2018 Accenture study, brands that are outwardly communicative of their main purpose are found 64% more attractive to consumers (Engage for Good, 2016). Consumers want to know the impact of their spending, and firm transparency is key to helping them understand. Given that there is substantial financial upside for companies who choose to be transparent about their sourcing practices, carbon footprint and how they treat their employees, it serves as a strong motivation for companies to be more sustainable and transparent. Sustainability and transparency are becoming competitive necessities in today's business market, and Patagonia perfectly displays this.

Some may argue that Patagonia's success story is unique and replicating their model may not work for all businesses due to the effort and expense of becoming truly sustainable. While adopting sustainable practices may initially be expensive for a corporation, the investment will pay off in the long run, fueled in part by increased consumer demand for ethical products. There are a plethora of companies who have adopted ethical practices and increased their revenues - Athleta, OLIPOP, Toms, and Seventh Generation - to name a few (Rae, 2021). For example, Ben and Jerry's, the much beloved ice cream brand is a certified B Corp trying to reduce their carbon footprint through many initiatives including sustainable packaging and less plastic use while also promoting social change and responsibility (Ben & Jerry's, 2017). In particular, for their company owned ice cream shops and offices and their manufacturing practices, they are almost approaching 100% renewable electricity (Ben & Jerry's, 2017). Further, they practice sustainable farming practices to preserve soil health and reduce negative carbon emissions from cows (Ben & Jerry's, 2017). Based on the brand's success, their commitment to ethics and sustainability is attractive to consumers, contributing immensely to the financial success of their brand. Companies who make investments in sustainability now, later reaped the financial rewards (Engage for Good, 2016). Therefore, moving towards more sustainable models is arguably one of the smartest moves a growing company can make.

In short, certified B Corps are helping companies today shift away from the traditional profit-driven focus, unlocking the potential to not only contribute to society but help reshape the way consumers view the value and impact of their spending decisions. By examining how companies are successful in their sustainable practices, more firms can follow suit. Patagonia proves that being ethical, transparent, and sustainable need not come at the expense of profit. Consumers are attracted to sustainability and transparency. In today's market climate, it is in everyone's interest for companies and consumers to adopt more sustainable practices for the betterment of business and more importantly the planet as a whole.
References
B Corporation. (n.d.). Driving continuous improvement for high-quality social and environmental business standards. Www.bcorporation.net. https://www.bcorporation.net/en-us/standards/development-and-governance/

Ben & Jerry's. (2017). How We Do Business. Http://Www.benjerry.com. https://www.benjerry.com/values/how-we-do-business

Engage for Good. (2016). Social Impact Statistics You Should Know. Engage for Good. https://engageforgood.com/guides/statistics-every-cause-marketer-should-know/

Faire. (2023, April 19). Trendspotting: Demand for sustainable products shows no signs of slowing. Faire Learning Hub. https://blog.faire.com/industry-insights/sustainable-product-trends/#:~:text=Today%2C%20interest%20in%20eco%2Dfriendly

O'Brien, B. (2018, February 8). 4 companies who succeed by focusing on ethical sourcing and manufacturing. Trade Ready. https://www.tradeready.ca/2018/topics/supply-chain-management/4-companies-succeed-focusing-ethical-sourcing-manufacturing/

Peek, S. (2020, May 5). A Complete Guide to Starting a B Corp. Https://Www.uschamber.com/Co. https://www.uschamber.com/co/start/strategy/b-corp-advantages-and-requirements

Pereira, D. (2023, April 17). Is Patagonia Profitable? The Business Model Analyst. https://businessmodelanalyst.com/is-patagonia-profitable/

Rae, M. (2021, February 8). 25 of The Best Certified B Corporations to Support in 2021. Everyday with Madi Rae. https://everydaywithmadirae.com/best-b-corporations-to-support/

Semuels, A. (2019, September 23). "Rampant Consumerism Is Not Attractive." Patagonia Is Climbing to the Top - and Reimagining Capitalism Along the Way. Time; Time. https://time.com/5684011/patagonia/

Usher, V. (2023, October 8). Council Post: Five Actionable Tips For Achieving B Corp Certification. Forbes. https://www.forbes.com/sites/forbesbusinesscouncil/2023/10/06/five-actionable-tips-for-achieving-b-corp-certification/?sh=5984e0e47691

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Op-Ed: Patagonia Proves the Success of Sustainable Corporations

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Written by Gabby Land As the world becomes increasingly more concerned about social justice, inequality, and sustainability issues, many consumers are looking for accountability in the companies that they buy from. Alas, the concept of benefit corporations, or "B Corps" offer a vehicle for companies to demonstrate their commitment to social and environmental performance and accountability, transparently.

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Climate change adaptation gone wrong - The case of sea walls in Kiribati
- by Silja Klepp with photographs by Barbara Dombrowski

Islands are recognized as uniquely exposed to climate change, now and in the future. Anthropogenic climate change
challenges for island inhabitants include issues of water security, salinization of groundwater, stronger tropical-cyclone
impacts and shoreline erosion and coastal flooding due to sea-level rise. Kiribati consists of 32 coral atolls and reef
islands, as well as the raised limestone island Banaba. Current studies suggest that two thirds of the land is less than
2 m above mean sea level and maximum elevations are roughly 3 m. Adding to the risks for island communities created
by anthropogenic climate change are a multitude of socio-economic vulnerabilities in Small Island Development States,
such as Kiribati. These vulnerabilities are linked to the (post)-colonial structures and dependencies that persist, in various
forms, until today. Among other factors colonialism and globalization processes brought a change in lifestyles and a loss
of local ecological knowledge and adaptation possibilities "Island Style".

Coastal protection measures can be well suited to immediately protect coastal assets from inundation and protect from
land loss during high water events. They can be divided into three categories: 'hard' protection measures, 'soft'
measures, and retreat or migration. Hard measures include land reclamation and physical barriers like sea walls.
Sea walls in Kiribati are normally built from coral rock, sand bags and concrete blocks. They represent most of the
engineered coastal structures in South Tarawa, the capital of Kiribati. Most solutions for climate-change adaptation in
Kiribati have been short-term, reflecting a dependence on project based and limited assistance from donor countries
and a preference by consultants, engineers and many I-Kiribati for visible, technical "solutions". In Kiribati, there is rarely
sufficient data to adequately inform the design and positioning of 'protective' structures.

Sea walls that are built in a wrong way, with cheap material and potentially in the wrong location can have disastrous
consequences, invariably marked by the degradation of structures like sea walls and irreversible negative impacts.
These impacts range from beach narrowing and beach loss to nearshore ecosystem degradation and biodiversity loss,
which might also threaten food security for coastal inhabitants. Expensive, hard measures require regular maintenance;
which is rarely provided by international cooperation that pays for the structures. There are so many broken, aid-funded
sea walls, roads, and water systems in South Tarawa that a report labelled the atoll a "graveyard of shortlived infrastructure
investments".

Research shows that traditional knowledge and coping capacity on islands is likely to help people better adapt to future
climate change. In addition to localized knowledge, it is important for those on islands involved in environmental
governance to be aware of their unique attributes and specific local and regional environmental contexts. And, maybe
most important, is to replace the commonly one-way direction of adaptation measures with genuine interaction in which
both external agents and target communities have at least equal say in the design and implementation of adaptation
pathways.

Based on texts written by Simon Donner (Fraser University, Vancouver, Canada) and Patrick Nunn
(University of the Sunshine Coast, Australia).

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IN FOCUS: With ‘no place to retreat to’, Singapore advances to protect its coastlines

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The planned “Long Island” reclamation project is the latest weapon in the low-lying nation’s arsenal, as it braces for the potentially devastating impact of rising sea levels.

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Case Study 4 - Australia (Carbon Pricing) 

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Case Study 4 - Australia (Carbon Pricing) 

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https://www.theguardian.com/environment/2014/jul/17/australia-kills-off-carbon-tax

https://www.nytimes.com/interactive/2019/04/02/climate/pricing-carbon-emissions.html

Scroll down to the last section which gives a report on Australia.

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Scheduled price on carbon

Scheduled price on carbon

Note: A local price on carbon is only highlighted where no national or European Union rules are in place. Some countries with a national price on carbon also have local-level programs that operate under separate rules. | Source: World Bank

The idea of putting a price on carbon dioxide emissions to help tackle climate change has been slowly spreading around the globe over the past two decades.

This week, Canada's federal government took the latest step when it extended its carbon-pricing program nationwide by imposing a tax on fossil fuels in four provinces that had declined to write their own climate plans.

More than 40 governments worldwide have now adopted some sort of price on carbon, either through direct taxes on fossil fuels or through cap-and-trade programs. In Britain, coal use plummeted after the introduction of a carbon tax in 2013. In the Northeastern United States, nine states have set a cap on emissions from the power sector and require companies to buy tradable pollution permits.

Partly for that reason, carbon pricing has, so far, played only a supporting role in efforts to mitigate global warming. Here are some efforts to date:

Canada

Individual provinces can opt out of the federal program by designing their own local climate policies. British Columbia, for instance, has its own higher carbon tax in place, which rose to $30 per ton this year, and Quebec has enacted a local cap-and-trade system. But four provinces, including Ontario, refused to create their own plans, and the federal tax went into effect in those places on April 1.

The tax is a core part of Mr. Trudeau's plan to reduce Canada's emissions 30 percent below 2005 levels by 2030. However, Canada is expected to hold national elections in October and the opposition Conservatives have vowed to repeal the tax if they take power.

Britain

So, in 2013, Parliament enacted a carbon price floor under the system for certain sectors, including electricity, a policy that essentially functions as a carbon tax of around $25 per ton. That tax has encouraged electric utilities to rapidly switch from coal to somewhat cleaner natural gas. This is perhaps the clearest example in the world of a carbon tax leading to a significant cut in emissions.

United States

9 Northeastern states

Current price per metric ton of CO ₂ $5

Share of emissions covered18%

California

Current price per metric ton of CO ₂ $15

Share of emissions covered85%

With Congress largely gridlocked on climate policy, the main carbon pricing efforts in the United States have unfolded at the state level.

California, meanwhile, has enacted its own cap-and-trade program that goes beyond power plants and also covers manufacturers, refineries, and other polluters. Here, too, carbon prices under the system have remained modest to date, in part because the initial cap was set fairly high, and most of California's emissions cuts to date have come as a result of other climate policies. Those include the state's efficiency standards for buildings, and aggressive renewable power targets. State officials are now struggling to tighten the cap so that it drives bigger cuts in future years.

China

Australia

In 2012, Australia's Labor Government rolled out a cap-and-trade program that essentially set a price on carbon of $23 per ton. Emissions fell nationwide under the program, but the policy faced a fierce political backlash from industry groups and voters. When the more conservative Liberal Party swept into power in 2013, it quickly repealed the program.

Australia currently has a far more lenient carbon pricing program in place, called the Safeguard Mechanism, in which large industrial polluters that exceed a pollution baseline can buy carbon credits to compensate. In 2017, only a handful of companies, including several coal mines, spent about $6 million buying credits. Australia is currently on track to miss its overall goals for cutting emissions.

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carbon caps and emissions trading programs

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These Countries Have Prices on Carbon. Are They Working? (Published 2019)

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Scheduled price on carbon Scheduled price on carbon Note: A local price on carbon is only highlighted where no national or European Union rules are in place. Some countries with a national price on carbon also have local-level programs that operate under separate rules.

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Key Findings

Implemented in 1991, Sweden's carbon tax A carbon tax is levied on the carbon content of fossil fuels. The term can also refer to taxing other types of greenhouse gas emissions, such as methane. A carbon tax puts a price on those emissions to encourage consumers, businesses, and governments to produce less of them. was one of the first in the world, second only to tax A tax is a mandatory payment or charge collected by local, state, and national governments from individuals or businesses to cover the costs of general government services, goods, and activities. , which was implemented a year earlier.Finland's carbon

Sweden levies the highest carbon tax rate in the world, at SEK 1,190 (US $126) per metric ton of CO₂. The tax is primarily levied on fossil fuels used for heating purposes and motor fuels.

Since the carbon tax was implemented 30 years ago, Sweden's carbon emissions have been declining, while there has been steady economic growth. Sweden's carbon tax revenues are significant but have been decreasing slightly over the last decade.

Due to numerous exemptions, Sweden's carbon tax covers only about 40 percent of all greenhouse gases emitted nationally. While some of the exempted industries are subject to the EU ETS (the European Union Emission Trading Scheme, which generally levies a lower carbon price), others are not subject to any type of carbon pricing. Levying a single carbon tax on all sectors would eliminate these distortions and potentially further reduce emissions.

The carbon tax is one of several environmental levies in Sweden; other levies include the energy tax, aviation tax, and vehicle tax. Sweden also participates in the EU ETS.

Introduction

In 1896, Swedish scientist Svante Arrhenius was the first to calculate how increases in atmospheric carbon dioxide could raise Earth's surface temperature through the greenhouse effect.[1] A century later, Sweden was one of the earliest adopters of a tax on carbon, implementing it in 1991, just one year after Finland, which was the first country to do so.[2]

Sweden has a long history of levying taxes on energy products. This tradition, combined with infrastructure for energy taxes in place, may have made it easier to implement a carbon tax in Sweden. Petrol has been taxed since 1924, diesel has been taxed since 1937, and coal, oil, and electricity for heating purposes have been taxed since the 1950s. The levy on all these energy products is a single tax, the so-called energiskatt, or "energy tax." When implemented, this tax was not considered an environmental measure, but rather a fiscal tool purely used to raise tax revenue.

Prior to the implementation of the carbon tax, most environmental measures consisted of regulations and prohibitions. It was not until the 1980s that a consensus began building for the use of more economic instruments. In 1987, economics professor Erik Dahmén wrote an article in Svensk Tidskrift titled "The environment and the market." He noted that all political parties in Sweden seem to have underestimated market mechanisms as a potential tool to reduce emissions, as they considered regulations the only viable option.[4] However, this was about to change in Sweden. On March 24, 1988, Swedish meteorologist Bert Bohlin, who would later become the first chairman of the Intergovernmental Panel on Climate Change (IPCC), published an article in Sweden's major daily newspaper Dagens Nyheter, proposing that Sweden should implement a tax on carbon.[5]

Growing environmental concerns, combined with the historical taxing of energy products and a new awareness of market mechanisms that can address environmental issues, led to Sweden's implementation of a carbon tax in 1991. At the same time, the already existing energy tax was lowered, as it was seen as a complementary rather than separate environmental levy to the new carbon tax. These two taxes have shaped Sweden's environmental policy for the last 30 years.

The implementation of the carbon tax was part of a major tax reform in 1990-1991 that had grön skatteväxling as one of its aims. Loosely translating to "green tax-switch," it means that environmental taxes increase while other taxes decrease. In 1990-1991, the marginal income tax rate for individuals was significantly reduced, lowering the highest rates from 80 percent to 50 percent. The corporate tax rate was lowered from 57 to 30 percent (while the corporate tax base The tax base is the total amount of income, property, assets, consumption, transactions, or other economic activity subject to taxation by a tax authority. A narrow tax base is non-neutral and inefficient. A broad tax base reduces tax administration costs and allows more revenue to be raised at lower rates. was broadened), and capital income-interest, dividends, and capital gains-were taxed at a uniform rate of 30 percent. inheritance tax wealth tax A wealth tax is imposed on an individual's net wealth, or the market value of their total owned assets minus liabilities. A wealth tax can be narrowly or widely defined, and depending on the definition of wealth, the base for a wealth tax can vary. in 2007. An inheritance tax is levied upon an individual's estate at death or upon the assets transferred from the decedent's estate to their heirs. Unlike estate taxes, inheritance tax exemptions apply to the size of the gift rather than the size of the estate. in 2004, the entrepreneurial tax in 2005, and the [6] In addition, during the last 30 years, Sweden has abolished or reformed several other taxes to encourage economic growth, including the abolition of the [7] Note that these changes have been undertaken by left-wing as well as right-wing governments.

This report describes the most important features of Sweden's carbon tax, provides an insight into how GDP, emissions, and carbon tax revenues have been developing since the tax was first implemented in 1991, summarizes some of the criticism of the Swedish carbon tax that has emerged in recent years, discusses other environmental levies Sweden has introduced, and, finally, draws comparisons to the Finnish and Canadian carbon taxes.

Design of Sweden's Carbon Tax

Since its implementation in 1991, Sweden's carbon tax has been modified multiple times. Today, compared to other countries' carbon taxes, it is characterized by a high tax rate that is predominantly levied on fossil fuels used as motor fuels and for heating purposes.

Carbon Tax Base

The carbon tax targets fossil fuels-such as petrol, oil, and coal-used for heating purposes as well as motor fuels. The tax is calculated based on the estimated amount of CO ₂ emissions covered energy products emit upon combustion-a measure that is based on the so-called carbon content of fossil fuels.

Major exemptions have been part of the Swedish carbon tax since its implementation. The industrial sector constitutes the most significant exemption. (Large parts of the sector, however, were subjected to the European Union Emission Trading Scheme (EU ETS) when it was launched in 2005.) Other sector exemptions include mining, agriculture, and forestry.

In addition to the various sector exemptions, there are also exemptions for fuel depending on its use. For example, fuel used for purposes other than motors or heating is not subject to the tax. Commercial use of fuel for maritime or aviation purposes is also exempt.[8]

Taking these exemptions into account, the Swedish carbon tax covers approximately 40 percent of Sweden's greenhouse gases.[9]

Carbon Tax Rate

In 2020, the carbon tax rate stands at SEK 1,190 (US $126[10]) per metric ton of CO ₂. The tax rate has been increasing gradually since the tax was first implemented in 1991 at SEK 250 ($26) per ton of CO ₂. There was a sharp increase in the tax rate in the early 2000s, when it was raised from around SEK 300 ($32) in 2000 to around SEK 900 ($95) in 2004.[11]

Historically, a lower tax rate was applied to the industrial sector outside the EU ETS. (The part of the industrial sector covered by EU ETS is entirely exempt from the national carbon tax.) For some industries the carbon tax was capped (see more in "Criticism of Sweden's Approach to Taxing Carbon"). In 2018, however, the tax rate for the industrial sector outside the EU ETS was raised to align with the general rate.

Points of Taxation

The tax on the fossil fuels covered is collected upon either consumption or delivery to a non-registered taxpayer. As there is effectively no production of fossil fuels in Sweden, taxpayers consist solely of importers, distributors, and large consumers.

Using importers, distributors, and large consumers as the points of taxation results in a relatively low administrative burden, as they are significantly fewer in numbers than, say, final consumers. For example, gas delivered to gas stations is already taxed at the importer or distributor level, meaning that no tax has to be administered on the gas station operator or the final consumer purchasing the gas at the pump.

It is important to note here that the legal incidence differs from the economic incidence of the carbon tax. Although levied at the importer, distributor, or large consumer level, the costs are likely fully or partially passed on to consumers and businesses further down in the supply chain. In the case of gas, for example, the tax is ultimately borne by the distributors or owners of gas stations through lower profits or lower wages, as well as by the final consumer through higher gas prices.

Thirty Years of Taxing Carbon: Effects on GDP, Carbon Emissions, and Tax Revenue

Thirty years have passed since Sweden's carbon tax was first implemented. How has it performed? This chapter provides some insight into the economic development during that time, how emissions have been reduced, the revenue raised through the tax, and, finally, some criticism of the design of the tax that has emerged in recent years.

Economic Development

Since the implementation of the carbon tax 30 years ago, Sweden has been able to reduce carbon emissions while maintaining solid GDP growth. In fact, GDP per capita increased in real terms by more than 50 percent between 1990 and 2019.[15] However, while frequently highlighted by Swedish politicians, it is difficult to disentangle the relationship between carbon taxes and GDP growth.

An empirical 2019 study by economist Gilbert Metcalf found no adverse impact of Canadian British Columbia's carbon tax on the region's GDP between 1990 and 2016. For European Union countries his findings suggest that carbon taxes may even have had a slightly positive impact on GDP. Metcalf suggests that this slightly positive effect may be partially due to carbon tax revenue being used to lower other types of taxes, as has been the case in Sweden.[16]

Carbon Emissions

Between 1990 and 2018, Sweden decreased its greenhouse gas emissions by 27 percent, most of that since the early 2000s. According to the Swedish environmental protection agency, the largest reductions in emissions come from heating homes and industrial facilities. In recent years, lower emissions in the industrial sector and in domestic transport have also significantly contributed to the overall reduction in emissions. Among other measures, the carbon tax as well as a push for CO ₂-free electricity production (e.g., through hydropower and nuclear power) have facilitated the cut in emissions.

In terms of emission reductions, a carbon tax is most successful if both businesses and households have realistic alternatives to fossil fuels at hand. In the Swedish case, CO ₂-free electricity production through hydropower, nuclear power, solar power, and wind power has been expanded, providing an alternative to fossil fuels.

Carbon Tax Revenue

The revenue raised through the carbon tax was increasing steadily up to around 2004, when it stabilized until 2010 before declining slightly over the last decade. In 2019, Sweden's carbon tax raised SEK 22.2 billion ($2.3 billion),[18] or approximately 1 percent of total tax revenues.[19]

The fluctuations in revenues are due to a gradually rising carbon tax rate, a declining tax base (carbon emissions have gradually decreased), and modifications to the exemptions and rate reductions for certain sectors. The rapid increase in revenue between 2000 and 2004 is due to a sharp increase in the carbon tax rate, tripling from around SEK 300 ($32) in 2000 to around SEK 900 ($95) in 2004.[20]

Sweden's carbon tax revenue is not earmarked, and thus goes into the overall government budget. Other countries, as discussed in a later chapter, do earmark their carbon tax revenues.

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Criticism of Sweden's Approach to Taxing Carbon

Sweden's carbon tax, however, has not been without its critics, especially in recent years. In 2019, an expert group from the Stockholm School of Economics concluded that the carbon tax's effect on emission reductions has been below its potential. The study focused on CO ₂ emitted by Swedish companies between 1990-2008 and found that while many companies cut their emissions, the large pollution sectors that were responsible for 70-75 percent of Sweden's emissions did in fact not cut their emissions but potentially even increased them. Large polluters are mainly companies that manufacture construction material such as steel and concrete.

According to Per Strömberg, a professor at the university and coauthor of the report, one of the main reasons for the failure is the cap-a maximum amount of carbon tax a single taxpayer can be required to pay-that applied to many major polluters before they became subject to the EU ETS. The cap was originally implemented to alleviate the tax burden on very large polluters, such as the steel industry, that may have been put out of business if they had to pay the tax on the total amount of emissions. However, for these large polluters that exceeded the cap, the marginal emission did not face a tax, and thus these businesses had no incentive to decrease their emissions.

In addition to the cap, the Swedish steel industry had also been largely exempted from carbon taxation until the introduction of the EU ETS. This was due to the steel industry being considered of national interest and it realistically not being able to decrease its emissions within a short period of time. Professor Strömberg concludes by stating that the tax would be more effective if it had a lower tax rate applied to all emitters instead of the current high tax rate combined with its various exemptions, as this would incentivize all polluters to lower emissions. With the introduction of the EU ETS and the phasing out of exemptions the Swedish government has been taking steps in the direction proposed by Strömberg and others.

A 2014 report by Jacob Lundberg argues that the Swedish carbon tax rate is unreasonably high. Comparing different models for calculating the optimal carbon tax rate, he concludes that the carbon tax rate should not exceed SEK 300-400 ($32-42) per metric ton of carbon-a significant difference to the current rate of SEK 1,190 ($126). Lundberg, like Strömberg and others, also points out that the effectiveness of the Swedish carbon tax is likely undermined by its many exemptions.[23]

Sweden's Other Environmental Taxes

Even though the carbon tax is viewed as the cornerstone of Sweden's environmental policy, it is only one of a number of environmental levies. Over the last 30 years, Sweden has continuously been one of the most progressive countries in the world when it comes to environmental reforms. The following section provides a brief overview of other environmental taxes Sweden levies and how they interact with its carbon tax.

Energy Tax

The energy tax was first introduced in 1924 and levied on petrol. It was extended to diesel in 1937, and to gas oil, coal, and electricity used for heating purposes during the 1950s. Natural gas and liquefied petroleum gas (LPG) were later added as taxable products. Even though the energy tax was lowered when the carbon tax was implemented, it was never abolished. The energy tax, unlike the carbon tax, is often primarily considered a tax aimed at raising revenue rather than changing consumer behavior. A number of products are subject to both the carbon tax and the energy tax. For example, the gasoline price for consumers consists of the carbon tax, the energy tax, as well as the Value-added Tax (VAT), in addition to the manufacturing costs and profits.

Aviation Tax

The Chicago convention prohibits countries from taxing aviation fuel used for international flights. Hence, neither the carbon tax nor the energy tax applies to the aviation industry. To address this gap, Sweden imposes a so-called flight tax which puts a fixed duty rate on all flight tickets. The duty rate differs depending on the destination, with lower rates for shorter distances and domestic and European destinations.[24] In this case, the coexistence of the flight tax and the carbon tax does not lead to double taxation Double taxation is when taxes are paid twice on the same dollar of income, regardless of whether that's corporate or individual income.. Instead, the flight tax complements the carbon tax in an area where the carbon tax cannot be applied due to legal restrictions.

EU Emissions Trading Scheme (EU ETS)

The EU ETS was implemented in Sweden in 2005 under the emissions trading directive.[25] The EU ETS constitutes a market-based solution to reduce carbon emissions by providing emission permits that European countries and companies can trade. As the number of permits on the market is restricted, it indirectly puts a price on carbon and thus functions similarly to a carbon tax. The EU ETS mainly targets heavy industry and power plants.

To avoid double taxation, Sweden excluded all industries affected by the EU ETS from the national carbon tax. However, this has had implications on businesses in Sweden. While the carbon tax rate has remained relatively high (and generally increased), the price for emission permits has on average been relatively low. As a result, businesses subject to the carbon tax pay a much higher price for emitting carbon than a business subject to the EU ETS.

Taxes on Vehicles

In addition to taxing emissions and fuel directly, Sweden also taxes vehicles. The so-called vehicle tax is applied annually. The tax can be seen as both fiscal and environmental as it is applied to almost all types of vehicles, and vehicles have, regardless of environmental reasons, always been taxed to some degree.

In 2018, the Swedish government implemented a system known as the "bonus-malus system." This system ranks vehicles on a scale based on a vehicle's average carbon emissions. The lower carbon emissions a vehicle has, the lower the vehicle tax. It is too early to fully evaluate the effects of the bonus-malus system but there are indications that both sales and the value of used cars have increased.

Furthermore, driving a vehicle in certain areas in Sweden can also subject you to a congestion charge-an extra fee paid for driving inside major cities such as Stockholm.

Carbon Taxes around the World

This chapter will give a brief overview of two other countries' carbon taxes, namely Finland and Canada. As previously stated, Finland was the first country to introduce a carbon tax, in 1990. Since Sweden's carbon tax was imposed just a year later, and given the two countries' demographic and economic similarities, Finland's carbon tax is a natural pick for comparison. Canada 's federal carbon tax was implemented just last year, making it one of the most recent initiatives.

Much like Sweden, Finland implemented a number of exemptions right from the beginning to minimize the tax's potential negative effects on certain industries. This includes peat and natural gas having a favorable deduction scheme for the sales tax A sales tax is levied on retail sales of goods and services and, ideally, should apply to all final consumption with few exemptions. Many governments exempt goods like groceries; base broadening, such as including groceries, could keep rates lower. A sales tax should exempt business-to-business transactions which, when taxed, cause tax pyramiding. to partially offset the carbon tax, as well as Finland's export-oriented wood industry being exempted from the carbon tax altogether. Finally, fuels used in industrial production as raw material or manufacturing input have also been exempted.

As Finland has implemented carveouts similar to Sweden, the Finnish carbon tax faces similar criticism. Exempting, or favorable treatment of, major polluters leads to lower emission reductions, as those sectors are not facing the disincentivizing effect of the carbon tax. Furthermore, there has also been criticism regarding administrative issues, as stated in a working group report of the Finnish prime minister's economic council regarding Finland's commitment to the Kyoto protocol in 2000:

"The Finnish environmental and energy tax system is the product of a number of conflicting factors. In addition to furnishing the government with revenues, the taxes collected have also been used to promote various policy goals involving environmental, energy and transport considerations. Administering the system has proved complicated and difficult. This is partly because of tax subsidies and partly because of procedures related to combined heat and power production (CHP). The system has also been changed several times."

In conclusion, the Finnish tax on carbon is in many ways similar to Sweden's carbon tax. Both are characterized by early implementation as well as providing several exemptions for different industries.

The Canadian federal carbon tax was implemented in 2019, making it one of the most recent carbon pricing initiatives. The tax is implemented at the provincial level if a province either does not already levy a carbon tax or if its carbon tax does not meet federal standards. As of 2020, all provinces without a carbon tax that meets federal standards are subject to the federal carbon tax.[29]

The structure of the tax differs depending on the province. Some provinces have implemented the federal carbon tax, some have an alternative regional carbon tax, and others are currently involved in a legal process that aims to avoid the implementation of a carbon tax. However, all carbon taxes upon implementation seem to follow a similar structure: There is a single carbon tax rate for smaller businesses and households while industrial emitters face a separate carbon pricing scheme based on a portion of their emissions rather than on fuel purchases.[30]

The Canadian government has promised that all the carbon tax revenue collected from a province will be returned to that province in one way or another. Canada has put a carbon dividend system in place to secure the popularity of the carbon tax and to alleviate its economic and distributional burden. Citizens in provinces that have fully implemented the tax are eligible for a tax credit tax refund A tax refund is a reimbursement to taxpayers who have overpaid their taxes, often due to having employers withhold too much from paychecks. The U.S. Treasury estimates that nearly three-fourths of taxpayers are over-withheld, resulting in a tax refund for millions. Overpaying taxes can be viewed as an interest-free loan to the government. On the other hand, approximately one-fifth of taxpayers underwithhold; this can occur if a person works multiple jobs and does not appropriately adjust their W-4 to account for additional income, or if spousal income is not appropriately accounted for on W-4s. by the same amount. A tax credit is a provision that reduces a taxpayer's final tax bill, dollar-for-dollar. A tax credit differs from deductions and exemptions, which reduce taxable income, rather than the taxpayer's tax bill directly. based on the carbon tax revenues. This credit can either reduce an individual's tax bill or, in the case of a negative income tax, increase a

Conclusion

Carbon taxation is sometimes viewed, maybe rightfully so, as the reform to end all other reforms when it comes to climate change. If well designed, carbon taxes provide an incentive to cut emissions on a large scale with comparably low economic costs. In 2019, over 3,000 economists, including all former chairs of the Federal Reserve and numerous Nobel Laureates, stated in the largest public statement of economists in history that carbon taxes are the most cost-effective mechanism to decrease emission levels at the speed and scale necessary.[32]

Sweden's carbon tax can be described as relatively narrow, as only 40 percent of its greenhouse gases are covered. Certain industries are either exempt from the carbon tax or subject to the-generally lower-rate-EU ETS. Sweden levies the highest carbon tax rate in the world, at 1,190 SEK ($126) per metric ton of CO ₂.

Between 1990 and 2018, Sweden has decreased its greenhouse gas emissions by 27 percent. Research indicates that the Swedish carbon tax has incentivized some businesses to lower their emissions; however, due to various exemptions and carveouts, very large polluters and exempted industries may not have reduced their emissions, leaving the Swedish carbon tax below its emission reduction potential.

The Swedish example, along with other carbon taxes around the world, provides several lessons. First, the large discrepancy between the tax rate of the national carbon tax and the implied tax rate of the EU ETS can lead to distortions, favoring EU ETS-covered businesses over businesses subject to the national tax.[33] Second, Sweden's comparably very high carbon tax rate arguably led to exemptions of sectors that are particularly affected by international competition but also considered large polluters which, in turn, may leave the carbon tax below its emission reduction potential. A lower standard tax rate applied to all sectors instead of the high tax rate combined with exemptions could eliminate this distortion. Finally, the Canadian carbon dividend system provides an example of how the economic and distributional impact of carbon taxes can be addressed-something to consider in a high-tax country such as Sweden.

[1] Svante Arrhenius, Ueber den Einfluss des atmosphärischen Kohlensäuregehalts auf die Temperatur der Erdoberfläche (Stockholm: Kungliga Vetenskapsakademien, 1896).

[2] World Bank, "Carbon Pricing Dashboard," last updated Apr. 1, 2020, https://carbonpricingdashboard.worldbank.org/map_data.

Henrik Hammar and Susanne Åkerfeldt, "CO ₂ taxation in Sweden: 20 years of experience and looking ahead," Global Utmaning, 2011, https://www.globalutmaning.se/wp-content/uploads/sites/8/2011/10/Swedish_Carbon_Tax_Akerfedlt-Hammar.pdf.

[4] Erik Dahmén, "Miljön och marknaden," Svensk Tidskrift, Dec. 31, 1987, https://www.svensktidskrift.se/erik-dahmen-miljon-och-marknaden/.

[5] Bert Bolin and Måns Lönnroth, "Introduce a tax on Carbon Dioxide," Dagens Nyheter, Mar. 24, 1988, http://www.galileomovement.com.au/docs/BertBolin-articleDN-March24-1988.pdf.

[6] Government Offices of Sweden (Regeringskansliet), "Budgetpropositionen för 1998: Bilaga 6," Sept. 11, 1997, https://www.regeringen.se/rattsliga-dokument/proposition/1997/09/prop.-1997981-/.

[7] Anders Ydstedt and Amanda Wollstad, "Ten years without the Swedish inheritance tax: Mourned by no one - missed by few," Confederation of Swedish Enterprise, December 2015, https://www.svensktnaringsliv.se/bilder_och_dokument/inheritance-taxpdf_636574.html/BINARY/Inheritance%20tax.pdf.

[8] Tax and Customs Department (Skatte och tullavdelningen), "Höjd energiskatt och koldioxidskatt på bränslen vid viss användning samt höjd skatt på kemikalier i viss elektronik," 2019, https://www.regeringen.se/490aef/contentassets/e9aac44d7310494da86ab1b49b5bc1ba/hojd-energiskatt-och-koldioxidskatt-pa-branslen-vid-viss-anvandning-samt-hojd-skatt-pa-kemikalier-i-viss-elektronik.pdf.

[9] World Bank, "Carbon Pricing Dashboard." Greenhouse gases broadly include CO ₂, methane, nitrous oxide, and fluorinated gases.

[10] The 2019 average yearly exchange rate was used (9.457). See Internal Revenue Service, "Yearly Average Currency Exchange Rates," accessed Aug. 4, 2020, https://www.irs.gov/individuals/international-taxpayers/yearly-average-currency-exchange-rates.

[11] Government Offices of Sweden (Regeringskansliet), "Sweden's carbon tax," updated Feb. 25, 2020, https://www.government.se/government-policy/taxes-and-tariffs/swedens-carbon-tax/.

Hammar and Åkerfeldt, "CO ₂ taxation in Sweden: 20 years of experience and looking ahead."

Henrik Scharin and Jenny Wallström, "The Swedish CO ₂ tax - an overview," Mar. 5, 2018, http://www.enveco.se/wp-content/uploads/2018/03/Anthesis-Enveco-rapport-2018-3.-The-Swedish-CO2-tax-an-overview.pdf.

[15] OECD, "Gross domestic product (GDP): GDP per capita, USD, constant prices and PPPs, reference year 2005," https://stats.oecd.org/index.aspx?queryid=61432#.

[16] Gilbert E. Metcalf, "On the Economics of a Carbon Tax for the United States," Brookings Institution, Mar. 7, 2019, https://www.brookings.edu/wp-content/uploads/2019/03/Metcalf_web.pdf. Another empirical study, Gilbert E. Metcalf and James H. Stock, "Measuring the Macroeconomic Impact of Carbon Taxes," AEA Papers and Proceedings 110 (March 2020), 101-06, https://doi.org/10.1257/pandp.20201081, shows similar results, suggesting no or slightly positive effects of carbon taxes on GDP and employment. Unlike these empirical studies, economic modeling of carbon taxes frequently suggests slightly negative economic impacts; see Alexander R. Barron, Allen A. Fawcett, Marc A.C. Hafstead, James R. McFarland, and Adele C. Morris, "Policy Insights from the EMF 32 Study on U.S. Carbon Tax Scenarios," Climate Change Economics 9:1 (March 2018).

Swedish Environmental Protection Agency (Naturvårdsverket), "Territoriella utsläpp och upptag av växthusgaser," last updated Dec. 12, 2019, http://www.naturvardsverket.se/Sa-mar-miljon/Statistik-A-O/Vaxthusgaser-territoriella-utslapp-och-upptag/.

[18] Swedish Tax Agency (Skatteverket), "Energiskatter och andra miljörelaterade skatter," last updated April 22, 2020, https://skatteverket.se/omoss/varverksamhet/statistikochhistorik/punktskatter/energiskatterochandramiljorelateradeskatter.4.3152d9ac158968eb8fd24b2.html.

[19] OECD, "Global Revenue Statistics Database," last updated July 23, 2020, https://stats.oecd.org/Index.aspx?DataSetCode=RS_GBL.

[20] Government Offices of Sweden (Regeringskansliet), "Sweden's carbon tax."

Sveriges Television,"Forskning: Svensk koldioxidskatt ineffektiv," Dec. 7, 2019, https://www.svt.se/nyheter/inrikes/forskning-svensk-koldioxidskatt-ineffektiv. As of August 2020, the report referenced in SVT has not been published but is set to be published in its entirety later in 2020. The report will be published as Gustav Martinsson, Laszlo Sajtos, Per Strömberg, and Christian Thomann, "The world's highest carbon tax," and will be available at https://www.hhs.se/en/houseoffinance/about/people/people-container/per-stromberg/.

[22] Boqiang Lin and Xuehui Li, "The effect of carbon tax on per capita CO ₂ emissions," Energy Policy 39:9 (September 2011), 5137-5146, https://ideas.repec.org/a/eee/enepol/v39y2011i9p5137-5146.html, empirically studies the effect of carbon taxes on emissions for Denmark, Finland, Netherlands, Norway, and Sweden. For Sweden, they find the effect to be negative but not significant, and they, like Per Strömberg, also suggest that the mitigation effects of the carbon tax have been weakened due to the tax exemption A tax exemption excludes certain income, revenue, or even taxpayers from tax altogether. For example, nonprofits that fulfill certain requirements are granted tax-exempt status by the Internal Revenue Service (IRS), preventing them from having to pay income tax. of certain energy-intensive industries.

[23] Jacob Lundberg, "Rätt pris på koldioxid," Timbro, November 2014, https://timbro.se/app/uploads/2017/01/ratt_pris_pa_koldioxid_101.pdf.

[24] European Commission, "Taxes in the field of aviation and their impact," June 6, 2019, https://op.europa.eu/en/publication-detail/-/publication/0b1c6cdd-88d3-11e9-9369-01aa75ed71a1.

[25] European Union, "Directive 2003/87/EC of the European Parliament and of the Council of 13 October 2003 establishing a scheme for greenhouse gas emission allowance trading within the Community and amending Council Directive 96/61/EC," Oct. 25, 2003, https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:32003L0087.

Svebio, "Koldioxidskatt," https://www.svebio.se/vi-verkar-for/koldioxidskatt/.

Sustain able!, "Carbon tax system in Finland," Feb. 7, 2013, https://blogs.ubc.ca/rosonluo/2013/02/07/finlands-carbon-tax-system/.

Economic Council of the Finnish Prime Minister's Office, "Environmental and Energy Taxation in Finland," 2000,

https://valtioneuvosto.fi/documents/10616/622996/J0400_Environmental+and+Energy+Taxation+in+Finland.pdf/bf880b78-6d64-461e-92c1-c823904bbb94?version=1.0.

[29] The Canadian Press, "How carbon pricing works across the country," Global News, Jan. 20, 2020, https://globalnews.ca/news/6438852/carbon-tax-canada-by-province/.

[30] Kathryn Harrison, "Commentary: How Canada's carbon tax works," Global News, Updated Sept. 12, 2019, https://globalnews.ca/news/5125670/how-the-carbon-tax-works/.

[32] The Wall Street Journal, "Economists' statement on carbon dividends," Jan. 17, 2019, https://clcouncil.org/economists-statement/.

[33] Price volatility can also discourage clean investment, as discussed in Florens Flues and Kurt van Dender, "Carbon pricing design: Effectiveness, efficiency and feasibility," OECD Taxation Working Papers No. 48, June 22, 2020, https://doi.org/10.1787/22235558. ETS tend to produce more volatile prices, which might affect clean investments by Sweden's ETS-covered industries.

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Looking Back on 30 Years of Carbon Taxes in Sweden

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Implemented in 1991, Sweden's carbon tax was one of the first in the world. Since then, Sweden's carbon emissions have been declining, while there has been steady economic growth. Today, Sweden levies the highest carbon tax rate in the world and its carbon tax revenues have been decreasing slightly over the last decade.

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Case Study 2 - Singapore (Solar Energy) 

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Case Study 2 - Singapore (Solar Energy) 

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https://www.channelnewsasia.com/singapore/singapore-electricity-sources-natural-gas-renewable-solar-energy-import-3252076

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SINGAPORE: Where Singapore gets its electricity from has been in the headlines in recent months, with the announcement that the country will import electricity from Malaysia and the opening of the largest energy storage system in Southeast Asia on Jurong Island.

Last Monday (Jan 30), it was announced that Singapore will import 100 megawatts (MW) of electricity from Malaysia as part of a two-year trial, under a joint agreement between YTL PowerSeraya and TNB Genco.

This marks the first time that electricity from Malaysia will be supplied to Singapore on a commercial basis.

Another agreement to import renewable energy from Laos was inked last year between Keppel Electric and Laos' state-owned Electricite du Laos (EDL).

Last month, Sun Cable - the company aiming to develop a A$30 billion (S$27.6 billion) project to supply solar power from Australia to Singapore via undersea cables - announced it was entering voluntary administration.

Questions asked online include why Singapore needs to import electricity and whether it can rely on solar energy.

CNA looks at Singapore's power sources and where the country's electricity could come from in the future.

WHERE DOES SINGAPORE GET ITS ELECTRICITY FROM?

About 95 per cent of Singapore's electricity is generated from natural gas, which is the cleanest form of fossil fuel, as it produces the least amount of carbon emissions per unit of electricity.

Using natural gas has allowed Singapore to cut the amount of carbon it releases into the atmosphere.

According to government agency website Powering Lives, natural gas will "continue to be a dominant fuel for Singapore in the near future" as the country scales up other sources.

The percentage of natural gas used in electricity generation has increased from 19 per cent in 2000 to 95 per cent today, says the National Climate Change Secretariat Singapore (NCCS).

According to the Energy Market Authority's (EMA) figures, other energy products - including solar, biomass and municipal waste - accounted for 2.9 per cent, followed by coal at 1.2 per cent and petroleum products such as diesel and fuel oil at 1 per cent.

Singapore's electricity is produced by the combustion of natural gas that is piped from Malaysia and Indonesia, NCCS said.

The country also diversified its supply of natural gas with the opening of a liquefied natural gas (LNG) terminal in Jurong Island, with plans to build a second terminal to support new industrial sites and power plants.

"This will not only provide critical mass for enhanced energy security, but it will also enable Singapore to be a hub for LNG-related business," it said.

WHY DOES SINGAPORE NEED TO IMPORT ELECTRICITY?

The short answer is that Singapore lacks natural renewable energy sources, so importing energy allows it to access cleaner energy sources from abroad.

Singapore's total electricity consumption has increased over the years.

It went up by 5.3 per cent from 2020 to 2021, with all sectors seeing a growth in its electricity consumption. Data from previous years also show a trend of growth.

The EMA has been working with various partners on trials to import electricity, which allows it to assess and refine the technical and regulatory frameworks. Countries involved include Malaysia, Indonesia and Laos.

Last year, Singapore started importing energy from Laos through Thailand and Malaysia, after a two-year power purchase agreement was signed between Keppel Electric and Laos' state-owned EDL.

This was the first multilateral cross-border electricity trade involving four ASEAN countries, as well as the first renewable energy import into Singapore.

Under the agreement, the Lao PDR-Thailand-Malaysia-Singapore Power Integration Project (LTMS-PIP) will import up to 100MW of renewable hydropower using existing interconnections.

This is equivalent to about 1.5 per cent of Singapore's peak electricity demand in 2020, enough to power about 144,000 four-room HDB flats for a year.

It will also contribute to Singapore's sustainability goals under its Green Plan 2030 by tapping into the abundance of renewable energy from the region.

Regional power grids can help accelerate the development of renewable energy projects and promote economic growth and bring greater energy security to the region, according to a joint statement released by Keppel, EMA, the Laotian Ministry of Energy and Mines and EDL in June last year.

Additionally, the project serves as a "pathfinder" towards realising the broader vision of an ASEAN power grid, the agencies said.

"To overcome our land constraints, Singapore is tapping on regional power grids to access cleaner energy sources beyond its borders," added the EMA.

WHY CAN'T SINGAPORE JUST GO SOLAR?

Singapore is a tropical country, which means sunlight is one resource it has plenty of. The country has doubled its solar capacity since 2020, with more than 700 megawatt-peak (MWp) currently installed.

The country aims to increase solar capacity to at least 2 gigawatt-peak (2 GWp) by 2030, equivalent to powering about 350,000 households a year. This is expected to meet around 3 per cent of projected electricity demand.

Harnessing solar energy comes with its own set of challenges. For example, the amount of sunlight fluctuates depending on changes in cloud cover during the day. Solar panels are also unable to generate electricity at night.

Using solar panels requires space - something Singapore does not have much of. The EMA has acknowledged that there are limitations to the amount of solar energy that can be harnessed due to Singapore's limited land area.

As of the end of the first quarter of 2022, Singapore has a total of 5,455 solar panel installations, of which 3,564 are non-residential. About 48.9 per cent of the total installations are town council and grassroots units, followed by residential installations at 34.7 per cent and non-residential private sector at 13 per cent.

Installations from public service agencies constituted the remaining 3.5 per cent of total installations.

Other innovative ways to overcome the limited land area constraint are being trialled. For example, a new type of floating solar panel system is being piloted on Jurong Island.

Compared to conventional solar panel systems used in calmer water bodies such as reservoirs, the new system is designed to withstand stronger waves and rough sea conditions so that solar energy can be harnessed reliably, said Keppel Corporation in July last year.

Beyond land space constraints, energy storage systems are also being looked at.

Singapore deployed its first utility-scale energy storage system in October 2020, with a capacity that can power more than 200 four-room HDB units for a day.

Last week, the largest energy storage system in Southeast Asia was opened on Jurong Island.

The Sembcorp Energy Storage System has a maximum storage capacity of 285 megawatt-hours (MWh), enabling it to meet the electricity needs of about 24,000 households in four-room HDB flats for one day in a single discharge.

The deployment of the utility-scale facility means that Singapore has achieved its 200 MWh energy storage target ahead of time. Singapore previously announced a target of deploying at least 200 MWh of energy storage systems beyond 2025 as part of the Singapore Green Plan 2030.

THE FUTURE OF SINGAPORE'S ENERGY

In October last year, Deputy Prime Minister Lawrence Wong announced that Singapore will raise its climate target to achieve net-zero by 2050 as part of its long-term low emissions development strategy.

According to EMA, solar energy remains the most promising renewable energy source in the near term for Singapore.

In fact, Singapore achieved its 2020 solar target of 350 megawatt-peak (MWp) in the first quarter of that year. Singapore is also working towards achieving a new solar target of at least 2GWP by 2030.

Solar energy is one of EMA's "four switches" vital to decarbonising Singapore - the others being natural gas, regional power grids and low-carbon alternatives.

Singapore plans to import up to 4GW of low-carbon electricity by 2035, which could make up around 30 per cent of Singapore's projected electricity supply then.

Steps are also being taken to diversify import sources and ensure back-up supply is in place to mitigate disruptions.

The LTMS-PIP is one of the trials that the EMA has been working on as part of plans to realise a regional power grid.

Another of the four switches is emerging low-carbon alternatives. Singapore is exploring l ow-carbon technologies such as hydrogen and carbon capture, as well as utilisation and storage technologies.

"While such technologies are nascent, the Government is taking active steps including investing in (research and development) through the Low-Carbon Energy Research (LCER) Funding Initiative," said the EMA.

Two years ago, S$55 million was awarded to 12 projects to research low-carbon technologies. An additional S$129 million has been committed by the Government for Phase 2 of the LCER programme.

Over the last 50 years, Singapore has moved from oil to natural gas for cleaner power generation. EMA said it is reviewing emissions standards for fossil fuel-fired generation units. The authority expects to introduce the revised standards in 2023.

It also said it will continue to diversify its natural gas sources and work with power generation companies to improve power plant efficiency.

Under the Singapore Green Plan 2030, Singapore also aims to have best-in-class generation technology that meets heat-rate/emissions standards and reduces carbon emissions, as well as a diversified electricity supply with clean electricity imports.

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CNA Explains: Singapore's energy sources and the future of its electricity supply

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Why does Singapore need to import its electricity? Why can't it just rely on solar power?

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https://edition.cnn.com/2019/02/06/motorsport/morocco-solar-farm-formula-e-spt-intl/index.html

https://www.bbc.com/future/article/20211115-how-morocco-led-the-world-on-clean-solar-energy

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morocco in the fast lane with world's largest concentrated solar farm - cnn

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Morocco in the fast lane with world's largest concentrated solar farm

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It's not just on the track that Morocco is aiming to become a world leader in renewable energy.