To guide businesses to reduce Scope 2 carbon emissions, the Energy Market Authority (“EMA“), the Energy Research Institute @ Nanyang Technological University, Singapore (“NTU“) and Enterprise Singapore announced on 22 October 2024 that they are developing a playbook titled “Powering a Sustainable Future: A Playbook on Scope 2 Emissions Reduction for Singapore Businesses” (“Playbook“).
Scope 2 emissions refer to indirect greenhouse gas emissions associated with companies’ purchase of electricity, as well as steam, heat or cooling. This is highly relevant to businesses since most businesses purchase electricity generated by third parties. According to EMA statistics, indirect emissions from such sources contribute towards approximately 39% of Singapore’s annual emissions.
The Playbook will be a comprehensive resource on managing Scope 2 emissions for businesses, covering Singapore’s existing decarbonisation policies and regulations, the role of private sector, the business case, as well as practical approaches that can be taken. Businesses can look forward to navigating these resources across the following main sections:
- Singapore’s regulatory and policy efforts to decarbonise
- Singapore’s national decarbonisation ambition is guided by the Singapore Green Plan (“SGP“) that takes on a whole-of-nation approach to advance Singapore’s national agenda on sustainable development until 2030 and Singapore’s Long Term Low-Emissions Development Strategy (“LEDS“) that lays out key approaches to achieve net zero by 2050.
- Under both SGP and LEDS, the Energy Reset is recognised as a main pillar for power sector decarbonisation. To this end, four switches to green our energy supply are emphasised, namely business transformation, investment in low-carbon technologies, effective international cooperation, and adopting low-carbon practices.
- Various standards and regulations applicable to decarbonisation are being highlighted such as the carbon tax and mandatory climate-related disclosure (CRD), among others. To learn more about the mandatory climate reporting requirements for listed enterprises, please read our October 2024 Legal Update here.
- Private sector’s role in the reduction of carbon emissions
- Businesses committing to net-zero targets and decarbonising their operations will be better-placed to meet increasingly stringent regulations and reporting requirements, reducing risks associated with changes/updates in environmental, social and governance (ESG) regulations and carbon pricing, while enhancing resilience against climate risks and their ability to capture carbon-competitive opportunities.
- Established frameworks and initiatives that offer guidance and benchmarks to businesses on decarbonisation are highlighted, including the Science-Based Targets initiative, UN Sustainable Development Goals and Net Zero Initiatives.
- Actionable strategies to reduce Scope 2 emissions.
- Solutions which businesses can adopt are categorised by time horizon i.e. near, middle, and long-term.
- For near-term solutions in the zero-to-five years horizon, business may focus on cost-effective and technologically mature solutions across renewable energy generation, energy storage systems, green energy procurement, energy efficiency and demand optimisation.
- For middle-to-long term solutions in the horizon beyond five years, businesses may focus on presently considered emerging technologies which they can plan for, such as long term low-carbon generation including hydrogen and its derivatives, novel fuel cells, and carbon capture and storage technologies. There are also decentralised and virtual approaches to renewable energy generation and demand optimisation, as well as repurposing and circular approach towards energy and material resources to enhance energy efficiency.
In our view, the Playbook will be an important roadmap for businesses, especially in industries which are energy-intensive such as manufacturing, petrochemicals and datacentres. Businesses will also need to undertake significant efforts to implement and achieve such plans, and may face legal, regulatory and compliance risks in the process.
An abridged version of the Playbook is available here on the EMA website. The full playbook will be available in the first quarter of 2025.
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