In the Workers’ Party’s (WP) budget speech on climate change delivered by Mr Dennis Tan, Workers’ Party (WP) Non-Constituency Member of Parliament on 27 February, the issue of recalibrating the country’s transport sector was raised.
Specifically, Mr Tan noted that WP welcomes the government’s plan to phase out all internal combustion engine (ICE) vehicles by 2040, as announced by Finance Minister Heng Swee Keat in his budget presentation last month.
Government measures to encourage the transition to electric vehicles
Mr Heng had said that the government will be introducing new measures to encourage the switch to electric vehicles (EV), starting with a new rebate scheme called ‘EV Early Adoption Incentive’. Under this scheme, those who purchase fully electric cars and taxis will receive a rebate of up to 45% on their Additional Registration Fee.
Next, Mr Heng said that the government will also be working with the private sector to expand the public charging infrastructure for EVs at public car parks, with a goal of deploying up to 28,000 chargers islandwide by 2030. This would be a substantial improvement from the 1,600 chargers present as of today.
Mr Heng also announced that a revision will be made on the existing vehicular tax structure – kicking in on January 2021 – as the transition from ICE to EVs would have a “major impact on tax revenues”. Explaining this, Mr Heng said that fuel excise duties today yield S$1 billion a year, a significant contribution to government revenues.
Mr Heng went on to highlight that EVs do not pay fuel excise duty; hence, the government is looking to implement a “usage-based tax” on EVs as an alternative. However, he noted that the technology to do that is still several years away.
In the meantime, the government will be imposing a lump-sum tax that will be built into the road tax structure for EVs to relatively make amends for the loss in fuel excise duties.
What about reducing the carbon footprint of power generation?
In his speech on WP’s climate change agenda, Mr Tan explained that while his party welcomes these initiatives, there are still issues that need to be addressed.
“The biggest elephant in the room is on rebuilding an infrastructure currently tailored for ICE engines,” said Mr Tan, adding that the power grid, in particular, will be taxed due to this transition to EVs.
While the country is in a power glut at the moment, electricity demands will increase as Singapore moves on it’s Smart Nation goals.
Pointing to the example of Sweden, Mr Tan explained that their ban on ICE vehicles states for 2030 had caused the demand for electricity to outgrow the capacity of local power grids, thus forcing EV charging networks to compete with each other in infrastructure projects for electricity.
On top of that is the concern that Singapore currently generates upwards of 95% of its energy in natural gas.
“While it is the least-polluting fossil fuel and has higher efficiency compared to ICE vehicles, there will continue to be a carbon footprint generated,” said Mr Tan.
He then asked, “While our current power generation mix will improve by 2030 due to more solar capacity, how are we moving to lowering the carbon footprint of our power generation in 2030 – 2040?”
Next, WP highlighted that the government’s goal of setting up 28,000 charging points by 2030 – with an assumption of 30% conversion to EVs – still means that there’s only 1 charging point to 10 EVs.
Mr Tan asked, “Should we even be contented with this ratio?”
He added, “Besides intelligent charging solutions, should the government also consider the alternative of battery swap stations which have the advantage of speed, ensuring load on our power grid can be managed well, as well as providing a ready infrastructure for battery recycling?”
What about the electrification of public transport?
Moving on, WP also raised the question on how soon the country’s public bus and private hire infrastructure would make the transition to EVs given that many Singaporeans rely on such services.
Mr Tan asked, “Would the Ministry of Transport give a timeline on this happening separately from the 2040 overall target?”
On that note, Mr Tan highlighted the need for ASEAN cooperation if Singapore wants to successfully electrify its transport system, with a key consideration being Malaysia.
As many people and trade now travel via the Causeway and the Tuas Second Link on ICE vehicles, WP wondered if the phasing out of ICE vehicles in Singapore would include implementing a ban on foreign ICE vehicles entering the country.
“If there is no infrastructure in place in Malaysia to support commercial EVs, would that also impact our businesses with a top partner in trade?”
Mr Tan stressed, “This is important to get right as, on one hand, foreign ICE vehicles and how we handle the issue, may have a significant impact on our EV plans, and on the other hand, we should not be seen to export our green problems away with unilateral bans.”
He goes on to say that the government can work with Malaysia’s state and federal authorities to build a sustainable and inclusive ecosystem for EVs.
Going a step further, Mr Tan also says that the government should propose an ASEAN Autonomous Vehicle and Electric Vehicle project that “holistically looks at all the challenges of EVs” which has already been raised by WP MP Leon Perera previously.
“The effective solving of these issues I have highlighted in the adoption of EVs can turn us into the bellwether state in ASEAN for EV adoption, just as Norway is for both the Nordic region and the world,” said Mr Tan.