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  Straits Times Forum 25 Aug 07
COE transport model an opportunity to make Singapore a green carbon-trading hub
Letter from Dr Khoo Guan Seng

I AM writing with regard to the announcements by the Land Transport Authority on new ERP gantries.

The COE/ERP model is not a long-term solution to traffic congestion. Also, traffic congestion impacts on global warming, Singapore's aim to be a carbon trading hub and its long-term transport policy.

Singapore has an opportunity to transform the current COE transport model into a national green movement, which will represent its indigenous and 'green' intellectual property.

Today, it is easy to calculate how much carbon dioxide a vehicle will emit based on its brand, model, engine capacity and mileage (daily, monthly or yearly).

If the Government imposes a fixed CO2 emission quota per vehicle and uses this model to complement the COE quota, there will always be road users who over-drive (beyond the CO2 emission quota) or under-drive.

Immediately, this creates an opportunity to trade in carbon offsets, which can be done on a local eBay-like platform or on SGX (preferably a new transport-based carbon exchange).

Singapore is a recent signatory to the Kyoto Protocol and this idea, if implemented, will demonstrate its support of and belief in combating global warming and doing something tangible about it.

I believe it is good branding for Singapore and will create an entirely new retail trading product, unique to Singapore, with a lot of relevance in how the country positions itself as a centre of environmental activism and sustainability.

In fact, even buildings that are 'intelligent' and more efficient in greenhouse gas emission (with, say, solar panels on their roof), may produce sufficient carbon offsets for frequent drivers to buy on the carbon exchange.

The fees tied to these trading activities will also create revenue for the Government which may be placed in a National Carbon Trust to fund and promote more sustainable and environmentally friendly projects.

In addition, as a national model, the products traded on this carbon exchange may evolve into other environmentally related derivatives and energy-related commodities in which individuals and corporate entities can participate, spawning a new investment asset class, made in Singapore.
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