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Implementing climate ambitions

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India and Singapore – moving towards net zero.

The transition to a net zero carbon economy is accelerating, and Asia is increasingly at the forefront of this change. Here we examine recent moves by India and Singapore that highlight their climate ambitions, reinforcing the energy transition theme.

India has released its first National Green Hydrogen Policy to support the country’s wider climate ambitions of net zero emissions by 2070. The policy will be released in phases, with the second leg – which will focus on the industrial use of green hydrogen and ammonia – under review. Although a small part of India’s net zero ambitions, in our view, implementation is key.

India aims to position itself as a regional green hydrogen hub and produce 5m tonnes by 2030, complementing plans to quadruple renewable electricity generation by 2030.

The hydrogen strategy is also relevant for India’s energy security, as the country imports a high proportion of its oil and gas needs. The policy initiative lays out incentives for both producers and consumers of green hydrogen (which is hydrogen made from renewable energy), building out a new value chain in India.

There is domestic support. Indian companies have outlined plans to develop green hydrogen production and ‘gigafactory’ electrolyser manufacturing capacity in the country. We see hydrogen as part of net zero strategies, although implementation will vary widely by capacity, infrastructure and investment.

Singapore, meanwhile, announced a five-fold increase in future carbon prices in its 2022 budget, bringing forward a review by a year. We consider Singapore’s move a response to the call to strengthen climate pledges made at COP26, and should up the ante on other countries to reconsider measures to address climate change ahead of COP27 in November.

The tax is economy-wide and covers about 80% of the Singapore’s total emissions, highlighting the Lion City’s ambitions to be a key player in a global net zero economy, especially as a number of jurisdictions have announced potential carbon tariffs for cross-border trade.

Some tax allowances will be allocated to aid key sectors, such as energy, chemicals and electronics, as part of a transition framework from 2024. Singapore will also of their taxable emissions, in lieu of paying carbon tax from 2024.

We think the move highlights Singapore’s ambitions to become a ‘trading hub‘ for carbon credits. Importantly, revenues from the carbon tax will continue to support Singapore’s decarbonisation efforts and assist households with the expected rise in utility prices. We expect various forms of carbon pricing to play a growing role, as more economies strengthen their climate pledges.

First published 21st February 2022.

Would you like to find out more? Click 'Climate Investment Update - India' and 'Climate Investment Update - Singapore' to access the full Global Research reports (you must be a subscriber to HSBC Global Research).

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