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Workshop on Carbon Pricing Policies for Brunei Darussalam

22 September 2021

Online, 22 September 2021The ASEAN Centre for Energy (ACE), the Brunei Climate Change Secretariat (BCCS) and the Institute of Policy Studies (IPS), Universiti Brunei Darussalam (UBD) collaborated in organising a workshop on September 22nd, 2021 to increase understanding and technical capacities on carbon pricing policies. This workshop aims to support establishment of best suited model for Brunei Darussalam to ensure that carbon pricing could be effectively and timely implemented in 2025, given that Strategy 6 of the Brunei Darussalam National Climate Change Policy (BNCCP) outlined carbon pricing as one of the key instruments that could advance and accelerate low carbon transition for Brunei Darussalam. This initiative is also supported by the ASEAN Climate Change and Energy Project (ACCEPT).

Opening remarks were delivered by Permanent Secretary, Ministry of Energy, Brunei Darussalam and Chair of the Executive Committee on Climate Change, Guest of Honour, YM Awang Haji Azhar bin Haji Yahya and Executive Director of ACE, Dr. Nuki Agya Utama. The first session applied self-learning method in which the audience can download and watch the pre-recorded presentations about carbon pricing potential, programme, modelling and assessment, policies, and implementation, delivered by presenters from ACE, Adelphi / International Carbon Action Partnership (ICAP), Asian Development Bank (ADB), UN ESCAP / National Institute of Economic and Social Research (NIESR), International Energy Agency (IEA), and National Climate Change Secretariat (NCCS) Singapore.

The presentation session discussed about carbon pricing potentials in Brunei Darussalam. Ms. Dina Yahya explained about Brunei Darussalam’s commitment to reduce national greenhouse gas (GHG) emission by 20% (from the BAU levels) by 2030.  Strategy objectives of carbon pricing are comprehensive assessment; Measurement, Reporting, Verification (MRV) system; and carbon trading. Dr. Romeo Pacudan described that according to Global Carbon Pricing Initiatives, explicit carbon pricing with price determination are carbon tax policies and Emissions Trading Schemes (ETS). There are two approaches in estimating carbon price namely social cost of carbon approach and marginal abatement cost approach. Brunei Darussalam could also implement shadow carbon pricing, a theoretical price set whether by private sector initiatives (carbon corridors initiative), development banks, or governments. Ms. Pengiran Mas Norhazilinah Pengiran Momin pointed out that industry stakeholders have collaborated for Carbon-Neutral Liquefied Natural Gas (LNG). For instance, Shell has signed an agreement with Brunei LNG for the purchase of a carbon-neutral LNG.

The discussion sessions were moderated by ACCEPT Project Manager, Mr. Beni Suryadi. Session 1 discussed about carbon pricing in Brunei Darussalam with Dr. Zulfikar Yurnaidi, Dr. Baran Doda, Mr. Virender Kumar Duggal, and Ms. Dawn Holland as the speakers. As a major exporter of fossil fuel, modelling the policy instrument of carbon pricing is important to prepare exports in new areas and fill the upcoming hole in export revenue. Subsidies in petroleum prices is opposite to lower fossil consumption and carbon tax. Lowering subsidies in petroleum could higher carbon pricing revenue and enhance energy transition. Noting that Brunei Darussalam has already started efforts in implementing carbon pricing, the next step is to build capacity within the government. For instance, the government should regulate cheaper Carbon Capture, Utilisation and Storage (CCUS) technologies to support carbon pricing. Moreover, ADB could support in commencing Brunei Darussalam carbon pricing by technical and capacity building which could be accessed through carbon market program.

Implementation and best practices of carbon pricing was the topic for discussion session 2. The speakers were Ms. Monika Merdekawati, Mr. Kieran Mcnamara, Ms. Lina Li, and Mr. Jansen Toh. The difference between carbon tax and ETS is ETS focus on allowance, guarantee emission level, and introduce auction to generate revenue.  Therefore, ETS would give more certainty in emission reduction than carbon tax. Important considerations in carbon pricing are emission history to project future emission, cap that should be in line with NDC, and communication engagement between stakeholders especially industrial stakeholders that should be included from the beginning.

ASEAN region has a huge potential on carbon pricing. One of ASEAN Member States (AMS) that has been implementing carbon pricing is Singapore, which took 4 years to develop it from 2013-2017. Singapore implements short term certainty of prices (for example the price for the next 5 years). They also engage companies in one-on-one basis to explain for example, revenue cycling mechanism. Singapore applied different type of price mechanism including internal shadow carbon pricing (price set by the government that projects should comply). However, institutional and technical barrier should be considered in determining whether to use shadow carbon pricing.

With high potentials and suitable practices, Brunei Darussalam can implement carbon pricing to advance and accelerate low carbon transition. However, further studies are necessary to support the implementation. As a project aiming to improve the coherence between the ASEAN energy and climate policies, ACCEPT supports the efforts in enhancing carbon pricing mechanisms in the region.SNF