The Impact Of Brunei's Co2 Emissions

Brunei Darussalam's CO2 emissions have been a cause for concern, with fossil CO2 emissions of 9,375,650 tons in 2022, according to recent statistics. While there was a decrease of 4.45% in emissions compared to the previous year, the country's per-capita emissions are significantly higher than the global average. The high emissions per capita can be attributed to the country's economic development, carbon-intensive transportation, and heavy reliance on fossil fuels for power generation. To address this issue, Brunei has identified domestic carbon pricing as a key strategy in its 10-pillar approach to transitioning to a low-carbon economy.

Fossil fuel burning

In 2022, Brunei's fossil CO2 emissions were 9,375,650 tons, with a per capita emission of 20.76 tons per person. While this represents a decrease of 4.45% compared to the previous year, it is still a significant contribution to global CO2 emissions.

The burning of fossil fuels, such as gas and crude oil, for power generation and industrial processes is the primary source of these emissions. In 2021, Brunei produced 4,450.77 GWh of electricity, with 98% generated using gas and the remaining from diesel and solar PV. The country has committed to reducing emissions and has pledged to achieve net-zero emissions by 2050.

To achieve this goal, Brunei is exploring the use of technology to reduce its carbon footprint while also investing in the development of oil recovery technologies to maximise its reserves. The country is also looking to attract investments in the oil and gas sector and plans to increase production to contribute more to its GDP.

While Brunei has recognised the importance of renewable energy sources, its current renewable energy policy is modest compared to its ambitious hydrocarbon strategy. The country's small size limits the technical potential for renewable energy, leaving it reliant on fossil fuels and nascent technologies to drive down emissions.

Overall, Brunei's high CO2 emissions per capita are largely due to its dependence on fossil fuels, particularly oil and gas, for energy production and exports. The country is working to reduce its carbon footprint while also investing in and expanding its fossil fuel industry.

Population size

Brunei, officially Brunei Darussalam, is a small country in Southeast Asia with a population of around 455,370 as of 2022. The country ranks 175th in the list of countries by population, with its population equivalent to just 0.01% of the total world population. Brunei has a median age of 32.2 years and a population density of 88 people per square kilometre.

The population of Brunei is heavily concentrated in urban areas, with 79.7% of the population living in urban centres in 2024. The capital and largest city, Bandar Seri Begawan, is home to approximately 180,000 people. The Belait, Tutong, and Brunei-Muara districts make up the larger western part of the country, where around 97% of the population resides. In contrast, only about 10,000 people live in the mountainous eastern part, the Temburong District.

Brunei's population is ethnically diverse, with indigenous groups including the Belait, Brunei Bisaya, Dusun, Kedayan, Lun Bawang, Murut, and Tutong. As of 2014, 65.7% of the population were Malay, 10.3% Chinese, 3.4% indigenous, and the remaining 20.6% comprised smaller groups. The country also has a relatively large expatriate community, with expats from non-Muslim countries such as Australia, the United Kingdom, South Korea, Japan, the Philippines, Thailand, Cambodia, Vietnam, and India.

Islam is the official religion of Brunei, with over 82% of the population identifying as Muslim. The country has a high Human Development Index ranking, coming in second among Southeast Asian nations after Singapore.

Energy consumption

Brunei's energy consumption patterns have fluctuated over the years, with a notable dependence on fossil fuels. In 2022, the country's fossil CO2 emissions were reported at 9,375,650 tons, a decrease from the previous year's emissions of 9,812,230 tons. These emissions translate to a per capita emission of 20.76 tons per person, considering Brunei's population of 455,370 in 2022. This per capita emission also witnessed a decrease from the previous year's figure of 21.72 tons.

The energy sector in Brunei is dominated by fossil fuel usage, particularly oil and natural gas. The country's economic development and growth are closely tied to this sector, which can influence per-capita energy-related CO2 emissions. Brunei's energy consumption patterns are shaped by its economic structure and energy system. Power plants, transportation, and industrial processes contribute significantly to the country's carbon emissions.

To address the environmental impact of energy consumption, Brunei has recognized the need for a transition to a low-carbon economy. The country has identified carbon pricing as a key strategy in its National Climate Change Policy (BNCCP), aiming to implement a carbon-pricing instrument by 2025. This policy is expected to apply to all industrial facilities that exceed a specific carbon emissions threshold. Additionally, Brunei has taken steps toward energy efficiency, such as introducing a Standards and Labelling Act and piloting electric vehicles.

The choice between carbon taxes and emissions trading systems (ETSs) is a critical aspect of carbon pricing. Carbon taxes offer certainty over emissions prices and can be easily integrated into existing fuel tax collection procedures. On the other hand, ETSs may require more sophisticated administration and monitoring of emissions trading markets. Brunei aims to launch an ETS as part of its carbon pricing strategy.

Furthermore, Brunei's Economic Blueprint, aligned with the Brunei Vision 2035, seeks to diversify the country's economy away from its heavy reliance on the petroleum sector. This blueprint focuses on growth-enhancing reforms, including reskilling the labor force, promoting open trade policies, fostering a conducive business environment, and emphasizing sustainable practices. By widening and diversifying its fiscal revenue base, the government aims to ensure financial sustainability and better target subsidies.

Trade-adjusted emissions

When countries set targets and measure their CO2 emissions, they typically focus on production-based emissions, or territorial emissions, which only account for the CO2 emitted within a country's borders. This approach fails to capture the emissions associated with traded goods and can lead to an incomplete understanding of a country's carbon footprint.

Brunei Darussalam, for example, has a significant fossil fuel-dependent economy, with oil and gas constituting about 80% of its exports and 88% of its fiscal revenues. The country's CO2 emissions per capita were estimated to be 16.05 tons in 2021, and 20.76 tons in 2022, showing a decreasing trend. However, these estimates are based on production-based emissions and do not account for the emissions embedded in traded goods.

To address this gap, consumption-based accounting aims to estimate trade-adjusted emissions by correcting for trade. This involves considering the CO2 emitted in the production of goods and services that are consumed within the country, regardless of where the production took place. This approach provides a more comprehensive understanding of a country's carbon footprint and can help inform more effective climate change mitigation strategies.

By adopting consumption-based accounting, countries like Brunei can gain a more accurate picture of their emissions, including the emissions associated with their trade activities. This information can then be used to guide policy decisions, such as the implementation of carbon pricing schemes, the development of diversified and sustainable economic plans, and the identification of sectors where emissions reduction strategies may be particularly effective.

Carbon pricing

The country has committed to reducing national greenhouse gas emissions by 20% from BAU levels by 2030. To achieve this, carbon pricing is enshrined in the Brunei Darussalam National Climate Change Policy (BNCCP), which outlines carbon pricing as a key instrument to advance and accelerate the low-carbon transition. The BNCCP, launched in 2020, is expected to be applicable to all industrial facilities emitting carbon beyond a specific threshold by 2025.

The choice between carbon taxes and emissions trading systems (ETS) is a critical decision in implementing carbon pricing. Carbon taxes are generally easier to administer and can be integrated into existing fuel tax collection procedures. They provide certainty over emissions prices and can be adjusted to maintain progress on emissions goals. However, they can be politically challenging to implement and may require revenue recycling and communication strategies to build support.

On the other hand, ETSs provide more certainty in achieving emissions targets and are a more natural fit for policies under the purview of environment ministries. They can be combined with price stability mechanisms, such as price floors, to encourage clean technology investments. ETSs may also be more feasible politically, especially when permits are freely allocated to affected firms. However, they typically require more sophisticated administration to monitor emissions and trading markets.

Brunei's path towards carbon pricing involves a combination of strategies. The country has already started efforts to implement carbon pricing, and the next step is to build capacity within the government. Lowering subsidies in petroleum could increase carbon pricing revenue and enhance the energy transition. Additionally, the government should regulate cheaper Carbon Capture, Utilization, and Storage (CCUS) technologies to support carbon pricing.

The Asian Development Bank (ADB) can provide technical and capacity-building support for Brunei's carbon pricing initiatives through its carbon market program. Singapore, another ASEAN Member State, has successfully implemented carbon pricing, offering valuable insights for Brunei's journey.

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