ACJC H2 Prelim 2024 P1 QP

ANGLO-CHINESEJUNIORCOLLEGE 2024JC2PRELIMINARYEXAMINATIONS ECONOMICS 9570/01 Higher 2 Paper1 19August2024 2hours30minutes Additional materials: Writingpapers2coversheets READTHESEINSTRUCTIONSFIRST Writeyourexamindexnumberandnameonall theanswersyouhandin.Writeindarkblueorblackinkpenonbothsidesofthepaper.Youmayuseasoftpencil foranydiagrams,graphsorroughworking.Donotusestaples,paperclips,highlighters,glueorcorrectionfluid/tapeinyouranswers. Answer allquestions. BeginQuestion2onafreshsheetofwritingpaper. Attheendoftheexamination,arrangeyouranswersinorder.FastenyouranswersforQuestion1andQuestion2separatelyusingthecoversheetsprovided. Thenumberofmarksisgiveninbrackets[]attheendofeachquestionorpartquestion. Thisdocumentconsistsof 8printedpages(includingthispage).Pleasecheckthatyourquestionpaperiscomplete.

2 Answer allquestions Question1: SustainableDevelopment inSingapore Figure1: Cost of energygeneratedfromsolar power vsfossil fuels: Source:International RenewableEnergyAgency Extract 1: Renewablesincreasinglybeat eventhecheapest coal competitorsoncost. Renewable power, or collectively known asrenewables, isincreasinglycheaper thanfossilfuels, anewreport bytheInternational RenewableEnergyAgency(IRENA)publishedtodayfinds. Thereport highlightsthat newrenewablepower generationprojectsnowincreasinglyundercut existingcoal-firedplants. Onaverage, solar power andwindpower cost lessthankeepingmanyexistingcoal plantsinoperation. Renewable electricity costs have fallen sharply over the past decade, drivenbyimprovingtechnologies, economies of scale, increasingly competitive supply chains and growingdeveloper experience. Since2010,solarpowerhasshownthesharpestcostdeclineat82%,followedbywindat39%. Renewablesoffer awaytoalignshort-termpolicyactionwithmedium-andlong-termenergyand climate goals. Renewables must be the backbone of national efforts to restarteconomies in the wake of the COVID-19 outbreak. With the right policies in place, fallingrenewablepowercostscanshiftmarketsandcontributegreatlytowardsagreenrecovery. Source:International RenewableEnergyAgency,2June2020 Extract 2: ‘Long Island’ along East Coast being studied as part of URA’s plans forcoastal protection, housingneeds. Areclaimed‘LongIsland’ alongthesouth-easterncoastofmainlandSingaporemayonedaynot onlyoffer protectionagainst floodsandrisingsealevels, but alsoanewspotforleisureandrecreation, muchliketheMarinaBarrage. Livingonthe"island", whichisenvisionedtostretcharound15kmfromMarinaEasttoChangi,mayalsobeapossibility. ©ACJC2024PreliminaryExam9570/01

3 The Long Island concept was one of the possible options laid out as part of Singapore’sS$100 billion plan to protect itself from rising sea levels. The Urban RedevelopmentAuthority (URA) said that it isstudyingwaystointegratecoastal protectionmeasuressuchasLongIslandwithfuturereclamationthatareintheworks. “Thiscouldincludecreatinganewreservoir toenhanceour floodandwater resilience.The‘Long Island’ can be developed for new homes and integrated with coastal parks andrecreational spaces,”itadded. Source:TodayOnline,7June2022 Extract 3: Canahigher carbontaxleadSingaporetothepromisedgreenland? Back in 2019, when Singapore became the first South-east Asian country to implement acarbontax—toutedasacost-effectivewaytocombat global warming—manyviewedthecurrentrateofS$5pertonneofcarbonemissionsastoolow. However, theimpendinghikeincarbontax,whichwill beraisedtoamore“respectablelevel”of S$25 per tonne in 2024, will give Singapore aseat alongsideseriouscarbontaxusers.The tax will be further increased progressively to S$45 per tonne in 2026, with a viewtoreachS$50toS$80pertonneby2030. Thehikeismeant tosendasignal tocompaniesthatcarbonemissionshaveanexplicitcoston the environment. They will now find it worthwhile to adopt sustainable measures toreducetheircarbontax. While many view the impending hike in carbon tax as unavoidable, given the intensifiedconcerns over climatechangeinrecent years, someobserverspointedout that consumersandbusinessesmayfeel thepinchintheformofhigherpricesandcosts. The effectiveness of carbon tax is contingent on its rate, which must be high enough toincentivise companies; the time period given for industries to adapt to the tax; and theavailabilityofgreentechnologyforindustriestotap,saidexperts. Professor Euston Quah, who specialises in environmental economics at NTU, however,arguedfor adjustmentstothecarbontaxtobespreadoutoveralongertimeperiod,beyond2030. HepointedtotheconstraintsfacingSingaporeinswitchingtorenewableenergy.Theuse of solar energy, for instance, is hampered by limited space, while tapping energysourcesthroughaninternational gridorpipelinewouldpresentenergysecurityissues. Source:TodayOnline,5March2022 Extract 4: What firmsaredoinginresponsetotheriseincarbontax. Big emitters which are subject to the carbon tax said that they havealreadyimplementedvariousdecarbonisationmeasurestoreducetheiremissionsoverthelastdecade. Petroleum company ExxonMobil Asia Pacific said that the firmhas introduced a series ofinnovationssince2002, whichhaveledtoenergyefficiencygainsof morethan25percentandreducedthecarbonemissionsofitsSingaporefacility. ©ACJC2024PreliminaryExam9570/01

4 These initiatives include the operation of three cogeneration facilities that produce bothelectricity and steam concurrently. Cogeneration recovers heat energy after electricity isgenerated to produce steam. The steamis then used for ExxonMobil’splant operationsinSingapore. This process requires less fuel and emits less carbon than if the steamandelectricitywereproducedseparately. However, given Singapore’s open economy, it is important that the carbon tax frameworksafeguardsthecompetitivenessof trade-exposedindustries. Theyarecompetingwithotherindustrial facilitiesgloballythat haveeither no, oralowerpriceoncarbondomesticallyorontheirexports. Source:Channel NewsAsia,7March2022 Extract 5: Largeemitterscanbuycarboncreditstooffset carbontaxbill from2024 Large emitters in Singapore will from2024 be able to buy international carbon credits 1 toreducethecarbontaxtheyhavetopay. Finance Minister Lawrence Wong said that businesses will be able to use "high-quality,international carboncredits" tooffset upto5per cent of taxableemissions,inlieuofpayingthecarbontax. "This will moderate the impact for companies," he said. "It will also help to create localdemandfor high-qualitycarboncreditsandcatalysethedevelopmentofwell-functioningandregulatedcarbonmarkets." Partially offsetting tax liabilities with international carboncreditswouldmeanthat firmscanshrink their tax bill if they buy credits generated by, say, a forest conservation project inIndonesia. Essentially, it meansthat acompanyherewouldhavetheoptiontopayanotherentitytoreduceemissionsinanothercountrywhereitmaybecheapertodoso. Source:TheStraitsTimes,27February2022 1 Carboncreditsare tradeablepermitsthatallowtheownertoemitacertainamountofcarbondioxideorothergreenhousegases(GHGs). ©ACJC2024PreliminaryExam9570/01

5 Questions: (a) Comparethechangeinthecostofenergyfromfossil fuelswiththechangeincostofenergyfromsolarpowerbetween2018to2022. [2] (b) With the aid of diagrams, explain howthedevelopmentsinrenewableenergymayaffectthemarketsforrenewableenergyandenergyfromfossil fuels. [4] (c) (i) Explain howthe development of ‘LongIsland’ will reducetheopportunitycostofbuildingnewhomes. [2] (ii) Explain why coastal protection measures such as ‘Long Island’ must beprovidedbythegovernment. [4] (d) Discusswhetherthebenefitsofacarbontaxoutweighthecoststosociety. [8] (e) Discusswhetherfirmsshoulduseinnovationorpurchasecarboncreditswhenfacedwithanincreaseincarbontax. [10] [Total: 30] ©ACJC2024PreliminaryExam9570/01

6 Answer allquestions Question2: Thechallengesinapost-pandemicworld Table1: SelectedKeyEconomicIndicatorsfor UnitedStates, 2019- 2023 2019 2020 2021 2022 2023 Real EffectiveExchangeRateIndex(USD) 116.4 118 115.6 126.6 127.3 Netcurrentaccount(inUSDbillions) -441.7 -597.1 -831.4 -971.6 -818.8 UnemploymentRate(in%) 3.7 8.1 5.3 3.6 3.6 Govern