Large carbon emitters to be taxed $5 per tonne of greenhouse gases from 2019 to 2023
Published on 2018-02-20 by Neyla Zannia
Finance Minister Heng Swee Keat said in his Budget speech on Monday (19 February) that large carbon emitters will be taxed S$5 for each tonne of greenhouse gases generated from next year to 2023, which is a significantly lower rate than the S$10 to S$20 per tonne envisioned last year by the authorities. This is said to give the industry more time to adjust and implement energy efficiency projects.
The minister said that the tax rate will be reviewed by 2023, with the intention of increasing it to between S$10 and S$15 per tonne by 2030.
Mr Heng said that the review will consider global climate change developments, the progress of Singapore’s emissions mitigation efforts and its economic competitiveness.
The first carbon tax is expected to be paid in 2020 based on emissions in 2019.
The carbon tax will apply to about 30 to 40 of the largest emitters here that each produce 25,000 tonnes or more of greenhouse gases a year, which account for about 80 per cent of Singapore's emissions.
"The carbon tax will encourage businesses to take measures to reduce carbon emissions," he said, adding that companies that do so will be more competitive, as more countries impose tighter limits on their carbon emissions and international agreements on climate change like the Paris Agreement take effect.
The minister noted that the initial rate of S$5 per tonne “cannot be directly compared” to those in other jurisdictions as those with higher headline carbon prices also have significant exemptions for particular sectors, which lower their effective carbon prices.
Many wanted the carbon tax to be implemented based on emissions performance benchmarks for fairness as opposed to a flat rate, saying that this system allows those that perform at or better than the benchmark to get free allowances. The Government, however, has decided to implement a credits-based carbon tax uniformly across sectors with no exemptions.
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