Singapore to introduce carbon tax from 2019

THE Singapore budget has revealed that companies emitting more than 25,000 t/y of greenhouse gases will face a carbon tax from next year.

The decision was announced during the budget on 19 February given by finance minister Heng Swee Keat. "In doing so, we will take into account international climate change developments, the progress of our emissions mitigation efforts and our economic competitiveness," said Heng. “This is the economically efficient way to maintain a transparent, fair and consistent carbon price across the economy to incentivise emissions reduction.”

The carbon tax will target the 30–40 large companies that contribute 80% of Singapore’s greenhouse gas emissions. The government said it would study how to account for the remaining 20% of emissions.

The tax will start at S$5/t (US$3.89/t) between 2019–2023. After a planned review in 2023, it will likely rise to S$10–15/t by 2030. The tax will be applied uniformly across the petroleum refining, chemicals, and semiconductor sectors, but will not apply to petrol, diesel, and concentrated natural gas, as these already have an excise duty charged.

The tax should collect nearly S$1bn in the first five years, which the government plans to use to support projects that reduce emissions.

A spokesperson for Shell expressed concern over the carbon tax, saying: “We should be incentivised to perform better and deploy best-in-class technologies – a flat carbon tax will not provide the appropriate incentives to do so.”

Euston Quah, head of the economics department at the Nanyang Technological University, said: “It sends a signal to those whose activities cause damage to society, whether in the form of human health or environment, that they must be responsible for their actions.”