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Singapore to introduce carbon tax in 2019

Public Policy

Singapore will introduce a tax on emissions of S$5.00 per ton of carbon dioxide equivalent ($3.80/tCO2e) from 2019, according to The Straits Times.

The move was announced in the country’s budget on Monday and will apply to all facilities producing more than 25,000 tons of greenhouse gas emissions per year.

All facilities producing 25,000 tonnes or more of greenhouse gas emissions in a year will have to pay a carbon tax from 2020, Finance Minister Heng Swee Keat announced on Monday (Feb 19).

The carbon tax will initially be $5 per tonne of greenhouse gas emissions from 2019 to 2023.

However, the Government will review the carbon tax rate by 2023, with plans to increase it to between $10 and $15 per tonne of emissions by 2030.

“In doing so, we will take into account international climate change developments, the progress of our emissions mitigation efforts and our economic competitiveness,” Mr Heng said.


The finance minister said the Government expects to collect a carbon tax revenue of nearly $1 billion over the first five years, and is prepared to spend more than this in the same period “to support worthwhile projects which deliver the necessary abatement in emissions”.

He added that the carbon tax will apply uniformly to all sectors, calling it ” the economically efficient way to maintain a transparent, fair and consistent carbon price across the economy to incentivise emissions reduction”.

A carbon tax is a common tool used to control the amount of earth-warming greenhouse gases being released into the atmosphere. About 67 countries and jurisidictions, including China, the European Union and Japan, have implemented or announced plans to implement such a scheme. Its aim is to incentivise emitters to reduce their greenhouse gas emissions and improve energy efficiency.

Professor Euston Quah, head of the economics department at the Nanyang Technological University, said it was timely for Singapore to adopt a carbon tax.

He 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.”

The carbon tax will be levied on 30 to 40 large emitters that contribute 80 per cent of Singapore’s greenhouse gas emissions.

They are mainly from the petroleum refining, chemicals and semiconductor sectors, with each emitter producing more than 25,000 tonnes of carbon dioxide equivalent of greenhouse gases a year. This is equivalent to the emissions produced by the annual electricity consumption of 12,500 four-room Housing Board flats.

As for the remaining 20 per cent, Mr Heng said the Government “will study how to account for these emissions, and take action where necessary”.

The first payment will be in 2020, based on emissions in 2019. The tax will be levied on each facility’s total emissions.

For households, the impact of the carbon tax will be small, at “about 1 per cent of total electricity and gas expenses on average”, Mr Heng said.

An additional U-Save rebate will be provided for three years to help HDB households.

Eligible HDB households will each receive $20 more per year, from 2019 to 2021.

This will cover the expected average increase in electricity and gas expenses arising from the carbon tax, Mr Heng said.

Two companies that will be affected by the new tax  expressed  reservations about it.

A spokesman for ExxonMobil Singapore said the petrochemical firm  was committed to working with the Government to reduce the risks of climate change but added that  “affordable energy” was important to support economic growth and ensure Singapore’s competitiveness.

A spokesman for oil company Shell expressed concern with the flat tax rate.

He said: “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.”

In a dialogue with the Government last month, companies that would be affected had  asked if the carbon tax could be implemented via a differentiated approach.
But Mr Heng, noting the need for a uniform carbon tax, said on Monday: “This is the economically efficient way-to maintain a transparent, fair and consistent carbon price across the economy to incentivise emissions reduction.”
Meanwhile, petrol, diesel and compressed natural gas (CNG) already have excise duties which encourage the reduced use of such fuels, so they will not be affected by an additional carbon tax.

In 2012, Singapore’s greenhouse gas emissions came up to a total of 49 million carbon dioxide-equivalent tonnes.

That year, the industry sector accounted for about 59 per cent of Singapore’s total emissions, of which 41 per cent was from direct emissions and 18 per cent from electricity use.

As part of the Paris Agreement, Singapore has pledged to reduce its emissions intensity (emissions per dollar of GDP) by 36 per cent from 2005 levels by 2030, the same year it aims to have emissions reach a peak.

Mr Heng said that from 2019, he will set aside funds to give companies, including small and medium-sized enterprises and power generation companies, better support to improve their energy efficiency.

These include schemes such as the Productivity Grant (Energy Efficiency) and the Energy Efficiency Fund. Projects with greater reduction in emissions will receive more support.

Executive director for Singapore Green Building Council Yvonne Soh said such schemes could help companies overcome the cost barrier for energy efficiency initiatives.

“A number of such incentive funds or assistance schemes already exist, but more support is always welcomed as energy efficiency is usually not on the top of most companies’ minds,” she said.


4 Comments on "Singapore to introduce carbon tax in 2019"

  1. Sissyfuss on Tue, 20th Feb 2018 10:12 am 

    This is an affront to the Trump adminstration and will be dealt with promptly. Singapore, prepare yourselves to be confronted with the full fire, fury, and pornstars that only a great and fearless leader can produce.

  2. Outcast_Searcher on Tue, 20th Feb 2018 12:16 pm 

    Good for Singapore!

    It’s way too small, but given the lack of progress on this front in other parts of the world (aside from political promises to stop selling pure ICE’s in 2040 or s — as though those can’t be reneged on if inconvenient at that time) at least it’s a START.

    Now, since I’d like it to be $20 a pound, for a metric ton that would be 2.2*1000*20 = $44,000 a metric ton or about 10,000+ times higher (than $3.80), but it’s still better than nothing.

    However, it’s laughable how Shell complains about it. I’d love to see them cry about MY carbon tax, which would eliminate most income taxes to compensate for the magnitude of my CO2 tax proposal.

  3. Anonymouse1 on Tue, 20th Feb 2018 11:14 pm 

    Carbon taxes are a something of a joke. A not very serious attempt by TPTB to convince their more vocal detractors they really are trying to do something about…carbon?

    My province has a carbon tax, and the roads are still choked with FF vehicles. More now than ever before. The money they do collect, is definitely NOT being used, at least not directly, to get people out of cars, build electric surface rail, or try to eliminate car dependency. Perhaps a few dollars here and there makes it way to whatever token efforts they do engage in, but the local ‘carbon’ tax, goes into general revenue. So serious is the govt about carbon taxes, they use the funds to lower other classes of taxes. They even hand out carbon tax rebates. At least I think they still do?

    6 cents or so a litre I believe. And more oil burning cars get added to the roads every day….

    Singapore already has impressive levels of investment in public transport from what I know. Given how strict they are, I don’t see why they don’t just regulate the worst offenders and polluters out of town.

  4. rockman on Wed, 21st Feb 2018 11:58 am 

    A – Good points. But:”…I don’t see why they don’t just regulate the worst offenders and polluters out of town.” Maybe because it doesn’t want to give up the tax revenue those countries supply. And also to not have to import more of those products these companies would no longer be supplying Singapore.

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