Singapore’s finance minister Lawrence Wong has announced the city-state will hike its carbon emissions tax some 500% to S$25 (US$18.60) a ton in 2024 as the country works to hit its zero-emissions target by 2050. The tax will rise a further 80% in 2026 to S$45 with a 2030 target of S$80 per ton. Singapore is a center for oil refining and petrochemical exports, exporting some US$43.1 billion ins refined petroleum to become the world’s fourth largest exporter. While taxes will rise, local businesses will be allowed to buy international carbon credits to offset up to 5% of their taxable emissions. Carbon credits are generated when a company reduces its emissions by more than required, then the company can sell that reduction to another company that needs it, creating an incentive to do more than required.
Singapore was the first country in Southeast Asia to introduce a carbon pricing plan and introduced the carbon tax in 2019. The tax applies to all facilities that produce 25,000 tons or more of greenhouse gas emissions annually. A stronger price signal from the government would encourage investments in greenhouse gas reduction, said a spokesperson from ExxonMobil, which has its largest refinery in Singapore. Unlike power, which is consumed domestically, Singapore exports most of its energy and chemical products, and must compete with other exporter countries that either do not have a carbon price policy or have sophisticated mechanisms to help their trade-exposed industries remain competitive if they do.