As announced in the country's 2017 annual budget speech, Singapore is set to introduce a carbon tax of SGD$10-20 (USD 7-14) per tonne of carbon released, starting from 2019. Beyond carbon dioxide, the tax penalises five other greenhouse gas emissions: methane, nitrous oxide, hydrofluorocarbons, perfluorocarbons and sulphur hexafluoride. The tax is aimed at helping Singapore achieve its Paris Agreement targets to reduce emissions while boosting its clean energy sector.
A first in Southeast Asia, this is all the more significant as a tax that will hit oil refiners hardest in a country that has long prided itself as a regional oil trading hub.
However, the tax is thought to be 'business-friendly' compared to other carbon tax prices. At USD 131 per tonne of carbon, Sweden's is the highest at present. The potential impacts of the tax on individual businesses remain unclear until the details of the final scheme are revealed in the coming months after industry and public consultation. Regardless, it is clear that companies that already have an internal carbon pricing will be more resilient in the face of the new tax, spurring other companies to be more proactive in managing climate risk.
There are signs that the carbon tax as a policy tool is getting increasing traction around the world. Notably, a group of Republican statesmen in the US are calling for a carbon tax, claiming it to be a conservative climate solution that follows a classic conservative principles of free-market solutions and small government.
- How effective is the carbon tax in reducing global emissions?
- What might the world look like if every single country institutes its own carbon tax?