Parliament Q&A
Written Reply to Parliamentary Question on International Carbon Credits Limit
26 February 2026
Written Reply to Parliamentary Question on the limit on the use of International Carbon Credits by Ms Grace Fu, Minister for Sustainability and the Environment.
Questions:
Mr Yip Hon Weng: To ask the Minister for Sustainability and the Environment with key industrial decarbonisation technologies still maturing (a) why has the Ministry retained the 5% limit on the use of international carbon credits rather than allowing time-limited flexibility; and (b) how does the Ministry balance environmental integrity concerns against the risk of firms relocating before viable domestic abatement solutions scale up.
Answer:
The International Carbon Credit (ICC) Framework provides a complementary pathway for carbon tax-liable companies to address hard to-abate emissions, through the use of high-quality ICCs that meet Singapore’s Eligibility Criteria. ICCs are capped at 5% of taxable emissions at the facility-level, to ensure companies continue to prioritise reducing emissions through domestic abatement efforts. The 5% limit also aligns with other comparable jurisdictions, such as South Korea.
The Government is mindful that the pace of Singapore’s transition to a low carbon economy will need to consider the availability of cost-effective low-carbon solutions, and time for companies to decarbonise and transform their operations while maintaining competitiveness. Eligible companies in Emissions-Intensive Trade Exposed (EITE) sectors have transitory carbon tax allowances to help alleviate near term competitiveness concerns. Allowances are conditional on efficiency targets and companies’ decarbonisation plans, to ensure that businesses are incentivised to transition. Separately, companies can also continue to utilise existing schemes such as the Singapore Economic Development Board’s (EDB’s) Resource Efficiency Grant for Emissions and the National Environment Agency’s (NEA’s) Energy Efficiency Grant, to embark on energy efficiency investments.
The Government will continue to monitor international developments to manage this transition in a calibrated manner that balances Singapore’s climate ambitions and our economic competitiveness.