A carbon price is needed to ensure that emitters take into account the environmental impact of carbon emissions in the decisions they make.
Singapore implemented a carbon tax in 2019. The tax sends a transparent, fair and consistent price signal to incentivise emitters to reduce their emissions, while giving them the flexibility to act where it makes business sense.
The carbon tax is levied on facilities that emit 25,000 tonnes of CO2-equivalent (tCO2e) or more annually, and applies uniformly to all sectors without exemption. The tax has been set at $5/tCO2e from 2019 to 2023 as a transition period to give the industry time to adjust to its impact. The Government will review the tax rate by 2023. We intend to increase the tax rate to between $10-$15/tCO2e by 2030. In doing so, we will consider international climate change developments, the progress of our mitigation efforts, and our economic competitiveness.
The Government is prepared to spend more than the expected carbon tax revenue of about $1 billion over the first five years to support projects that reduce emissions.