Singapore has announced a new carbon tax which will come into force by 2019, with initial prices set between US$7 and US$14 per tonne of emissions.
On Monday 20 February, Finance Minister HengSweeKeat announced plans to introduce South East Asia’s first carbon tax in 2019.
The carbon tax plan will cover refineries in the city-state, applying added pressure on international oil companies in one of Asia’s biggest refining centres.
The initiative will price a tonne of greenhouse gas (GHG) emissions at between S$10 (US$7) and S$20 (US$14) and will affect more than 30 of Singapore’s largest polluters.
Exxon Mobil Corp. – which operates an oil refinery in Singapore – stated it is committed to working with the Singapore government to balance the risks of greenhouse gas emissions with the need to maintain a strong economy.
Shell issued a statement affirming its support for a strong and stable government-led carbon price, but said that any policy “must ensure companies can compete effectively with others in the region who are not subject to the same levels of carbon dioxide costs”.
The nation’s government has confessed that the scheme is likely to increase energy prices by between two and four per cent; however, SweeKeat states that the tax is the fairest and most efficient way to curb emissions.
During his 2017 budget speech he said: “The most economically efficient and fair way to reduce greenhouse gas emissions is to set a carbon tax, so that emitters will take the necessary actions. Singapore is vulnerable to rises in sea level due to climate change. Together with the international community, we have to play our part to protect our living environment.”
Under the Paris Agreement, Singapore has committed to reduce its emissions intensity – which is the ratio of carbon emissions to each dollar of the gross domestic product – by 36 per cent from 2005 levels by 2030 and stabilise emissions with the aim of peaking around 2030.
The proposed tax will be imposed on carbon dioxide emissions in addition to five other GHG including methane and hydrofluorocarbons (HFCs) – with the profits being dedicated to help fund the industry’s emission reduction measures.
Isabella Loh, Chairman of the independent Singapore Environment Council, said: “It is the first time in the history of Singapore that a budget has placed such a high emphasis on green initiatives linked to tax revenues.”
An industry consultation has been launched on the proposal, which SweeKeat believes has the potential to “spur the creation of new opportunities in green growth industries such as clean energy”.