The Business Times: Singapore Budget 2022 - Carbon Tax Set To Rise
February 17, 2022
The Singapore government is bringing forward its net-zero timeline "by or around mid-century", as part of the green initiatives announced in Budget 2022. Singapore’s Finance Minister Lawrence Wong announced in his Budget speech on February 18 that the first increase, to S$25 per tonne on companies that emit at least 25,000 tonnes of greenhouse gas annually, is set to take effect from 2024.This will be followed by an increase to S$45 per tonne in 2026 and 2027, with the view to reach S$50 to S$80 per tonne by 2030, he added.
Abhi Bhuchar, Head of Consumer and Industrials, Southeast Asia, and Energy, Asia Pacific, Oliver Wyman, believes the progressive increase in carbon tax will increase Singapore's attractiveness as an investment hub. "The government has given certainty in an uncertain path to decarbonization, which will certainly attract capital. In addition, this will spur carbon market development and all the investments that go with it. For example, in the aviation and shipping sector, it would drive investments in more fuel efficiency and the development of sustainable fuels."
Timothy Colyer, Partner, Financial Services, Oliver Wyman, said the hike in carbon tax will inspire laggards to invest in transition technologies. It also provides support to Singapore's role as a regional financial center for carbon credits, and should be welcomed by the Asian subsidiaries of multinational companies with net-zero commitments.
Singapore also announced that businesses will be allowed to use high-quality, international carbon credits to offset up to 5 per cent of their taxable emissions, in lieu of paying carbon tax, from 2024.
Tek Yew Chia, Vice Chairman, Singapore, Oliver Wyman, said this is "clear recognition" that more needs to be done to develop the voluntary carbon credits market.
Read more about the carbon tax changes here.