Singapore’s carbon taxes are here to stay. They provide a firm and clear direction for organisations going forward.
That said, they will be reviewed when major events occur.
Minister for Sustainability and the Environment Grace Fu made this climate-conscious future clear while debating with Opposition MP Associate Professor Jamus Lim over the Carbon Pricing (Amendment) Bill in Parliament Tuesday (Nov 8),
A clear direction for clean skies
“The signal to the companies must be: this is the path that the Government is going ahead, we will have to make investments with these numbers in mind,” outlined Minister Fu, while noting that Singapore’s investments in the petrochemical and power generation industry are multi-year.
Singapore will raise carbon tax to S$25 per tonne for greenhouse gas emissions in 2024 and 2025, and S$45 per tonne for greenhouse gas emissions in 2026 and beyond.
And the progressive increments will set us on course to hit S$50 to S$80 per tonne of emissions by 2030, or a variable rate of 60 per cent.
Here, the Minister was responding to Assoc Prof Lim’s suggestion to have that rate set from S$58 to S$133, or a variable rate which is more than double its lower end.
“So if we have targets, carbon tax rates that cannot be even certain for the next four, five, six years, how can they make long-term projections?” asked the Minister.
“I find it very difficult for companies to do that. I’ll find it very difficult for financiers — for banks — to also do that.”
Minister Fu also noted that the carbon tax is a reform mechanism for the sake of Singapore’s environment.
“This is not a fiscal policy,” she emphasised.
“This is a policy to change our energy mix and our energy use.”
“So whether there is going to be an economic downturn or not, this is a change that we all need to make.”
A clear direction is better than mixed messages
“And here, I think I am receiving slightly mixed messages,” the Minister observed about the Opposition’s climate tax suggestion.
“The message is, ‘We want to fly the environmental flag, we want to be sustainable. We want to be able to address our constituents who want us to, you know, be as green as possible.’”
“But when it comes to the hard decision of making changes, of making companies change and invest in renewables, reduce efficiency, reduce utility, reduce water, circular economy, reduce waste, ‘Hang on, I think there’s an economic condition. And therefore…’,” said Minister Fu.
No half-measures then, for this Government.
“So we have to decide for ourselves — is this carbon tax something that we need to do?” explained the Minister. “And if we need to do, do we need certainty? If we need certainty, how do we address conditions that we do not foresee?”
Although, the carbon tax rate will inevitably be reviewed during disruptions like the pandemic.
“If we have a Covid-19 again — touch wood that will never happen — but if we have a Covid-19, we have a major recession,” she said.
“Of course, we have to think about ways to cushion, but that doesn’t mean that we are turning back to fossil again.”
Clarity for climate-conscious companies
Singapore’s stance on the importance of regulating carbon emissions is clear.
During Minister Fu’s Parliament debate, there was a Singapore pavilion over in Sharm-el-Sheik, Egypt, at the 27th Conference of the Parties to the United Nations Framework Convention on Climate Change (COP27).
This pavilion (at AREA C, Blue Zone, Pavilion 121, if you’re interested) was sending an unambiguous message to all the large emitters in the world, as well as world leaders — even though there’s an energy crisis currently out there, please don’t turn your eyes away from the larger problem.
“So, I hope that Members will support what we’re doing,” said Minister Fu about the Carbon Pricing (Amendment) Bill.
“Understand that we are not we’re not blind to concerns.”
“Accept that we need to give clarity to companies. To invest. To change. To adopt a way of low carbon production that we cannot delay any more. Even as we are confronting some major challenges out there.”