Stricter vehicle emissions rules: 6 things to know about new carbon tax, tweaked emissions schemes

A new Vehicular Emissions Scheme will replace the current Carbon Emissions-based Vehicle Scheme beginning from Jan 1, 2018, and will run for two years. PHOTO: ST FILE

This article was first published on Feb 20, 2017, and updated on Aug 15, 2017.

SINGAPORE - There has been a rush by car dealers to sell off certain car models, with stricter vehicle emissions standards set to kick in in two weeks time.

These are part of the plans announced by Finance Minister Heng Swee Keat in his Budget 2017 speech, which included plans to implement a carbon tax from 2019 and adjustments to two vehicle incentive schemes which encourage the use of greener vehicles.

Here are six things to note about the initiatives towards sustaining Singapore's environment.

1. The carbon tax will target largest emitters of greenhouse gases, rather than individual users of electricity

The tax will likely cost between $10 and $20 per tonne of emissions, which is in the range of similar carbon tax rates around the world.

It will generally be applied on the largest emitters of greenhouse gases, such as power stations and direct emitters, rather than on individual users of electricity.

2. The tax serves as a price signal for industries

The carbon tax will "create a price signal to incentivise industries to reduce their emissions", Mr Heng said.

It will help achieve Singapore's commitment to reduce emissions under the Paris Agreement, which Singapore signed in 2016 along with more than 120 other countries.

As part of the agreement, Singapore pledged to cut emissions intensity by 36 per cent below 2005 levels by 2030 and stabilise emissions with the aim of peaking around 2030.

3. Consultations with the public on the carbon tax will begin in March

The Government will conduct public consultations on the carbon tax in March. It has already started consultations with industries.

The final carbon tax and exact implementation schedule will be decided after consultations and further studies. Measures will also be introduced to help ease the transition.

4. Diesel taxes restructured from lump-sum tax to usage-based tax

Current diesel taxes, which are a lump sum Special Tax levied on diesel cars and taxis, will be restructured to a volume-based duty.

The duty, which took effect on Monday (Feb 20), costs $0.10 per litre, and will be levied on automotive diesel, industrial diesel and the diesel component in biodiesel.

This is to incentivise users to reduce diesel consumption.

"At the same time, I will permanently reduce the annual Special Tax on diesel cars and taxis by $100 and $850 respectively. In this way, we shift from an annual amount of tax to one which is related to usage," said Mr Heng.

The Special Tax reduction will offset the impact of the new diesel duty for most drivers.

5. The current Carbon Emissions-based Vehicle Scheme (CEVS) will be replaced

A new Vehicular Emissions Scheme will replace the CEVS, which was implemented in 2013 with the aim of encouraging use of vehicles with low carbon emissions.

Under this new scheme, which will run for two years beginning from Jan 1, 2018, four more pollutants will be considered on top of carbon dioxide.

The Vehicular Emissions Scheme will be reviewed before it expires.

Meanwhile, the current CEVS will be extended to Dec 31, 2017.

6. Early Turnover Scheme to be enhanced, extended

The Early Turnover Scheme, which was introduced in 2013 to encourage early replacement of older and more pollutive commercial diesel vehicles, is due to expire on July 31 this year.

It will be extended to July 31, 2019 for vehicle owners who turn over their existing Euro II and III commercial diesel vehicles for Euro VI vehicles.

The scheme has seen owners of 27,000 vehicles switch to cleaner models.

The Certificate of Entitlement (COE) bonus period for Light Goods Vehicles will also be further enhanced, with more details revealed at a later date.

Join ST's Telegram channel and get the latest breaking news delivered to you.