S’pore green groups call for transparency on carbon tax hike and ‘discounts’ for emitters

SINGAPORE - Several environment groups in Singapore are pressing the Government for more clarity on how much the carbon tax will be raised from 2028, and for more transparency on tax “discounts” given to some large emitters here.

In an open letter to the Government released on Sept 9, the four groups also urged the authorities to protect low-income households from higher electricity bills amid carbon tax hikes.

The letter was penned by youth-led initiative Energy CoLab, as well as environment groups LepakInSG, SG Climate Rally and Singapore Youth for Climate Action.

They said: “An effective carbon tax should protect our people, not fossil fuel companies.”

Singapore’s carbon tax

– which puts a price on greenhouse gases so that polluting firms will slash their emissions – first went up from $5 per tonne of carbon dioxide (CO2) emissions to $25 per tonne of emissions in 2024 and 2025.

This will increase further to $45 per tonne in 2026 and 2027. By 2030, the tax rate could be $50 to $80 per tonne, the Government earlier announced.

The letter read: “As the carbon tax amount beyond $45 per tonne of CO2 must be decided upon before 2028, and firms will require sufficient time to adjust, it is timely to review the tax and its associated measures now.”

They added: “This will also allow adequate time for public consultation.”

There are roughly 50 carbon tax-paying facilities in Singapore, mainly from the manufacturing, power, waste and water sectors. These emitters are responsible for about 70 per cent of total national emissions.

The Straits Times reported in June

that the expected revenue from Singapore’s carbon tax for 2024 – the year the tax rate increased fivefold to $25 – is lower than expected. 

The revenue was projected to be about $642 million, when calculations showed that the total tax revenue should be about $1 billion, assuming Singapore’s emissions are similar to previous years.

Experts said this discrepancy was likely due to the allowances given to trade-exposed emitters to help them stay competitive and ease cost strains.

Eligible companies here that face strong competition globally are granted “carbon tax relief” in the form of allowances. Such companies may come from the chemicals, electronics and biomedical manufacturing sectors.

While the tax rate is being raised, providing discounts or allowances for emitters that face global competition goes against the purpose of the tax, said the groups.

They added that this raises questions about the policy’s effectiveness, fairness and transparency.

It is not clear how many firms have received this reprieve. The quantum of the allowances was also never revealed, although Reuters reported in 2024 that refiners and petrochemical companies were offered rebates of up to 76 per cent for the carbon tax for 2024 and 2025.

Questions remain about whether the tax framework strikes the right balance between climate ambition and protecting companies, and whether the tax regime is effective enough to drive deep emission cuts, said the letter.

The environment groups therefore called for the amount of allowances and the reasons for giving these discounts to be made public.

The letter added: “Firms heavily reliant on allowances will be subject to greater scrutiny, which in turn strengthens their incentives to decarbonise. Transparency doesn’t hurt us; it makes our climate policies stronger.”

In a parliamentary reply in February, Deputy Prime Minister and Minister for Trade and Industry Gan Kim Yong said “the Government will release aggregated information on carbon tax allowances in due course, bearing in mind the need to preserve commercial sensitivities”.

The environmental groups said aggregated disclosure is insufficient to ensure accountability, pushing for more transparency on each tax-paying facility’s allowances.

They added that California reveals allowances given to companies annually, while the European Union, Britain, Australia and South Korea disclose facilities’ emissions.

“Publishing such data is widely recognised as a cornerstone of credible carbon pricing regimes, and Singapore risks falling behind global norms if it maintains opacity,” the letter read.

The groups also called for the authorities to indicate when the tax allowances will be phased out, so that they do not become permanent subsidies.

Singapore has

pledged to reduce its greenhouse gas emissions

to between 45 million tonnes and 50 million tonnes by 2035, down from around 60 million tonnes in 2030.

“Achieving a reduction of some 15 million tonnes within just five years will require firm action,” said the groups, recognising a proper carbon tax as a crucial lever.

On protecting low-income households from higher electricity bills due to the tax, the groups hope to see such families receiving more financial support through permanent rebates or a tiered pricing system. In such a system, price hikes may kick in after a household crosses an electricity usage threshold.

LepakInSG calculated that a carbon tax of $50 per tonne could raise household bills by around $8 a month for a four-room HDB flat.

“Higher (electricity) prices can help discourage excessive energy use, as long as there are protections for those who will be disproportionately affected, such as low-income households,” said the letter.

The groups also called on the authorities to consult the public on the upcoming carbon tax review, and take in the views of households, civil society, and others.

“Any deviation from planned carbon tax levels should be clearly explained, with disclosure of stakeholders supporting it, to improve transparency and accountability,” the letter read.