S'pore firms will get time to adapt to higher carbon tax

A higher carbon price to cut emissions is on the cards, but the authorities aim to give companies time to adapt, while easing the cost increase for households.

The move will spur large emitters in Singapore to cut their carbon footprint, but adjustments to the carbon tax must be done carefully, said Trade and Industry Minister Gan Kim Yong yesterday.

Speaking during a debate on Singapore's green transition, he said: "We should calibrate and pace the adjustment carefully, to give companies sufficient time to adapt... and stay competitive."

A higher carbon tax will also have an indirect impact on households, he noted. "The Government will consider how we can help ease the cost increase, especially for lower-income households," said Mr Gan.

Singapore's current carbon tax rate, which will be in place until 2023, is $5 per tonne of emissions. The revised rate for 2024 will be announced during next month's Budget, which will also indicate what to expect up to 2030.

Nineteen MPs spoke during the roughly five-hour debate on the private members' motion moved by Ms Poh Li San (Sembawang GRC), Mr Gan Thiam Poh (Ang Mo Kio GRC), Ms Nadia Samdin (Ang Mo Kio GRC), Mr Louis Ng (Nee Soon GRC), Ms Hany Soh (Marsiling-Yew Tee GRC) and Mr Don Wee (Chua Chu Kang GRC).

The motion urges the Government to enhance green financing, create more green jobs, and strengthen corporate accountability. This, said the MPs, should be done "in partnership with the private sector, civil society and community, to advance Singapore's inclusive transition towards a low-carbon society".

Mr Ng, noting that a carbon tax has the "highest potential to reshape incentives and motivate action", suggested the coverage of the carbon tax be expanded to more firms.

Currently, Singapore's carbon tax applies to all facilities producing 25,000 tonnes or more of greenhouse gas emissions in a year, covering large emitters that contribute 80 per cent of Singapore's greenhouse gas emissions.

In response, Minister for Sustainability and the Environment Grace Fu said that if excise duties on vehicular fuel are considered, more than 90 per cent of Singapore's emissions are subject to a carbon price.

"This coverage is one of the highest in the world," she said.

A carbon tax is a means of assigning costs to the release of planet-warming emissions from human activity.

Ms Fu noted that the Government has engaged businesses and the public on the need for, and the potential impact of, a higher carbon tax.

"The Minister for Finance will announce the outcome of our review at Budget 2022," she added.

Ms Fu, who represented Singapore at the COP26 United Nations climate summit in Glasgow last November, pointed out that a higher carbon price will keep Singapore's carbon tax trajectory in line with the broader international momentum on climate action.

"This will support the review of our climate targets," she said.

The latest motion follows one debated in February last year, which saw the House agreeing that the Government should accelerate efforts to mitigate the impact of climate change.

Ms Poh said the green sector is developing rapidly in response to the climate emergency.

"There are many new and exciting opportunities in the green economy, particularly in green financing, and many new job roles in the sustainability sector," added the deputy chair of the Government Parliamentary Committee for Sustainability and the Environment.

"Central to our transition to a green economy, our priority is to ensure Singaporeans are not left behind as the world progresses towards a sustainable future and economy," Ms Poh said.