SINGAPORE: From 2019, emitters of greenhouse gases will be taxed for every ton of gas they release into the air, sending a price signal to power stations and large emitters to reduce their carbon footprint, said Finance Minister Heng Swee Keat on Monday (Feb 20).
Delivering the annual Budget speech in Parliament, Heng said the Government is looking at setting a carbon tax rate of between S$10 and S$20 per ton of greenhouse gas emissions, which is within the range of what other countries have implemented.
It will also create a price signal to incentivize industries to reduce their emissions and complement the regulatory measures the authorities are also introducing, he said.
Under a carbon tax, the Government sets the price for each unit of greenhouse gas emissions. Six greenhouse gases will be covered under the carbon tax. They are carbon dioxide, methane, nitrous oxide, hydro fluorocarbons, per fluorocarbons and sulphur hexafluoride.
The carbon tax will generally be applied upstream, such as on power stations and other large direct emitters, rather than electricity users, said Heng.
The revenue from the carbon tax will help to fund measures by the industries to reduce emissions while new opportunities in green growth industries, such as clean energy, could be created, said Heng.
For businesses, the carbon tax rate of S$10 to S$20 per tonne of greenhouse gas emissions represents a 6.4 to 12.7 per cent increase from current oil prices, compared to historical quarterly oil price fluctuations which have ranged from -29 to 35 per cent from 2011 to 2016.
For households, the tax rate would be equivalent to a rise in electricity prices of 0.43 to 0.86 cents per kilowatt-hour. This is a 2.1 to 4.3 per cent increase from current electricity tariffs as compared to quarterly electricity prices that have fluctuated up to 10 per cent between 2010 and 2016.
Singapore first declared its intention to implement some form of carbon pricing in the 2010 Singapore International Energy Week, if other countries also pledged to curb their carbon emissions. Prime Minister Lee Hsien Loong said then that to comply with international obligations, Singapore will have to “make the carbon price explicit, to send the right price signals”.
Likewise, China started pricing carbon through emissions trading pilots since 2013. The world’s largest emitter has also announced plans to introduce a national emissions trading scheme later this year.
