Regulatory updates on Singapore's Carbon Tax
What is Singapore’s carbon tax policy?
On 1 January 2019, Singapore implemented a carbon tax of $5 per metric ton of carbon dioxide equivalent. This was the first carbon pricing scheme in Southeast Asia.
In March 2022, the government announced that it would be progressively increasing the carbon tax as part of raising its climate ambition to encourage businesses and individuals to reduce their carbon footprint. The carbon tax will be raised to $25 per ton in 2024 and 2025 and $45 per ton in 2026 and 2027, aiming to reach $50 to $80 by 2030. [1]
How are carbon credits related to the carbon tax?
From 2024, companies will be able to surrender high-quality international carbon credits to offset up to 5% of their taxable emissions. Details on the eligibility criteria for carbon credits are still being worked out through ongoing consultations with the industry and are set to be shared in 2023. [1]
What is the latest regulatory update on the use of carbon credits for the carbon tax?
On August 29th, 2022, Singapore's National Environment Agency (NEA) announced MOUs with Gold Standard and Verra, two of the largest carbon credit standard bodies globally. Under these MOUs, companies can use credits issued by Gold Standard and Verra to meet their carbon tax obligations, subject to meeting other prescribed criteria to be released by the Singapore government in the future. [2]
Why is this significant?
Since announcing the tax increase, companies have been awaiting more direction from the government on eligible carbon credits. The recent announcement is the first time the Singapore government has clarified what it considers a high-quality carbon credit, allowing companies to start formulating their approaches to sourcing carbon credits.
The government's cooperation with Gold Standard and Verra will enable robust procedures for the transfer of information on the retirement and use of credits between their respective registries and the national registry of Singapore. This will provide confidence in the environmental integrity of the carbon credits used for the carbon tax obligations. [3,4]
How can we help your organization meet its compliance obligations, such as the carbon tax?
As the leading global provider of market-based sustainability solutions, we have the expertise and knowledge to help our clients navigate compliance carbon markets. Get in touch to see how we can help your organization meet its compliance obligations.
Sources:
[3] Gold Standard signs a momentous partnership on carbon credits with Singapore | The Gold Standard
[4] Singapore and Verra Sign MOU to Support National Carbon Tax - Verra
Topics