The carbon tax is first introduced through Carbon Pricing Act (CPA) and its accompanying Regulations on 1 January 2019. In order to support Singapore’s raised climate ambition of achieving net zero emissions by 2050, the CPA (Carbon Pricing (Amendment) Act) had been amended and passed in Parliament on 8 Nov 22. Legislative amendments to the accompanying Regulations are in the pipe-line and details will be made available when ready. All the legislative amendments will come into effect on 1 January 2024.
The carbon tax mechanism is also supported by a robust measurement, reporting and verification (MRV) framework. Details of the MRV requirements are specified in the Carbon Pricing (Measurement, Reporting and Verification) Regulations 2018.
The carbon tax is applied to all industrial facilities with an annual direct GHG emissions of 25,000 tonne of carbon dioxide equivalent (tCO2e).
The initial carbon tax rate was set at $5 per tonne for 2019 to 2023, to provide a transition period for businesses to adjust. The carbon tax rates will be raised to: –
- $25 per tonne in 2024 and 2025
- $45 per tonne in 2026 and 2027
- with a view of reaching $50 to $80 per tonne by 2030
The carbon tax revenue collected are used to support decarbonisation efforts, the transition to a green economy, and to cushion the impact on businesses and households.
International carbon credits
From 2024, taxable facilities will be allowed to use high quality international carbon credits (ICC) to offset up to 5% of their taxable emissions. Details of ICC framework will be announced in 2H 2023.
Allowance Framework
From 2024, a transition framework will also be introduced by EDB to give existing emissions-intensive trade-exposed (EITE) companies more time to adjust to a low-carbon economy and to avoid carbon leakage. The allowances will be determined based on efficiency standards and decarbonisation targets. Details of the allowance framework will be announced by EDB in 2H 2023.
The Carbon Pricing Act (CPA) applies to business facilities1 in the industry sectors of:
1. manufacturing and manufacturing related services;
2. supply of electricity, gas, steam, compressed air and chilled water for air-conditioning; and
3. water supply and sewage and waste management.
Please click here for more information on the Carbon Pricing (Registration and General Matters) Regulations 2018 for the full elaboration of the prescribed industry sectors.
1 A business facility is a single site at which any business activity is carried out, including series of activities carried out at more than one parcel of land, where: i) parcels of land that are contiguous, adjacent, adjoining or separately by any road or pathway or drain or waterway; or ii) there is dependency between the activities carried on the parcels of land.
Regulated GHG Emissions
The greenhouse gases (GHGs) covered under the CPA are:
i) Carbon dioxide (CO2)
ii) Methane (CH4)
iii) Nitrous oxide (N2O)
iv) Sulphur hexafluoride (SF6)
v) Nitrogen trifluoride (NF3)
vi) Hydrofluorocarbons (HFCs); and
vii) Perfluorocarbons (PFCs)
Please click here to view the full list of HFCs and PFCs covered under CPA.
GHG emissions directly released into the atmosphere (i.e. Scope 1 Emissions) from both fuel combustion and Industrial Processes and Product Use (IPPU) activities within the business facility, are to be measured and reported in accordance with the Measurement & Reporting (M&R) requirements.
To moderate verification and tax burden on business facilities, minor emission streams that are not manufacturing related are classified as non-reckonable emissions.
Please see Table 1 for the key differences between reckonable and non-reckonable emissions; and Table 2 for a summary of the GHG emissions covered under the CPA.
Table 1: Difference between reckonable and non-reckonable emissions
Table 2: Emissions covered under the CPA
Under the CPA, the responsibility rests with any industrial facility that attains the first or second emissions threshold to register by 30 June of the year immediately following the trigger year through EDMA system at https://www.edma.gov.sg. A trigger year refers to any year that the facility’s the direct GHG emissions have exceeded the emissions threshold(s).
Facilities are regulated based on two reckonable emissions thresholds as follows :
i) first reckonable emissions threshold at 2,000tCO2e to be registered as a reportable facility; and
ii) second reckonable emissions threshold at 25,000tCO2e to be registered as a taxable facility.
The compliance obligations based on the reckonable emissions threshold are in Table 3.
Table 3: Compliance Obligations based on Emissions Thresholds
