Carbon tax-liable companies can carry over unused carbon credit offset quota from 2025

[SINGAPORE] Companies required to pay carbon tax will be able to roll over their unused International Carbon Credit (ICC) offset quota from emissions years 2025 to 2026.

The one-year rollover is “intended as a transitional measure” to give international carbon markets under Article 6 of the Paris Agreement more time to mature, the Ministry of Sustainability and the Environment (MSE) as well as the National Environment Agency (NEA) said in a joint statement on Monday (May 11).

Article 6 sets out how countries can pursue voluntary cooperation to achieve climate targets and tackle climate change.

The move is also to allow for more ICCs to become available, MSE and NEA added.

Under Singapore’s ICC Framework, companies can use eligible, high-quality ICCs to offset up to 5 per cent of their taxable emissions each year.

“This provides carbon tax-liable companies with an alternative way to meet part of their carbon-tax obligations, while supporting the development of high-integrity international carbon markets,” the statement noted.

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The Republic’s carbon tax rate was raised to S$45 a tonne for emissions year 2026. In light of this, MSE and NEA said a credit conversion formula will be applied to adjust the emissions year 2025 offset amount being carried over to emissions year 2026.

That said, companies’ ICC offset quota carried over from emissions years 2024 to 2025 will expire and cannot be carried forward further.