Time to take action, carbon credits won’t stay cheap

READING between the lines of Singapore’s International Carbon Credit (ICC) framework suggests that voluntary carbon credits are probably going to cost more than predicted due to a near-term scarcity of eligible quality credits.

All companies should pay attention, even if they are not subject to Singapore’s carbon tax, and therefore will not have to buy ICC-eligible credits. The mounting urgency of climate action raises the likelihood that carbon prices will flow into all parts of the economy, and companies should start taking steps to decarbonise and minimise their need to pay for expensive credits down the road.

The special regime

When the ICC framework takes effect in 2024, it will allow companies subject to Singapore’s carbon tax to offset up to 5 per cent of their taxable emissions using eligible carbon credits. That is when the country’s carbon tax rate is set to rise to S$25 per tonne of emissions from S$5 a tonne now. By 2030, the tax rate is expected to be between S$50 and S$80 per tonne.