Budget 2022: What the rise in carbon tax means for companies

WHEN Singapore announced in Budget 2018 the introduction of a carbon tax from 2019, it was the first South-east Asian nation to do so. While the tax rate of S$5 per tonne of greenhouse gas emissions was not high, the coverage was broad - capturing about 80 per cent of national emissions.

This allowed the Singapore government to sound the bell and inform businesses that the country was serious about reducing emissions across all sectors and has its sights locked on transitioning to a low-carbon economy.On Friday (Feb 18), Singapore's Minister for Finance Lawrence Wong announced that the country intends to raise its carbon tax significantly to S$25 per tonne in 2024, then to S$45 per tonne in 2026, with a view to arriving at between S$50 and S$80 per tonne in 2030.

This is expected to increase electricity costs by approximately 2 to 3 per cent in 2024, 4 to 7 per cent in 2026, and 8 to 12 per cent in 2030, assuming companies continue to consume fossil fuel-based electricity.