Singapore’s path to net-zero far from straightforward
Its carbon tax policy is a gambit that entails significant risk, and policymakers need to focus on the practical constraints of the tool.
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Jordan McGillis and Bryan Cheang
In February, the Singapore government announced a new carbon tax schedule as the centrepiece of its net-zero emissions plan. The carbon tax, now set at S$5 a tonne of carbon dioxide equivalent (tCO2e), will be raised to S$25/tCO2e in 2024 and 2025, and S$45/tCO2e in 2026 and 2027, with a view to reaching S$50 to S$80/tCO2e by 2030. In March, the Energy Market Authority further articulated Singapore’s plan to achieving net zero by 2050.
Economics and public policy analyses provide important insights on whether the carbon tax and the larger goal of net-zero emissions are truly intelligent choices for Singapore, which has always needed to balance sustainability against its growth imperative. Specifically, a carbon tax approach is sound in economic theory, but practically, things are more complicated.
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