The Singapore Carbon Tax: Where To Next?

Singapore’s climate policy context and carbon tax

Introduced in 2019, the Singapore Carbon Tax (SCT) marked an ambitious move toward controlling emissions in a systematic, scalable manner. Now after 2½ years in operation, the scheme looks set for dramatic change to deliver accelerated climate action for Singapore and the globe.

Learning from Australia’s carbon tax mistakes

In 2012, Australia introduced the Carbon Pricing Mechanism (CPM), a world-leading suite of measures to reduce carbon emissions including its own carbon price. The scheme started with a price of ~$27AUD/SGD (adjusted for inflation) and was forecast to grow rapidly from there. This grand plan had the effect of generating outrage across the Australian electorate at the time, who saw the tax as excessive, given the lack of global climate action and limited alternative technologies. Outrage so great it caused the CPM to be repealed.

This is where Singapore’s carbon price is a stroke of genius. By waiting until real, genuine alternatives to fossil fuels emerged (e.g., battery storage has dropped 1,000% in price since Australia’s’ CPM was introduced) and starting at a much lower price – Singapore’s carbon pricing mechanism has survived its introduction.

Trade implications for Singapore

Singapore’s total merchandise trade exports in 2020 were valued at about S$515.6 billion, with manufacturing representing 21.5% of Singapore’s 2020 nominal GDP.2,3. The nature of Singapore’s economy and top exports mean that it is particularly exposed to CBAMs; schemes we are likely to see more of in years to come. 

Source: ndevr (https://ndevrenvironmental.com.au/carbon-price/the-singapore-carbon-tax-where-to-next/)