1. What is the role of the carbon tax in Singapore’s mitigation strategy?
Singapore’s Climate Action Plan sets out four strategies to achieve its pledge: (i) improving energy efficiency, (ii) reducing carbon emissions from power generation, (iii) developing and deploying cutting-edge low-carbon technologies, and (iv) encouraging collective action among government agencies, individuals, businesses, and the community.
A carbon tax will enhance Singapore’s existing and planned mitigation efforts under its Climate Action Plan, and stimulate clean technology and market innovation. A tax on greenhouse gas (GHG) emissions will incentivise emitters to factor in the costs of their GHG emissions in their business decisions. This would encourage companies to improve their energy efficiency and innovate to reduce their GHG emissions.
2. Who is covered under the carbon tax?
The tax is applied on the total direct emissions of facilities that emit 25,000 tCO2e or more of emissions annually. This is equivalent to emissions produced by the annual electricity consumption of 12,500 HDB 4-room households. About 40 to 50 companies are expected to be liable for carbon tax. It covers the six greenhouse gases (GHGs) that Singapore is currently reporting to the United Nations Framework Convention on Climate Change (UNFCCC), namely carbon dioxide (CO2), methane (CH4), nitrous oxide (N2O), hydrofluorocarbons (HFCs), perfluorocarbons (PFCs), and sulphur hexafluoride (SF6).
3. Why has the government decided on a carbon tax regime with no exemptions?
Having a clean and simple carbon tax will help to preserve a fair, uniform and transparent price signal on all units of emissions, to incentivise emissions reduction where it presents the lowest cost.
A system with benchmark-based exemptions, in which exemptions are provided to many sectors resulting in different facilities paying different prices, would erode the price signal of the carbon tax, and make it less transparent.
Also, setting such benchmarks can be a complicated process, and implementing them could increase administrative and compliance costs.
4. Which other countries or jurisdictions have implemented carbon pricing?
Singapore is not alone in pricing carbon. About 78 jurisdictions (46 national and 32 sub-national jurisdictions) have implemented, or have plans to implement, carbon pricing. These jurisdictions account for roughly half of global greenhouse gas emissions. A few of these jurisdictions such as Finland, Norway and Sweden have implemented carbon pricing as early as the 1990s.
5. What is the expected impact of the carbon tax on households?
Our strategies for climate action take into account the needs of all stakeholders, including the low-income and the vulnerable.
Our range of adaptation and mitigation measures is designed to be inclusive. The measures aim to minimise the adverse effects that climate change could have on the economy, society and on our daily lives.
For example, the Government has been improving the liveability of our public housing estates through novel ways of weaving greenery into our estates and towns, which reduces temperatures while improving air quality. HDB flats are also designed to maximise cross-ventilation, thereby reducing reliance on air-conditioning which is a large contributor to household utility bills. The recently announced HDB Green Towns Programme will further enable reduction in energy consumption and cool our HDB towns. These sustainability measures ensure that the impact of climate change on all residents, including low-income groups, are minimised.
The Government also ensures that cost of mitigation measures is minimised for households. As recently announced, the Government will introduce incentives to support lower-income households in purchasing more energy efficient appliances. To help households adjust to the impact of the carbon tax on their electricity and gas expenses, eligible HDB households are given an additional $20 GST Voucher – U-Save on top of the regular U-Save rebate each year from 2019 to 2021. Eligible households living in smaller HDB flats benefit more as they receive a larger quantum of U-Save rebates, and typically have smaller annual utilities bills.
6. How would the Government ensure that consumers are not over-charged by electricity retailers passing on more than 100 per cent of the carbon tax to consumers?
Today’s electricity retail market is competitive and discourages retailers from raising their electricity rates excessively. Nevertheless, EMA will continue to ensure fair and efficient conduct of market players. Government agencies will also work closely with the Consumer Association of Singapore (CASE) and Competition & Consumer Commission of Singapore to monitor the market for unfair pricing and coordinated price hikes which are anti-competitive.
7. How would my electricity price plan under the Open Electricity Market be affected by the carbon tax?
With the rollout of the Open Electricity Market from 2018, small consumers who have bought standard price plans will continue to pay the electricity rate contracted with their retailers even when the carbon tax was implemented on 1 January 2019. This is because the electricity rate under standard price plans are inclusive of all applicable charges, i.e. consumers’ contracted electricity rate will not change during the contract duration even after the carbon tax comes into effect.
For non-standard price plans, retailers who wish to exercise the contractual right to adjust the electricity rate, and/or add a new charge for contracted consumers due to genuine rise in business costs (e.g. carbon tax) even if the contract provides for this, shall seek EMA’s prior approval. Specifically, for carbon tax, the retailer is required to provide the following information to EMA as part of the approval process:
-Justification on the amount of carbon tax to be imposed and how it is calculated; and
-Communications and customer engagement plan.
 Small consumers refer to (a) businesses with an average monthly consumption of less than 2,000 kWh and (b) all households.