Parliamentary reply by DPM Gan on Singapore’s Carbon Tax Strategy Amid Global Developments

FIFTEENTH PARLIAMENT OF SINGAPORE
WRITTEN ANSWER

Mr Mark Lee: To ask the Prime Minister and Minister for Finance in light of the United States’ pull-back from UN climate processes while Europe and regional partners remain engaged at a calibrating pace (a) how does the Government assess implications for Singapore’s carbon tax and sustainability pathway; and (b) whether there is scope to recalibrate the pace of carbon tax increases to mitigate cost pressures on local industries while meeting long-term climate commitments. 

Mr Gan Kim Yong (for the Prime Minister): 

The government takes a pragmatic and calibrated approach in setting our carbon tax trajectory, bearing in mind the pace of international climate action, Singapore’s economic competitiveness, and the progress of decarbonisation technologies. 

The pace of global climate action will ebb and flow, as countries grapple with different challenges in setting and meeting their climate ambition.  However, the increasingly severe impact of climate change means that all countries will eventually be forced to take more drastic climate action.  

Decarbonisation is necessary for Singapore to remain competitive in the long-term as the world transits to a low-carbon future. As an alternative energy-disadvantaged country, decarbonisation is more costly for us, hence, our carbon tax must be high enough to incentivise investments to reduce carbon emissions. We also need to plan early, given the longer lead time needed to implement decarbonisation solutions. In addition, we have to balance these considerations against nearer-term factors, including how carbon is priced in other jurisdictions. This is to avoid carbon leakage, where companies in Singapore relocate their emissive activities to other jurisdictions with lower carbon prices, without resulting in any net decrease in emissions globally.  

The Ministry of Trade and Industry has been engaging businesses to address their concerns and challenges with regard to the carbon tax as well as mitigation measures, and to provide the necessary support and assistance.