SINGAPORE: A significant portion of Singapore’s companies have weathered the recent carbon tax increase with little to no impact on their operations, according to a survey by the Sustainable Energy Association of Singapore (SEAS).
According to Business Times, the poll, which included 250 industry professionals primarily from the energy sector in Southeast Asia, found that 37 per cent of companies experienced minimal impact from the carbon tax hike, which rose from S$5 to S$25 per ton of carbon dioxide equivalent this year.
The survey also indicated that 24.5 per cent of companies had reconsidered their long-term sustainability strategies in response to the tax increase, with nearly 20 per cent ramping up efforts to reduce emissions and invest in energy-efficient technologies.
However, only 3.8 per cent of respondents reported purchasing carbon credits, suggesting that the tax hike alone may not be sufficient to drive demand for carbon credit purchases.
Is Singapore’s carbon tax regime effective?
The carbon tax is set to climb further, reaching S$45 per ton in 2026 and 2027, with plans to potentially hit between S$50 and S$80 by 2030.
Former managing director of the Monetary Authority of Singapore, Ravi Menon, emphasized the need for higher carbon taxes to accelerate climate action.
Despite the tax increase, only 24.5 per cent of respondents considered Singapore’s carbon tax regime effective, with 41.9 per cent viewing it as moderately effective.
A mere 6 per cent deemed it very effective, highlighting the need for refinement and impact assessment to enhance its effectiveness.
Regarding the pace of the energy transition, 45.9 per cent of respondents found Singapore’s progress satisfactory, while 32.5 per cent called for more improvements.
Only 17 per cent rated the progress as very satisfactory, indicating substantial room for improvement to meet Singapore’s net-zero-by-2050 target.
Government policies (89.2 per cent) and economic incentives (59.8 per cent) were identified as key drivers for decarbonization, with over 58 per cent highlighting the importance of corporate sustainability initiatives.
However, these were seen as secondary to government-led initiatives.
Demand for clean energy growing
The survey also noted a growing demand for clean energy from large tech corporations, likely due to increased investments in artificial intelligence and data centres.
Challenges in Singapore’s decarbonization journey include dependence on natural gas (68 per cent), barriers in cross-border interconnection agreements (57.2 per cent), and regulatory uncertainties in tightened energy markets (40.2 per cent).
The main hurdles identified were limited space for renewable energy infrastructure (85.6 per cent), high costs and investment required (63 per cent), and limited avenues to offset carbon emissions (40.7 per cent).
A majority (67.9 per cent) believe a carbon trading system could speed up decarbonization, though 32 per cent remain sceptical.
Establishing comprehensive and reliable carbon accounting systems (69 per cent), transparent regulatory frameworks (67.9 per cent), and a competitive carbon pricing mechanism (63 per cent) are seen as critical for Singapore to become a key carbon trading hub.
Enhancing market liquidity and accessibility (54.9 per cent) and building a robust infrastructure for carbon trading transactions (58.7 per cent) are also considered essential.
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