Singapore refiners weigh carbon tax pressure

Singapore refiners weigh carbon tax pressure

As the first country in southeast Asia to introduce a carbon tax, industry and the wider region will be watching its next steps closely, writes Prethika Nair

Singapore, 4 March (Argus) — Southeast Asian firms have gradually been gearing up for the energy transition, but the implementation of a significantly higher carbon tax in Singapore could impact the operations of refiners in the city-state sooner than expected.

Singapore last month announced plans to increase its carbon tax from 5 Singapore dollars/t ($3.70/t) currently to S$25/t in 2024-25 and S$45/t in 2026-27. The tax rate will be reviewed with a long-term view of raising it to S$50-80/t by 2030, finance minister Lawrence Wong says. This comes as part of the country's plan to bring forward its net zero carbon emissions target to around 2050 from the second half of this century, and signals a greater urgency for firms to decarbonise, in line with a global effort to reduce greenhouse gas (GHG) emissions.

The refining and petrochemical sector is a large source of carbon emissions in Singapore, with the industrial sector contributing about 45pc of total primary emissions, and the power sector contributing about 39pc, according to the National Climate Change Secretariat (NCCS) of Singapore.