Singapore is to introduce a carbon tax on large direct emitters of greenhouse gases, including power stations from 2019. The tax is expected to affect between 30 and 40 emitters.
Because coal has already been effectively phased out in the city-state, it will not provide any advantage to gas, and would be a disadvantage for gas relative to zero carbon renewable alternatives. However, the potential for renewable development in Singapore is limited due to its small land area and lack of wind or hydro sources, and the generating mix is dominated by efficient CCGT and CHP gas. Singapore buys its gas from Malaysia and Indonesia via pipelines, and in the form of LNG.
The move aims to raise the cost of emitting carbon and help achieve Singapore's commitment to the Paris climate agreement, which it ratified in 2016. Singapore committed to reducing emissions intensity by 36% by 2030 compared to 2005 levels. It also aims to stabilise its emissions, with the aim of peaking around 2030.
Consultation on the carbon price level will now take place, with an initial expectation of a tax rate of between S$10 and S$20/tonne (US$15-25/tonne) of GHG emissions. The National Climate Change Secretariat (NCCS) said this proposed tax rate would be equivalent to a rise in electricity prices of between 0.43 and 0.86 Singapore cents per kilowatt-hour (kWh) – which could mean a rise of up to 4.3% in electricity prices. (US$1 = S$1.41).
The NCCS said the price signal would incentivise large emitters to factor in the cost of their emissions in their business decisions.