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<\/figure>\n\n\n\nImage Source: National Climate Change Secretariat (NCCS)<\/em><\/p>\n\n\n\n According to the government, the revenue generated from the carbon tax is being used to support decarbonisation efforts, facilitate the transition to a green economy, and mitigate the impact on both businesses and households.<\/p>\n\n\n\n It has also been stated that the government does not expect to generate additional revenue from the carbon tax increase during this decade, as the focus remains on driving sustainable practices.<\/p>\n\n\n\n The carbon tax is levied on facilities that emit at least 25,000 tCO2<\/sub>e of greenhouse gas (GHG) emissions annually. It currently covers seven GHGs, namely carbon dioxide (CO2<\/sub>), methane (CH4<\/sub>), nitrous oxide (N2<\/sub>O), hydrofluorocarbons (HFCs), perfluorocarbons (PFCs), sulphur hexafluoride (SF6<\/sub>),\u00a0and Nitrogen Trifluoride (NF3<\/sub>).<\/p>\n\n\n\n According to NCCS, \u00a0the carbon tax covers around 80% of our GHG emissions from around 50 manufacturing, power, waste and water facilities.<\/p>\n\n\n\n However, this doesn\u2019t mean only these 50 facilities will pay the carbon tax.<\/p>\n\n\n\n Facilities in other sectors will also indirectly face a carbon price on the electricity they consume. Power generation companies are expected to pass on some of their tax burden through increased electricity tariffs.<\/p>\n\n\n\n Similarly, while consumers are not taxed directly, the carbon tax levied on large emitters could flow through in the form of higher electricity tariffs as power companies pass on the carbon tax to end users. On average, with every $5\/tCO2<\/sub>e increase in the carbon tax level, electricity tariffs could rise by 1%. The increase in carbon tax to $25\/tCO2<\/sub>e is estimated to translate to an increase of about $4 per month in household utility bills for the average 4-room HDB flat.<\/p>\n\n\n\n Carbon credits permit companies to emit a specific amount of carbon dioxide or other greenhouse gases. Typically, one carbon credit represents the right to emit one metric ton of CO\u2082.<\/p>\n\n\n\n These credits are part of a cap-and-trade system, which enables companies to buy, sell, or trade them. If a company reduces its emissions below the allocated allowance, it can sell its excess credits to other companies. This creates a financial incentive for businesses to lower their emissions, while still operating within an overall emissions limit set by regulatory bodies.<\/p>\n\n\n\n Starting in 2024, companies will be allowed to use high-quality international carbon credits (ICCs) to offset up to 5% of their taxable emissions in Singapore.<\/p>\n\n\n\n This 5% cap ensures that industries remain focused on reducing domestic emissions while offering an alternative decarbonisation pathway for sectors where it may be difficult to achieve significant emission cuts in the near or medium term. This balance supports the transition to a lower-carbon economy while recognising hard-to-abate sectors’ challenges.<\/p>\n\n\n\nWho Pays The Carbon Tax?<\/h3>\n\n\n\n
Use Of International Carbon Credits To Offset Taxable Emissions<\/h3>\n\n\n\n