How will the carbon tax hike help achieve the 2030 green targets?

The carbon tax will be raised to $25 per tonne in 2024.

Experts said the plan to raise carbon tax to $25 per tonne in 2024 to eventually $50 to $80 in 2030 is “promising” not only for Singapore’s goal of achieving net-zero but also solidifying its position as a regional green finance hub.

Ajay Kumar Sanganeria, Partner, head of Tax, KPMG in Singapore, said a five-fold increase in carbon tax lends “further credibility to Singapore’s goal of bringing forward the net-zero target to around mid-century.”

A higher carbon tax, amongst others, also puts Singapore in “a prime position to leverage the energy transition in a way that unlocks growth and innovation,” according to KPMG Partner Satya Ramamurthy.

Since businesses will be allowed to use high-quality, international carbon credits to offset the taxes under the Transition Framework for the carbon tax hike, Simon Yeo, EY Asean Climate Change and Sustainability Services leader said there will be more “demand for carbon credits.”

“This not only moderates the impact for companies, but also… positions Singapore to become a Carbon Services and Trading Hub for ASEAN and the wider Asia-Pacific region,” Yeo added.

This sentiment was shared by Toh Shu Hui, Ernst & Young Solutions LLP partner, saying that the move will encourage “growth of a sophisticated carbon trading market in Singapore, which could generate employment opportunities and value creation for Singapore.”

Apart from a carbon tax hike, the government has also announced the issuance of $35b green bonds by 2030, which Deloitte’s Yvonne Zhang said will “push for greater accountability in the use of proceeds and having measurable impact of sustainability efforts in financing generally.”

The green bonds issuance will likewise help reinforce Singapore’s “pre-eminent position as leader of green finance” in the Asian region, Sanganeria added.

Read more: Singapore Budget 2022: GST hike delayed, carbon tax raised