NCCS: Carbon Tax Discounts Support Net-Zero Plans, Not Continued Emissions

Takeaways

• Carbon tax allowances are not exemptions but support for trade-exposed firms with credible net-zero plans, said the National Climate Change Secretariat (NCCS).
• Environment groups demand transparency, questioning the fairness and effectiveness of carbon tax discounts given to large emitters.
• Singapore’s carbon tax is set to rise, reaching up to $80 per tonne by 2030, with measures in place to cushion households from higher utility bills.

Allowances granted to large companies under Singapore’s carbon tax framework are not a free pass to continue emitting greenhouse gases, the National Climate Change Secretariat (NCCS) said on Sept 9. Instead, they are designed to support firms in their green transition and prevent “carbon leakage,” where businesses shift operations overseas to avoid climate policies.

The clarification came after several environment groups, including Energy CoLab, SG Climate Rally, and Singapore Youth for Climate Action, issued an open letter to the Government. The groups called for more transparency on how carbon tax “discounts” are distributed and how much the tax rate will increase beyond 2027.

Read More: How To Think About Net Zero Transition Plans

Singapore raised its carbon tax from $5 to $25 per tonne of carbon dioxide (CO2) emissions in 2024, with further hikes planned, i.e., $45 in 2026–2027, and between $50 and $80 by 2030. To ease the impact, some trade-exposed companies in sectors like chemicals, electronics, and biomedical manufacturing have received carbon tax allowances. These firms account for much of 70 per cent of national emissions that come from about 50 tax-paying facilities in manufacturing, power, waste, and water.

However, NCCS stressed that the allowances cover only a portion of emissions and apply only to facilities with credible net-zero strategies. Remaining emissions are still taxed at $25 per tonne, and firms continue to pay for indirect emissions through their electricity bills. Allowances are pegged to global best practices, incentivising companies to reduce emissions intensity.

The Government has not disclosed which companies receive allowances or the exact amounts, citing commercial sensitivities. Environment groups argue this lack of transparency undermines accountability, pointing to international examples where allowance details are made public. NCCS countered that publishing such data could compromise firms’ competitive positions.

Revenue projections for the carbon tax also revealed gaps. In 2024, expected collections were around $642 million, short of the $1 billion estimated if all emissions were fully taxed. Experts said this discrepancy was likely due to the allowances.

Also Read: Net-Zero: Trend Or Necessity? (Part 1)

Beyond industry, concerns were also raised about rising household electricity bills. NCCS said it is mindful of these pressures and pointed to measures such as additional U-Save rebates for HDB households and $400 climate vouchers for energy-efficient appliances.

Public engagement, NCCS added, “remains an integral part of the Government’s policymaking process,” with further details on post-2027 tax increases to be released in due course.

Follow more news and views via our Regulators and Featured Articles sections, and stay updated on the top ESG events to attend in 2025 for industry insights and networking.

Source: THE STRAITS TIMES