Linking Carbon Tax Increases to Technology Readiness or Regional Carbon Price Movements

Mr Yip Hon Weng asked the Minister for Sustainability and the Environment given global adjustments to carbon pricing, (a) why has the Ministry maintained the planned trajectory of $50 to $80 per tonne by 2030 instead of linking increases explicitly to technology readiness or regional carbon price alignment; and (b) what specific indicators will justify moderating the pace of increase in carbon tax to safeguard jobs while sustaining climate ambition.

Tackling the complex challenge of climate change requires long-term planning and staying the course on a clear set of directions. As the world transits towards a low-carbon future, businesses and economies that remain emissions-intensive relative to their competitors will become less attractive. Singapore is alternative energy disadvantaged; our decarbonisation solutions are therefore more expensive and require longer lead times to study and implement. Consequently, our carbon tax rates need to reflect Singapore's higher costs of decarbonisation, to provide an economy-wide price signal to improve energy- and carbon-efficiency in all sectors and to enhance the business case for investing in low-carbon solutions.

The Government provides advance notice of the carbon tax trajectory to enable businesses to act early and adapt their operations. At Budget 2022, we announced a target carbon price of $50 to $80 per tonne by 2030. Nonetheless, we remain alert to the evolving near-term cost impact, especially on businesses. We will continually assess Singapore's post-2027 carbon tax trajectory carefully, in the light of international developments.

We will continue to calibrate our carbon tax trajectory to strike a balance between spurring decarbonisation to secure Singapore's longer-term resilience and competitiveness in a low-carbon future and managing the nearer-term cost impact on our businesses and households.