Update on Transition Framework for Carbon Tax

Mr Speaker, in January 2022, the Government announced the introduction of the carbon tax transition framework to provide time for Singapore companies in emissions-intensive and trade-exposed (EITE) sectors to adjust to a low-carbon economy and to make the necessary investments for their transformation. Since the announcement, the Economic Development Board (EDB) has been engaging affected companies, such as those in the chemicals and semiconductor sectors, on the details and the implementation of the framework.

The transition framework will be calibrated to spur companies to invest in decarbonisation. Transitory allowances will be provided only for a proportion – only for a proportion – of the companies' emissions and are based on internationally recognised efficiency benchmarks, where available, or the companies' decarbonisation plans.

The remaining emissions will be subject to the prevailing headline carbon tax. The Government will review and adjust the allowances based on how companies have fared in lowering their emissions, as well as international developments and advancements in decarbonisation technologies.

For the Energy Efficiency Fund, 90 projects amounting to $3.4 million have been approved to date. The Energy Efficiency Fund has been subsumed under the enhanced Energy Efficiency Grant – just two days ago – from 1 April 2024, which will be available to more companies.

I thank the Minister for his reply. I have two supplementary questions.

The first is, the Minister said earlier that EDB has been engaging affected companies. I was just wondering how many companies have been reached by EDB and does he have an estimate about how many companies have not yet been engaged by EDB; and how many more to go, basically?

The second question is, is there any significant projected impact from the transition framework on Singapore's climate targets that arise from this, from the framework?

I thank the Member for her supplementary questions. For the first one, under this transition framework, EDB has been engaging the types of facilities in the EITE sectors. They are sectorally determined, so we have them in the chemicals, electronics and biomedical manufacturing sectors. These will receive transitory allowances.

As to the number of companies, you can imagine, these are large sector companies – today, there are more than 20 companies and the list will continue to be populated. But thus far, more than 20 companies. The level of allowances, with EDB's involvement, will factor in the company's decarbonisation plans as well as benchmarking to internationally-recognised efficiency benchmarks, wherever it is applicable.

In time, when appropriate, the Government will release aggregated information on the amount of allowances provided. But this is where I want to also sound a caution. We will need to bear in mind considerations, such as whether these disclosures will inadvertently divulge commercially-sensitive information. I think you can imagine that, in the energy and chemical sector, there are that number of players within Jurong Island and within the entire space.

What was the second question?

Mr Speaker, just to answer the second supplementary question. We want to spur and continue to nudge companies to decarbonise ahead of time. We are mindful and we are very focused on achieving that target by 2050. Because this is a developing framework and the companies that we are engaging with are also looking at international benchmarks, in time to come, in about a year from now, I think, we will be able to give you a better, a clearer indication. I seek the Member's patience on this.