SEAS's report shows Singapore carbon tax has minimal impact and needs more effectiveness. (Photo: iStock)
Starting this year, Singapore has increased its carbon tax to SGD 25 per ton (about 19 USD) and announced plans for further increases, aiming to encourage companies to accelerate their carbon reduction efforts. However, a recent survey indicates that nearly 40% of businesses in Singapore report minimal impact from the rise in carbon tax.
Over 20% of businesses adjust sustainability strategies
The Singapore Sustainable Energy Association (SEAS) surveyed 250 professionals in the Southeast Asian energy sector and found that 24.5% of respondents believe their companies are affected by the government’s carbon tax hike, prompting a reassessment of long-term sustainability strategies. Almost 20% of businesses are intensifying their emission reduction efforts and expanding investments in energy-saving technologies.
The government's implementation of the carbon tax aims to hold companies accountable for their carbon emissions. However, the survey reveals that only 6% of respondents believe the tax is very effective, while 24.5% consider it effective, and 41.9% view it as moderately effective. The association believes these results highlight the carbon tax's influence, but further evaluation and adjustments are necessary to enhance its effectiveness.
Additionally, the survey gathered opinions on the energy transition process in Singapore and ASEAN countries. Among the professionals surveyed, 45.9% rated Singapore’s performance as satisfactory, 17% as very satisfactory, and 32.5% stated that improvements are needed.
SEAS believes survey results highlight the carbon tax's influence, but further evaluation and adjustments are necessary to enhance its effectiveness. (Photo: iStock)
Three major decarbonization barriers in Singapore
Respondents generally agree that the growth in demand for clean energy from tech companies is mainly driven by increased investment in artificial intelligence (AI) and data centers. Singapore’s energy transition faces three major regulatory challenges: reliance on natural gas (68%), obstacles in transnational interconnection agreements (57.2%), and uncertainty in energy market regulations (40.2%).
Moreover, nearly 90% (89.2%) of respondents indicated that government policy is a key driver for decarbonization, followed by economic incentives (59.8%) and corporate sustainability initiatives (58%). Major obstacles to decarbonization in Singapore include insufficient space for renewable energy infrastructure development (85.6%), high costs and investment thresholds (63%), and limited carbon offset options (40.7%).
Although a majority (67.9%) believe that a carbon trading system can effectively accelerate decarbonization, only 3.8% of Singaporean companies choose to purchase carbon credits as a result of the carbon tax. The carbon market has struggled over the past two years due to skepticism regarding the environmental benefits of carbon credits, leading to a decline in prices and trading volume.
The survey results also suggest that if Singapore aims to become a carbon credit trading hub, it should focus on three key areas: establishing comprehensive and reliable carbon accounting systems, creating a transparent regulatory framework, and developing a competitive and attractive carbon pricing system.
Source: ESG Post、Straits Times
