Carbon tax-liable companies can carry over unused offsets to 2025

Move allowed due to constrained supply of international carbon credits for 2024: NEA

- Shabana Begum

Carbon tax-liable companies in Singapore, which have been able to use eligible carbon credits to offset up to 5 per cent of their emissions each year, will be allowed to roll over their unused offset limit in 2024 to 2025.

This means that if any of the roughly 50 such tax-paying facilities here did not use any carbon offsets in 2024, they may offset up to 10 per cent of their emissions in 2025.

The National Environment Agency (NEA), which is the carbon tax-administering agency, announced this on its website, saying it was allowing this due to the "constrained supply of international carbon credits for emissions year 2024".

Singapore is making headway in its quest to source carbon credits from its partners around the world, and has inked carbon trading agreements with seven countries since 2023, including Paraguay, Bhutan and Ghana. However, no credits have come online yet.

Singapore's carbon tax covers around 70 per cent of the Republic's greenhouse gas emissions, which come from about 50 facilities in the manufacturing, power, waste and water sectors.

These tax-liable facilities emit more than 25,000 tonnes of greenhouse gases annually and, since 2024, have been paying $25 a tonne. This was up from the rate of $5 a tonne imposed between 2019 and 2023.

The tax will subsequently go up to $45 a tonne in 2026 and 2027, with a view to reaching between $50 and $80 a tonne by 2030.

It is not immediately clear whether the unused 2024 offset limit will be a fixed amount based on that year's emissions, or a percentage of 2025 emissions.