Singapore's carbon tax serves as 'key pillar' of climate strategy: PM

Singapore Prime Minister Lawrence Wong, who is also the country's minister of finance, said in his budget speech Feb. 12 that the carbon tax is a "key pillar" of the country's strategy as it pursues other measures to chart a sustainable future.

The carbon tax sends a clear price signal to encourage emissions reduction, Wong said.

Singapore implemented a carbon tax, the first carbon pricing scheme in Southeast Asia, in January 2019. The carbon tax was set at S$5/metric ton of CO2 equivalent ($3.96/mtCO2e) for the first five years, from 2019 to 2023. As announced in Budget 2022, the carbon tax was raised to S$25/mtCO2e, effective from 2024.

"For HDB [Housing Development Board] households, the additional U-Save rebates that I highlighted earlier will help to cushion the impact of the carbon tax," Wong said.

U-Save rebates are quarterly rebates to offset utility expenses for HDB households, according to the Government of Singapore website.

"For businesses, we will extend the Energy Efficiency Grant and support for green loans under the Enterprise Financing Scheme," Wong said. "These will help firms invest in energy-efficient and sustainable solutions."

The EEG aims to help businesses improve their energy efficiency by co-funding investment in energy-efficient equipment, according to the Enterprise Singapore website.

Wong said Singapore would continue to monitor global developments in this regard to retain its competitive advantage.

"While Singapore will continue to contribute responsibly to climate action, we recognize that our actions alone cannot determine global outcomes," Wong said.

"We will therefore calibrate our moves cautiously -- doing our part to reduce emissions as a responsible global citizen, while taking into account what other countries are doing, in order not to put ourselves at a competitive disadvantage," Wong added.

Singapore already has one of the highest carbon tax rates in Asia.

"Beyond 2027, we are assessing Singapore's carbon tax trajectory carefully, in light of international developments," Wong said.

"If global climate momentum continues to weaken, we may need to position ourselves towards the lower end of the $50-$80/ton range by 2030," Wong added.

Other net-zero efforts

Wong said Singapore's transition to net zero may be uneven and will rely heavily on technological breakthroughs and sustained international collaboration.

That said, amid market uncertainties, Singapore was already making concrete progress to achieve its net-zero targets. As an example, Wong highlighted the country's sustained push to expand solar deployment.

"We have reached our 2030 solar deployment target of 2 gigawatt-peak ahead of schedule," Wong said, adding that this target was going to be raised to 3 gigawatt-peak by 2030.

"Beyond that, we will continue to maximize solar deployment across all viable surfaces and progressively set more ambitious targets further into the future," Wong said.

Singapore is also advancing plans to import low-carbon electricity from the region.

"While not all will materialize, those that do will help to reduce our carbon footprint and strengthen our energy resilience," Wong said.

The country is also exploring ways to further diversify its energy mix, whether through hydrogen, geothermal energy, or civilian nuclear power, according to Wong.

"We are building up capabilities in nuclear energy to be able to assess its safety and viability for Singapore," Wong said.

"We have initiated cooperation with the US and France, and are discussing similar arrangements with other partners like South Korea," Wong added.

Singapore remains committed to achieving 100% cleaner vehicles by 2040, and incentives are being offered to encourage early adoption of electric vehicles while charging infrastructure is also being expanded nationwide, Wong said.

Efforts are also being made to green the aviation and maritime sectors, according to Wong.

"In aviation, we are supporting demand for sustainable aviation fuel, with a target of 1% sustainable fuel use for flights departing Singapore this year," Wong said.

Singapore launched its first voluntary SAF procurement trial, bringing together nine companies to test a centralized buying system that aims to build a scalable SAF ecosystem ahead of a mandatory levy taking effect in October 2026, the Civil Aviation Authority of Singapore said in a statement Feb. 2.

"In shipping, we are partnering industry to develop a low-carbon ammonia bunkering solution on Jurong Island," Wong said. "If successful, Singapore will be among the first countries in the world to supply ammonia commercially as a fuel for international shipping."

Singapore is the world's largest bunkering port. In 2025, the country's marine fuel sales increased by 3.4% to a record high of 56.77 million metric tons, according to data from the Maritime and Port Authority of Singapore in January.

The MPA highlighted record sales of alternative marine fuels, with volumes rising to 1.95 million mt in 2025 from 1.35 million mt in 2024, as shipowners and suppliers expanded trials and consumption of non-conventional bunker options. LNG bunker sales reached 571,360 mt in 2025, up from 460,950 mt in 2024.