How will carbon tax affect investors and companies?

SINGAPORE (July 8): On Jan 1 this year, the Carbon Pricing Act came into force in Singapore. Under the Act, any industrial facility that emits greenhouse gases (GHG) equal to or above 25,000 tonnes of CO2e, or carbon dioxide equivalent, will have to pay a carbon tax of $5 per tonne of GHG emissions. CO2e is calculated by multiplying the greenhouse gases’ emissions by their 100-year global warming potential.

The tax is expected to affect about 30 to 40 companies, mainly petroleum refineries on Jurong Island and power generators. However, $5 per tonne is miniscule when compared with how much other jurisdictions are imposing, and detractors say it would amount to just a slap on the wrist for the worst polluters.

The implementation of an extra tax may seem counterintuitive for a business-friendly, open economy such as Singapore. But the carbon tax could actually present new opportunities for investors. Market watchers tell The Edge Singapore that a carbon tax ­policy effectively sends out a strong signal that Singapore is cognisant of what matters — sustainability, and business and investments related to it.