A coalition of civil society groups has urged the Singapore government to increase transparency and accountability in the administration of its carbon tax, warning that opaque subsidies for polluters could undermine the effectiveness of one of the nation’s key climate policies.
To continue reading, subscribe to Eco‑Business.
There's something for everyone. We offer a range of subscription plans.
- Access our stories and receive our Insights Weekly newsletter with the free EB Member plan.
- Unlock unlimited access to our content and archive with EB Circle.
- Publish your content with EB Premium.
In an open letter published on Tuesday, the groups argued that while Singapore’s carbon tax trajectory marks progress, the granting of transitional allowances to emissions-intensive sectors, as reported by news agency Reuters last year, risks weakening the policy’s ability to cut greenhouse gas emissions.
“An effective carbon tax should protect our people, not fossil fuel companies,” the letter co-signed by non-profits Energy CoLab, SG Climate Rally and LepakinSG said.
In response to the open letter, Singapore’s National Climate Change Secretariat (NCCS) said that transitional allowances for high emitters help to avoid the risk of carbon leakage – companies shifting their operations to other jurisdictions with lower or no effective carbon prices.
“
Recipient companies have raised valid concerns about how information on carbon tax allowances could be used to compromise their strategies and operations.
Singapore National Climate Change Secretariat spokesperson
“This is particularly relevant amidst current political and economic headwinds confronting climate action. Such an outcome would result in the loss of jobs and economic value to Singapore, with no overall global reduction in emissions,” the NCCS spokesperson said.
It added that “allowances are not a free pass for our emissions-intensive trade-exposed (EITE) companies to continue emitting. They are only provided for a proportion of companies’ emissions, and eligible facilities must have credible net-zero decarbonisation plans.”
Big allowances for big emitters
Singapore introduced Southeast Asia’s first carbon tax in 2019, covering facilities responsible for around 70 per cent of the country’s emissions. The rate rose to S$25 (US$19.50) per tonne of carbon dioxide equivalent (CO₂e) in 2024 and is set to reach S$45 (US$35) in 2026-27, with the government signalling a price range of S$50-80 (US$39-62) by 2030.
However, the system of transitional allowances for large emitters has drawn scrutiny. NGOs note that there is currently no public information on the amount of allowances distributed, the benchmarks used to award them, or the actual effective carbon tax rate companies end up paying.
The report by Reuters last year suggested that refiners and petrochemical companies received rebates of up to 76 per cent, lowering their effective rate to as little as S$6 (US$4.7) per tonne. Meanwhile, the Straits Times reported in June 2025 that projected tax revenue fell S$358 million (US$279 million) short of expectations, suggesting that coverage had dropped from 70 per cent of national emissions to 45 per cent.
“This casts serious doubt on the comprehensiveness of Singapore’s carbon tax,” the letter said, and called for facility-level disclosure of allowances, clarity on benchmarking criteria, and the publication of effective rates. Without such information, the NGOs warned, the system risks becoming a “permanent subsidy” for polluters.
In its response to NGOs’ assertions around the disclosure of allowances, the government said the publication of this information “should be balanced against the need to protect the legitimate commercial sensitivities of our companies,” and said it would release aggregated information on carbon tax allowances in “due course”.
NCCS said it calculates the quantity of allowances by pegging them to industry efficiency benchmarks, to encourage facilities to continuously improve and “be among the most carbon-efficient globally.”
It said the disclosure amount awarded would be reviewed regularly, accounting for factors such as our economic competitiveness as well as climate related international and technological developments, such as
Impact of carbon tax on households
The NGOs also raised concerns about potential rising electriticity prices for consumers, as companies pass on the cost of the tax.
They urged the government to protect vulnerable households through permanent rebates or tiered pricing schemes, noting that households contribute just 6.2 per cent of national emissions.
The NGOs estimate that a tax of S$50-80 (US$39-62 per tonne could add about S$103 (US$80) a year to the average bill for a four-room flat.
NCCS said that it was “mindful” of the potential impact of the carbon tax on household expenses, and cited government initiatives such as the $1.1 billion (US$857 million) cost-of-living package to cushion the impact of the carbon tax on utility bills as well as “climate vouchers” to incentivise families to lower their carbon footprint.
Meaningful public consultation
The open letter also pressed for meaningful public consultation ahead of the government’s review of carbon tax levels beyond 2028. While past consultations have drawn strong participation – there were 580 responses to the 2024 “Decarbonisation Journey” exercise – the government has not always published detailed responses to feedback, the non-profits noted.
“Public consultations cannot be a one-way exercise,” the letter said. “Any deviation from planned carbon tax levels should be clearly explained, with disclosure of stakeholders supporting it.”
The NGOs called for longer timelines for consultation, the use of citizens’ panels, and publication of both feedback themes and government responses to ensure a “closed feedback loop.”
Singapore has committed to cutting its emissions to 45-50 million tonnes by 2035, down from around 60 MtCO₂e in 2030, and reaching net zero by 2050. Meeting this target will require a carbon tax that delivers genuine price signals and public trust, the NGOs said.
“Transparency doesn’t hurt us; it makes our climate policies stronger,” they wrote, warning that without reforms, allowances and exemptions could dilute the tax’s credibility and slow the structural transition Singapore needs.
NCCS said in response that it “consistently engages” the private sector and civic society in climate policy-making, and held a public consultation in 2017 to seek feedback on carbon tax policy.
The government said it would share more information on the post-2027 carbon tax trajectory “in due course”.
The open letter emerges the week after Singapore pushed back mandatory climate rules for most listed firms, a move seen to risk undermining its reputation as an early mover in the region.
This story has been updated with the Singapore government’s response
