Singapore could moderate the pace of future carbon tax increases if global climate ambition continues to weaken, said Singapore prime minister Lawrence Wong, marking a shift in tone from previous years, when the government stressed the need to keep its carbon price path on a firm upward trajectory.
In his budget statement on Thursday, Wong reaffirmed the existing carbon tax schedule – S$25 (US$20) per tonne in 2024, S$45 (US$36) in 2026, rising to S$50–80 (US$40-US$63) by 2030 – but said the pace of future increases would have to be aligned with the transition speed elsewhere.
He warned that international climate momentum has slowed, citing limited progress at the COP30 climate talks and fraying geopolitical cooperation, and said Singapore’s efforts would be “credible, forward looking and aligned with global realities” as it transitions to a low-carbon economy.
Singapore prime minister Lawrence Wong addressing parliament on 12 February. Image: CNA
Wong’s comments mark the clearest signal yet that the city-state is prepared to adjust its climate pricing strategy if global competitors fail to keep pace. A slower rise in the carbon tax could ease pressure on emissions-intensive sectors such as petrochemicals, energy and heavy manufacturing, which have warned of cost challenges and competitiveness risks.
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Some governments are scaling back their climate ambitions, but for Singapore, retreating from action is not an option.
Lawrence Wong, prime minister, Singapore
Singapore granted carbon tax rebates to major polluters in 2024 and 2025, a move that has drawn opposition from environmental groups concerned that the government had weakened its ability to cut emissions. Singapore is one of the world’s most fossil fuel-dependent countries, and a major global refiner of crude oil.
“If global climate momentum continues to weaken, we may need to position ourselves towards the lower end of the S$50 to S$80 per tonne range by 2030,” Wong said. “Looking further ahead, our path to net zero will depend heavily on technological breakthroughs and sustained international cooperation. Without these, it will be increasingly difficult for a small resource country like Singapore to move further on our own,” he said.
Wong noted that Singapore is already experiencing harsher climate impacts – higher temperatures, heavier rainfall and more extreme weather – but said that the international system meant to curb global warming is faltering.
“While Singapore will continue to contribute responsibly to climate action, our actions alone cannot determine global outcomes. We will therefore calibrate our moves cautiously, doing our part to reduce emissions while taking into account what other countries are doing in order not to put ourselves at a competitive disadvantage,” he said.
The carbon tax is Singapore’s key instrument for restructuring industrial emissions – and is the highest in Asia. Revenue from the tax funds energy-efficiency upgrades, low-carbon technologies and carbon capture projects in the manufacturing and power sectors.
New renewables target
As part of the same budget speech, the prime minister said that Singapore would expand investment in climate resilience and decarbonisation research. Part of the S$37 billion (US$29 billion) Research, Innovation and Enterprise (RIE) 2030 budget will be channelled into low-carbon and carbon removal technologies and fossil fuel alternatives.
He also announced a new target to increase Singapore’s renewable energy supply to 3 gigawatt-peak (GWp) of solar capacity by 2035, up from the existing 2 GWp-by-2030 goal. The government will accelerate rooftop deployment, explore new floating solar sites and expand regional power-import deals.
Singapore is also looking to diversify its heavily fossil fuel-based energy mix by exploring hydrogen, nuclear and geothermal, the prime minister noted. “They are at various stages of development, while not all will materialise, those that do will help to reduce our carbon footprint and strengthen our energy resilience,” he said.
He added that the city-state remained committed to achieving 100 per cent electric vehicles by 2040, had a target of achieving 1 per cent sustainable aviation fuel this year, and was developing a low-carbon ammonia bunkering solution for the shipping sector on Jurong Island, Singapore’s petrochemicals hub.
The climate elements of Wong’s speech were minimally covered in the mainstream media, which focused on measures to support families and seniors, a corporate income tax rebate for companies, the country’s bid to boost competitiveness in Artificial Intelligence, and a big increase in tax on tobacco.
