Carbon Tax

The carbon tax is applied to all industrial facilities with an annual direct GHG emissions of at least 25,000 tonne of carbon dioxide equivalent (tCO₂e).

The initial carbon tax rate was set at $5 per tonne for 2019 to 2023, to provide a transition period for businesses to adjust. The carbon tax rate has been progressively raised to: -

• $25 per tonne in 2024 and 2025
• $45 per tonne in 2026 and 2027
• with a view of reaching $50 to $80 per tonne by 2030

The carbon tax revenue collected are used to support decarbonisation efforts, the transition to a green economy, and to cushion the impact on businesses and households.  

International Carbon Credits (ICC) Framework

From 1 Jan 2024, taxable facilities are allowed to use high quality ICC to offset up to 5% of their taxable emissions. Details on the ICC eligibility can be found at Singapore’s Carbon Market Cooperation Website.

Taxable facilities can refer to the Guidance Document (download) on the administrative processes under the ICC Framework. It covers the Eligibility Criteria of ICC, steps on sourcing and procuring eligible ICC, and steps on surrendering the ICC to NEA for the payment of carbon tax under the Carbon Pricing Act 2018 (CPA).

Roll over of Unutilised ICC Offset Limit for Emissions Year 2025

Taxable facilities will be allowed to roll over their unutilised International Carbon Credit (ICC) offset quota from emissions year 2025 to emissions year 2026¹.

To date, the Government has signed 11 Implementation Agreements (IAs) and launched application calls for carbon credit projects in Bhutan, Ghana, Peru, Rwanda, and Thailand, with the calls launched from late 2025 to early 2026. As carbon credit projects typically take up to four years to generate credits, supply will take time to build up. Recent global developments — including a stronger industry focus on carbon credit integrity and evolving international carbon market rules — have also delayed the overall supply of eligible credits.

As the carbon tax rate has been raised to $45 per tonne in emissions year 2026, a credit conversion formula will be applied to adjust the carried-over amount from emissions year 2025 to emissions year 2026. Taxable facilities should note that the ICC offset quota carried over from emissions year 2024 to emissions year 2025 will expire and cannot be carried forward further. 

¹ For any registered person who surrenders a number of eligible ICCs equal to the prescribed limit under section 33B(1) of the CPA in payment of the carbon tax charged on the taxable emissions for emissions year 2026 of a taxable facility of the registered person, to surrender a further number of eligible ICCs in payment of the carbon tax for emissions year 2026 calculated as follows:  

(A – B) x ($25/$45)

rounded down to the nearest whole number, where —

A is the prescribed limit under section 33B(1) of the CPA for the number of eligible ICCs that may be surrendered by the registered person in payment of the carbon tax charged on the taxable emissions in emissions year 2025 of the taxable facility; and

B is the number of eligible ICCs that the registered person surrenders in payment of the carbon tax in A.\

The fraction ($25/$45) serves as the Credit Conversion Factor to account for the tax rate increase from emissions year 2025 to emissions year 2026 (Noting that $25 and $45 refer to the carbon tax rates for emissions years 2025 and 2026 respectively).  

For illustration: 

1. Taxable facility emits 100,000 tonnes of CO₂e annually. It is allowed to use up to 5,000 ICCs (5% of taxable emissions) to offset their carbon tax liability each year.  

2. If the taxable facility only uses 1,000 ICCs to offset their tax liability for emissions year 2025, it will pay the carbon tax for the remaining 99,000 tonnes of taxable emissions.  
   

3. The unutilised ICC offset quota from emissions year 2025 can be rolled over to emissions year 2026 after applying the Credit Conversion Factor, to be used together with their ICC offset quota for 2026 emissions. By applying the Credit Conversion Factor, the roll over ICC offset quota is 4,000 x (25/45) = 2,222 (rounded down to the nearest whole number). 
   

Table 1: Illustration of Roll over of Unutilised ICC Offset Limit for Emissions Year 2025

*excluding roll over of EY2024 ICC offsets for purpose of this illustration  

Allowance Framework

From 2024, a transition framework will also be introduced by EDB to give existing emissions-intensive trade-exposed (EITE) companies more time to adjust to a low-carbon economy and to avoid carbon leakage. The allowances will be determined based on efficiency standards and decarbonisation targets.

The Carbon Pricing Act (CPA) applies to business facilities¹ in the industry sectors of:

1. manufacturing and manufacturing related services;
2. supply of electricity, gas, steam, compressed air and chilled water for air-conditioning; and
3. water supply and sewage and waste management.

Please click  here for more information on the Carbon Pricing (Registration and General Matters) Regulations 2018 for the full elaboration of the prescribed industry sectors.

¹ A business facility is a single site at which any business activity is carried out, including series of activities carried out at more than one parcel of land, where: i) parcels of land that are contiguous, adjacent, adjoining or separately by any road or pathway or drain or waterway; or ii) there is dependency between the activities carried on the parcels of land.

 The greenhouse gases (GHGs) covered under the CPA are:

i)                 Carbon dioxide (CO₂)

ii)                Methane (CH₄)

iii)              Nitrous oxide (N₂O)

iv)              Sulphur hexafluoride (SF₆)

v)                Nitrogen trifluoride (NF₃)

vi)              Hydrofluorocarbons (HFCs); and

vii)             Perfluorocarbons (PFCs)

Please click here to view the full list of HFCs and PFCs covered under CPA.

GHG emissions directly released into the atmosphere (i.e. Scope 1 Emissions) from both fuel combustion and Industrial Processes and Product Use (IPPU) activities within the business facility, are to be measured and reported in accordance with the Measurement & Reporting (M&R) requirements.

To moderate verification and tax burden on business facilities, minor emission streams that are not manufacturing related are classified as non-reckonable emissions.

Please see Table 2 for the key differences between reckonable and non-reckonable emissions; and Table 3 for a summary of the GHG emissions covered under the CPA.

Table 2: Difference between reckonable and non-reckonable emissions

Table 3: Emissions covered under the CPA

Table 3.1: HFCs and PFCs newly added under the Carbon Pricing (Amendment) Act

Under the CPA, the responsibility rests with any industrial facility that attains the first or second emissions threshold to register by 30 June of the year immediately following the trigger year through EDMA system at https://www.edma.gov.sg.  A trigger year refers to any year that the facility’s the direct GHG emissions have exceeded the emissions threshold(s).

Facilities are regulated based on two reckonable emissions thresholds as follows :

i) first reckonable emissions threshold at 2,000tCO₂e to be registered as a reportable facility; and

ii)  second reckonable emissions threshold at 25,000tCO₂e to be registered as a taxable facility.

The compliance obligations based on the reckonable emissions threshold are in Table 4.  

Table 4:  Compliance Obligations based on Emissions Thresholds

Please click here for more information on measurement and reporting requirements for GHG emissions.

NEA has prepared a spreadsheet ( Reckonable-emissions-calculator_Jul_2025) to assist facilities in:

1. estimating the reckonable GHG emissions from fuel combustion and IPPU emissions, which is based on the 2006 IPCC Guidelines; and
2. determining the reckonable emissions thresholds which have been met and the compliance obligations to be fulfilled.