• Singapore’s carbon tax will rise from S$25 per tonne in 2024 to between S$50 and S$80 by 2030, making early decarbonisation planning essential for cost control. 

  • Businesses can offset up to 5% of their carbon tax using International Carbon Credits (ICCs) under the Carbon Pricing (Amendment) Act 2022.

  • Low-carbon technologies, such as carbon mineralisation, green concrete, and battery generators, offer practical pathways to reduce emissions and strengthen competitiveness. 

As global climate ambitions intensify, countries are ramping up their efforts to reduce greenhouse gas emissions through market-based instruments. Singapore has taken a proactive approach with its carbon tax introduced in 2019. This tax is a critical lever in the nation’s climate strategy, aimed at encouraging industries to lower their emissions while driving investment in low-carbon technologies. 

For businesses, understanding the evolving carbon tax framework is no longer optional; it’s essential for maintaining competitiveness and long-term resilience. In addition to exploring decarbonisation pathways, companies are also turning to carbon capture innovations, clean technologies, and strategic partnerships to navigate this transition effectively. 

Evolution of Singapore’s Carbon Tax 

Introduced in 2019, the carbon tax applies to facilities that emit 25,000 tonnes or more of greenhouse gases annually. This policy was designed to send a clear market signal: emitters must either reduce their emissions or pay a price for their environmental impact. 

According to the National Environment Agency (NEA), the tax rate, initially set at S$5 per tonne of emissions, is being progressively increased to strengthen decarbonisation incentives. The rate will rise to S$25 per tonne in 2024 and S$45 in 2026, with a projected range of S$50 to S$80 by 2030. This gradual escalation gives businesses time to plan and adapt, while accelerating investment in cleaner processes, energy efficiency, and emissions reduction technologies. 

This step-by-step increase also aligns with broader efforts to strengthen open innovation in Singapore, encouraging companies to work collaboratively with partners with decarbonisation technology and solutions to meet their sustainability targets. 

Measurement and Reporting Requirements 

To ensure transparency and accountability, facilities subject to the carbon tax must measure and report their emissions in line with strict regulatory standards. In, addition, companies emitting at least 25,000 tCO₂e annually are required to submit an approved Monitoring Plan to the National Environment Agency (NEA). 

How Businesses Can Comply: 

Companies can start by determining whether their facility emits 25,000 tonnes or more of CO₂-equivalent annually, as this threshold determines eligibility under the Carbon Pricing Act. Those that qualify must: 

  • Develop and submit a Monitoring Plan to NEA, outlining how emissions will be tracked and calculated. 

  • Implement systems and procedures for accurate measurement and record-keeping. 

  • Engage an NEA-accredited third-party verifier to validate emissions data annually. 

  • Submit verified reports through NEA’s Emission Data Monitoring and Analysis System (EDMAS) by the stipulated deadline. 

  • Pay the carbon tax based on verified emission volumes at the prevailing rate. 

These steps not only ensure compliance but also strengthen the integrity of Singapore’s carbon management framework, enabling the government to make informed policy decisions. More importantly, accurate measurement and verification help businesses identify operational inefficiencies and uncover opportunities for emission reductions and cost savings. 

Use of International Carbon Credits (ICCs) 

Under the Carbon Pricing (Amendment) Act 2022 (CPA), companies can use International Carbon Credits (ICCs) to offset up to 5% of their carbon tax liability from 2024. This mechanism provides flexibility, allowing businesses to balance direct emissions reduction with credible offsetting initiatives. 

ICCs must meet stringent eligibility criteria to ensure their environmental integrity, and the surrender process is closely monitored by NEA. By incorporating ICCs into their carbon strategy, companies can optimise compliance costs while supporting credible climate projects worldwide. 

Tax Implications of Carbon Trading 

The introduction of ICCs and rising tax rates has broader implications for financial planning and reporting. Carbon pricing directly affects operational costs, influencing everything from energy procurement strategies to investment decisions in new technologies. 

Companies that act early to reduce emissions can gain a competitive edge by lowering their carbon liabilities. Conversely, businesses that delay may face rising costs and reputational risks as climate disclosure requirements tighten. 

Strategic Considerations for Businesses 

  • Turning Compliance into Competitive Advantage 
    As carbon regulations tighten, businesses that act early can turn compliance into a strategic advantage. Understanding their carbon footprint, planning for rising tax rates, and adopting low-carbon solutions allow companies to stay competitive and build long-term resilience. With clear guidance and the right technology partners, even smaller enterprises can progress confidently on their decarbonisation journey while managing costs effectively. 

    “SMEs recognise the need to take climate action but often struggle with where to begin. With the right guidance and access to practical innovation, the path becomes far more manageable. At IPI, we help businesses identify technical and business solutions that fit their needs so they can make meaningful progress while staying competitive,” said Grace Wee, Principal Manager, Innovation Advisory, IPI Singapore 
  • Cost Implications: Understanding the Financial Impact 
    The increasing carbon tax rate presents both a financial challenge and a planning opportunity. As costs rise from S$25 per tonne in 2024 to as high as S$80 by 2030, companies will need to assess how these expenses affect profitability, pricing strategies, and investment plans. 

    This underscores the importance of incorporating carbon cost projections into business forecasting and exploring mitigation strategies early. Partnering with firms that provide business advisory services in Singapore can help companies model different scenarios, optimise operations, and identify tax-efficient pathways to transition towards lower emissions. 
  • Carbon Credit Trading: Opportunities to Offset Emissions 
    The emerging carbon market offers businesses the chance to offset part of their liabilities through credible ICCs. Strategic participation in carbon credit trading can help manage tax exposure while supporting global climate mitigation. 

    Companies may also explore internal abatement projects that generate credits in the future, such as renewable energy installations or efficiency upgrades. Over time, these efforts not only reduce emissions but also position organisations to benefit from a more developed carbon marketplace in the region. 

Adopting Carbon Reduction Technologies 

With carbon prices rising, technology adoption is often the most direct way for businesses to reduce liabilities, cut energy costs, and meet customer and investor expectations. Forward-thinking businesses are already leveraging innovative solutions developed through IPI Singapore’s network of technology partners. Below are several examples of low-carbon innovations available through the Innovation Marketplace. While some are industry-specific, others can be applied across sectors to help businesses track, manage, and reduce their carbon footprint. 

  • Carbon Mineralisation for Industrial Waste: A prime example is the carbon mineralisation technology for upcycling of industrial solid waste. This innovation captures CO₂ from flue gas or industrial processes and converts it into carbon-negative products such as calcium carbonate. Beyond emissions reduction, it transforms waste into valuable raw materials, supporting circular economy practices. 

  • Battery Generators as Sustainable Power: To decarbonise energy use, companies can adopt battery generators as sustainable power, offering a cleaner, modular alternative to diesel generators. This solution supports renewable energy integration, improves energy reliability, and reduces operational carbon emissions. Innovations like this are essential in creating green buildings for a sustainable future, aligning with Singapore’s vision of a low-carbon built environment. 

Another practical solution applicable across sectors is a carbon footprint measurement platform, which enables businesses to measure and monitor their emissions baseline, identify hot spots and reduction areas, as well as prepare for compliance reporting. 

Beyond these examples, a wide range of technologies from energy storage and materials innovation to digital sustainability tools are available to help businesses meet regulatory requirements and strengthen their environmental leadership. 

Integrating Sustainability into Business Planning 

Carbon tax should not be seen solely as a compliance burden, but as an opportunity to future-proof business models. Integrating carbon management into corporate planning enables organisations to align with national climate goals and global investor expectations. This involves: 

  • Setting internal carbon prices to guide investment decisions. 

  • Exploring energy efficiency and low-carbon technology adoption. 

  • Building capacity for emissions monitoring and reporting. 

  • Engaging supply chain partners to ensure end-to-end impact reduction. 

Forward-looking businesses are also exploring partnerships and innovation networks to accelerate their decarbonisation journey. By tapping into technology ecosystems and collaborative platforms, companies can access practical solutions that enhance both sustainability and operational performance. 

Singapore’s carbon tax represents more than just an environmental regulation; it is a strategic signal for businesses to decarbonise, innovate, and remain competitive in a rapidly evolving global economy. With carbon prices set to rise, companies that act early will be better positioned to mitigate costs, attract investors, and strengthen their market position. 

By adopting emerging technologies such as carbon mineralisation, green concrete, and battery storage solutions, and by working closely with advisory and innovation partners, businesses can turn compliance into a catalyst for sustainable growth. The time to act is now, and those that embed carbon management into their long-term strategy will lead the way in shaping a more sustainable and resilient future. 

For organisations looking to start or advance their decarbonisation journey, IPI Singapore offers expertise, networks and innovation pathways needed to move from awareness to action. From technology scouting, feasibility validation, and solution matching, IPI’s team works closely with businesses to help them adopt practical innovations that reduce emissions and strengthen long-term competitiveness. Connect now.