Singapore Mulls Keeping Carbon Tax at Low End of Target

Why It Matters

A lower‑end carbon tax could temper cost pressures on Singaporean industries while still signaling strong climate ambition, influencing regional policy benchmarks and investment decisions.

Key Takeaways

• Carbon tax may stay near S$45/t by 2030.
• Singapore leads Asia with highest carbon tax rate.
• Solar target increased to 3 GWp by 2030.
• Plans to import 6 GW low‑carbon power by 2035.
• Goal of 100% clean vehicles by 2040.

Pulse Analysis

Singapore’s tentative decision to anchor its carbon tax at the lower bound of the $50‑80 per tonne trajectory reflects a pragmatic response to waning global climate urgency. By keeping the levy close to the current S$45 per tonne level, the government aims to preserve competitiveness for energy‑intensive sectors while maintaining a price signal that encourages emissions reductions. This calibrated approach positions Singapore as a regional benchmark, balancing fiscal prudence with its reputation as Asia’s most ambitious carbon‑tax jurisdiction.

The nation’s renewable agenda reinforces this balanced strategy. Achieving the 2 GWp solar milestone ahead of schedule and expanding the target to 3 GWp by 2030 underscores a commitment to scaling clean generation despite limited land. Complementary plans to import 6 GW of low‑carbon electricity by 2035 illustrate a regional integration model, leveraging neighboring grids to diversify supply and reduce reliance on fossil fuels. These steps, coupled with exploratory investments in hydrogen, geothermal and nuclear options, broaden the energy mix and mitigate the risk of over‑dependence on any single technology.

Transport and aviation reforms round out Singapore’s holistic climate blueprint. Incentives for electric vehicles, expanded charging infrastructure, and a 100 % clean‑vehicle goal for 2040 signal a clear market signal for automotive manufacturers and service providers. Meanwhile, the push for 1 % sustainable aviation fuel use and low‑carbon ammonia bunkering on Jurong Island demonstrates an early focus on decarbonising hard‑to‑abate sectors. Collectively, these policies create a predictable regulatory environment that attracts green finance, stimulates low‑carbon innovation, and reinforces Singapore’s role as a climate‑leadership hub in Southeast Asia.

Singapore mulls keeping carbon tax at low end of target

By Prethika Nair · 13 February 2026, 05:34 GMT

Singapore is considering keeping its carbon tax at the lower end of the targeted range against the backdrop of slowing global momentum on climate action, said Prime Minister Lawrence Wong at the unveiling of the country's budget on 12 February.

Singapore's carbon tax is now at S$45/t (≈ $35.60/t) and is planned to reach $50‑80/t by 2030. But in light of international developments, Singapore is assessing its carbon‑tax trajectory carefully, Wong said. Singapore currently has the highest carbon‑tax rate in Asia, and “if global climate momentum continues to weaken, we may need to position ourselves towards the lower end of the $50‑80/t range by 2030,” he said.

Some governments are scaling back their climate ambitions, but this is not an option for Singapore, said Wong. A “key pillar” of the country's climate strategy is the carbon tax, which has already had an impact, with firms investing more in low‑carbon solutions and raising energy efficiency, he added.

Separately, Singapore has achieved its 2030 solar‑deployment target of 2 GW peak (GWp) ahead of schedule, and it has therefore raised the target to 3 GWp by 2030, said Wong. Beyond 2030, Singapore will continue to maximise solar deployment across all viable surfaces, and will progressively set higher targets.

Singapore is also “advancing plans” to import low‑carbon electricity from the region, although further details were not provided. The country aims to import 6 GW of low‑carbon power by 2035 and has already signed a few supply agreements with neighbouring countries to achieve this.

The country is looking at opportunities to diversify its energy mix, including hydrogen, geothermal energy and nuclear power.

In terms of transport, the country aims to achieve 100 % cleaner vehicles by 2040, and incentives are already in place for the early adoption of electric vehicles, with charging infrastructure also being expanded across the country.

Singapore also targets 1 % sustainable aviation fuel (SAF) use for flights departing the country this year. In shipping, the government is looking at developing low‑carbon ammonia bunkering solutions on Jurong Island.