Under Singapore’s recent carbon tax rate, which got here into effect on January 1, corporations emitting greater than 25,000 metric tons of carbon annually can pay $25 per tonne by 2025, up from $5 per tonne in 2019-2023.
The rate will then increase to $45 per tonne in 2026-2027 and $50-80 per tonne by 2030, the federal government announced in 2022.
Three sources said major refining and downstream corporations got transitional rebates to ease the extra tax burden, bringing final costs all the way down to $6-10 per tonne of emissions.
Refineries and downstream corporations will still must pay a complete US$25 per tonne carbon tax after which claim rebates under terms set by the federal government, a fifth source said.
Singapore has three refineries with a combined production capability of 1.119 million barrels per day, currently operated by Shell, ExxonMobil Corp and Singapore Refinery Co (SRC), a three way partnership between Chevron and Singapore Petroleum Co, wholly owned by PetroChina.
While disruptions to Russian crude oil trading following the war in Ukraine and post-Covid-19 demand boosted refining margins in 2020-2022, those gains halved from peak levels reached in February.
Shell declined to comment, while an ExxonMobil spokesman said: “As is our practice, we don’t discuss confidential matters.”
“Singapore Refining Company remains committed to supporting the policies of the Singapore Government through close partnership and ongoing dialogue,” an SRC spokesperson said.
The concessions are prone to last through no less than 2024 and 2025, one in every of the sources said, adding that a “reduced” rate would return to discussion in 2026 or later.
Singapore introduced a transition framework last yr to support corporations in emission-exposed trade (EITE) sectors corresponding to chemicals, electronics and biomedical manufacturing of their energy transition.
“Allowances will only be allocated for a portion of companies’ emissions and will be based on internationally recognized efficiency benchmarks, where available, or on the ambition and robustness of companies’ decarbonization plans,” a spokesman for the Ministry of Trade and Industry told Reuters. e-mail.
“The remaining emissions will continue to be subject to existing headline carbon tax rates.”
The duration of the transition framework will depend upon developments in carbon pricing internationally and progress in decarbonization technologies, he said, adding that corporations might be notified prematurely of the changes to facilitate business planning.
Generally, the carbon tax would must be paid within the yr following the reporting yr “on account of the time needed to compile emissions data and independently confirm total emissions for the reporting yr,” a spokeswoman for town’s National Environment Agency (NEA) previously said.
According to the NEA, corporations currently have the choice to offset as much as 5 percent of their taxable emissions using international carbon credits – purchased or collected elsewhere on the planet.
This significant increase in carbon taxes has change into a hot topic in Singapore’s refining sector following the sale of Shell’s flagship refineries and petrochemical plants on Bukom and Jurong Island within the face of fierce competition.
