SINGAPORE will increase its carbon tax fivefold to S$25 (US$18.6) a ton in 2024, Finance Minister Lawrence Wong said, in an attempt to meet its zero-emissions target by around 2050.

The city state, a major Asian oil refining and petrochemical export center, plans to increase the carbon tax further to S$45 in 2026 and 2027, and S$50 to S$80 by 2030, Wong said Friday in a budget speech.

From 2024, businesses will be allowed to buy international carbon credits to offset up to 5 percent of their taxable emissions, he added.

“This will moderate the impact for companies,” Wong said. “It will also help to create local demand for high-quality carbon credits and catalyze the development of well-functioning and regulated carbon markets.”

Carbon credits are certified instruments to represent emission reductions at climate action projects and are traded by companies to offset emissions elsewhere.

Singapore, the first country in Southeast Asia to introduce a carbon pricing scheme, implemented its carbon tax in 2019.

The country’s carbon tax applies to all facilities producing 25,000 tons or more of greenhouse gas emissions annually, which include oil refineries and power plants.

A stronger price signal from the government would encourage investments in greenhouse gas reduction, said a spokesperson from ExxonMobil which operates its world’s largest refinery in Singapore.

“Carbon tax and supportive government policies can help to incentivize more industries and sectors to invest in research or technologies to reduce emissions,” she said.(SD-Agencies)