Carbon Market in Singapore

By Mr Nicholas Chang and Ms Tan Chin Yee

In conjunction with the Singapore International Energy Week (21 October – 4 November, 2010), the Singapore government announced its intention to introduce carbon pricing if a global treaty is reached to curb carbon emissions.

The two likely approaches are cap- and-trade systems and carbon taxes. A cap-and-trade system sets quantitative targets for emission reductions for a period of time and allows companies to buy and sell "rights" to produce the targeted emissions. The carbon tax implements tax levy on products or activities that result in carbon emissions arising from the consumption of fossil fuels. Carbon tax is viewed to be easier to be implemented and require a smaller bureaucratic overhead as it could utilise on existing methods of tax collection. A cap-and-trade system would require new structures to support the distribution of permits and extensive monitoring to track emissions statistics.