What is Carbon Tax?
As part of Singapore’s commitment under the Paris climate agreement signed in 2016, the Singapore Government announced the implementation of a carbon tax of S$5 for every tonne of greenhouse emissions from 2019 to 2023, including emission from power generating companies in order to reduce greenhouse gas emissions. According to the announcement, the rate will be reviewed again in 2023.
Our Responsibility to the Environment
Tuas Power Generation is already using the most efficient technology, having converted the less-efficient oil-fired steam plants to the highly efficient F-class series – the most advanced and efficient Combined Cycle Plants (CCPs) available in Singapore. Since 2005, Tuas Power Generation has reduced its carbon footprint by 17% with the use of the CCPs.
As Tuas Power continuously strives to achieve higher reductions of its carbon footprint, land scarcity and the lack of renewable energy resources poses as a constant challenge. Hence, the carbon tax will also help to remind end-users to do their part in using energy efficiently and to reduce consumption as much as possible.
To help you cope with the carbon tax implementation, you can consider embarking on energy efficient solutions developed by Tuas Power such as the TP Green Programme, TP Lighting Solution, TP Integrated Energy Management system and other energy efficiency solutions as part of reducing the carbon footprint in Singapore.
Are There Any Government Schemes in Place?
NEA has increased the funding support from 30% to 50% of the qualifying costs from 1 Jan 2019 for financial assistance schemes such as the Energy Efficiency Fund (E2F) to advise industrial companies and SMEs on the adoption of energy efficient technologies.
Other financing programmes by the Energy Efficiency Programme Office (E2PO) can be found here.
How Will Carbon Tax Affect Me?
As the carbon tax will be imposed on power generation plants in the generation of electricity for users, the carbon tax will be passed through to our electricity consumers. For all existing Tuas Power Commercial customers utilising any Tuas Power electricity plan except for customers taking pool prices, carbon tax will be passed through in your invoice as a new charge under your existing agreement from 2019 onwards based on loss-adjusted consumption.
The carbon tax charge will be included as a separate line item on your bill and is GST chargeable. It will be calculated based on the following formula below:
Electricity Consumed (kWh) x GEF (kg CO2/kWh)* x Carbon Tax Rate ($/ton CO2)
*GEF (kg CO2/kWh) is Grid Emission Factor-Operating Margin, a published figure by the EMA on a yearly basis. The GEF-OM in 2017 is 0.4192. The Energy Market Authority will update the GEF around every July2.
+Carbon Tax Rate is S$5/tCO2 as announced by the Singapore government until its revision in 2023.
Hence, the carbon tax charged per MWh is:
GEF (kg CO2/kWh) x Carbon Tax Rate ($/ton CO2)
= 0.4192 kg CO2/kWh x S$5/ton CO2
= S$2.096/MWh (equivalent to S$0.002096/kWh)
For example, if Company A utilized 30 MWh in 1 month, their carbon tax charge would be:
30 MWh x 0.4192 tCO2e/MWh x S$5/tCO2e = S$62.88
As the consumption for residential consumers is lower in comparison to Commercial consumers, Tuas Power Supply will be absorbing the carbon tax charges for residential consumers.
Frequently Asked Questions
1. When will carbon tax be implemented?
The tax will be implemented with effect from 1 Jan 2019.
2. How will carbon tax be reflected in the Companies’ invoices from Tuas Power Supply?
The carbon tax will be charged as a separate line item and will be GST applicable.
3. Will other electricity retailers also charge carbon tax?
We are unable to represent other electricity retailers if they will be passing through the costs to the end consumers.
4. Will the carbon tax rate change?
Yes. The carbon tax rate will change every year based on the GEF-OM, a published figure by the Energy Market Authority which changes around every July. The carbon tax rate (S$5/ tCO2e) is also expected to change in 2023 and is dependent on the Energy Market Authority’s review.
5. Is it possible to waive off my carbon tax charges?
Unfortunately, Tuas Power is unable to waive off the carbon tax charges. Do consider embarking on the different energy efficient solutionsthat Tuas Power provides, as well as finance assistance schemes provided by NEA.
Should you have any further questions, please feel free to give us a call at 6838 5565, or e-mail us at email@example.com. Thank you.
1 Singapore to use study on carbon pricing to shape future tax, The Straits Times