Singapore 🇸🇬
Climate warning
Climate warning
Boniface Kuria
31 w
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Singapore offers carbon tax rebates for refiners near term, sources say
https://www.reuters.com/sustainability/climate-energy/singapore-offers-carbon-tax-rebates-refiners-near-term-sources-say-2024-06-13/
Singapore is offering refiners and petrochemical companies rebates of up to 76% for its planned carbon tax for 2024 and 2025 to help them ease cost stress and remain competitive versus rivals elsewhere, four sources familiar with the matter said.
The tax concessions will provide a significant buffer for refiners' profit margins amid growing competition with newer plants in China and the Middle East.
Carbon tax costs are estimated at between 80 cents and $1 per barrel of crude input basis for refineries based on the $25 per ton of emission rate, according to consulting firms FGE and Wood Mackenzie. That would be close to a quarter of refiners' current margins in Singapore.
Under Singapore's new taxation rate for carbon emissions, which took effect on Jan. 1, businesses that emit more than 25,000 metric tons of carbon annually pay $25 per ton until 2025, compared with $5 per ton in 2019-2023.
The rate will subsequently go up to $45 per ton in 2026-2027 and $50-80 per ton by 2030, the government announced in 2022.
Major companies in the refining and downstream sectors have been given rebates on a transitional basis to soften the added tax burden, lowering the final costs to between $6 and $10 per ton of emissions, three of the sources said.
These refineries and downstream businesses will still have to pay an outright $25 per ton of carbon emission tax and subsequently apply for the rebates, according to the terms and conditions set out by the government, a fifth source said.
Singapore has three refineries of a combined capacity of 1.119 million barrels per day, currently operated by Shell (SHEL.L), opens new tab, Exxon Mobil Corp (XOM.N), opens new tab, and Singapore Refinery Co (SRC), a joint venture between Chevron (CVX.N), opens new tab and Singapore Petroleum Co, wholly owned by PetroChina (601857.SS), opens new tab.
While the disruption of Russian oil trade post-Ukraine war and post-COVID demand boosted refining margins between 2020 and 2022, these profits have halved from peak levels reached in February.
Shell declined to comment, while an ExxonMobil spokesperson said: "As a matter of practice, we do not discuss confidential matters."
"The Singapore Refining Company remains committed to support the Singapore government's policies through close partnership and continued dialogue," an SRC spokesperson said.
The concessions will likely be in place at least for 2024 and 2025, one of the sources said, adding that the "discounted" rate will be back on the table for discussion in 2026 or after.
Singapore introduced a transition framework last year to support companies in Emissions-intensive trade-exposed (EITE) sectors such as chemicals, electronics and biomedical manufacturing in their energy transition.
"The allowances will only be provided for a proportion of the companies' emissions, and are based on internationally recognised efficiency benchmarks where available, or the ambition and robustness of companies' decarbonisation plans," a spokesperson at Ministry of Trade & Industry told Reuters in an email.
"Their remaining emissions will continue to be subject to the prevailing headline carbon tax rates."
The duration of this transition framework will depend on the development of carbon prices internationally and the progress of decarbonisation technologies, he said, adding that companies will be given sufficient notice in advance of changes to facilitate business planning.
In general, the carbon tax would have to be paid in the year following the reporting year "because of the time needed to compile the emissions data and independently verify the total emissions of the reporting year", a spokesperson from the city state's National Environmental Agency (NEA) said earlier.
Companies currently have the option to also offset up to 5% of their taxable emissions using international carbon credit - either bought or accumulated elsewhere in the world, according to the NEA.
This hefty increase in carbon taxes has been a hot topic in Singapore's refining sector, following the sale of Shell's flagship Bukom and Jurong Island refinery and petrochemical facilities amid stiff competition.
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12 w
It's time to fund renewable sources of energy and not focus on the non renewable ones that bring about pollution.
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29 w
This must be condemned.
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30 w
Dear Boniface Kuria Your climate warning has received over 50 agrees! We have reached out to Singapore 🇸🇬 by email and requested a response. I will keep you updated on any progress! To reach more people and increase the chance of a response, click the Share button above to share the review on your social accounts. For every new member that joins We Don't Have Time from your network, we will plant a tree and attribute it to you! /Adam, We Don't Have Time
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30 w
Not good
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30 w
This is deeply concerning 😟.
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30 w
This is so disappointing. This is what is hindering the shift to renewable energy.
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30 w
It's disappointing to see this from the Singapore government. Strict enforcement of carbon taxes is essential for reducing the carbon footprint & fostering a sustainable environment.
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31 w
I can't fathom how anybody could come up with such an idea while knowing very well the consequences of it. They must hate life. And of course Shell "declined to comment" while ExxonMobil says "we do not discuss confidential matters". Of course you don't, it's better for your own reputation, but what's better for our children, for the animals, for the environment? Most of these people seem not to care about that.
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30 w
@afirerith_may Is only that they, don't care about human race, only interested in making huge profits.
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30 w
@afirerith_may I understand your anger and disappointment.
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31 w
Not good at all
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31 w
This is a disappointment from the government of Singapore, Carbon taxes must be enforced strictly to create a sustainable environment by reducing carbon footprint.
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30 w
@joseph_githinji Absolutely! Strong measures needs to enforced.
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@joseph_githinji Its like they incentivizing the use of fossil fuel
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30 w
@joseph_githinji Carbon tax could be a simple carbon pricing instrument to incentivise emissions reductions
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31 w
This is very wrong !
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31 w
@Kevin Absolutely!💯