Singapore is offering refiners and petrochemical companies rebates of up to 76% for its planned carbon tax in 2024 and 2025. This move is aimed at helping these businesses ease the cost pressure and remain competitive against rivals in China and the Middle East.
The carbon tax costs are estimated to be between $0.80 and $1 per barrel of crude input for refineries, based on the $25 per ton of emission rate. This would account for nearly a quarter of the current profit margins for refiners in Singapore.
The rebates will provide a significant buffer for refiners’ profit margins, as they face growing competition from newer plants in China and the Middle East. Major companies in the refining and downstream sectors have been given these rebates on a transitional basis to soften the added tax burden, lowering the final costs to between $6 and $10 per ton of emissions.
The concessions are likely to be in place for at least 2024 and 2025, and the “discounted” rate will be up for discussion in 2026 or after. This move is part of Singapore’s transition framework to support companies in Emissions-intensive trade-exposed (EITE) sectors in their energy transition.