Despite some parts of the world reversing course on climate change, Singapore will be pushing on with its sustainability agenda to address climate risks and secure the island-state’s long-term future, according to Prime Minister Lawrence Wong at Singapore’s 2026 Budget Statement.
However, Wong also sounds caution on the impact of carbon taxes on Singapore’s competitiveness, saying that the government will “carefully” assess the trajectory of the carbon tax which is now at $45 per tonne and scheduled to rise to $50-$80 per tonne in the next five years.
“Singapore already has the highest carbon tax rate in the whole of Asia,” says Wong. “If global climate momentum continues to weaken, we may need to position ourselves towards the lower end of the $50 to $80 per tonne range by 2030.”
Professional services firm Deloitte Southeast Asia energy, resources and industrials industry leader Brent Vasconcellos says that the Budget strikes a “careful balance” between Singapore's energy security and ensuring that households and businesses continue to benefit from stable energy costs.
Support for business decarbonisation
To support business decarbonisation, the Singapore government is extending the Energy Efficiency Grant (EEG) by one year from April 1, 2026 to Mar 31, 2027. This grant provides co-funding support to help businesses improve their energy efficiency by investing in energy-efficient (EE) equipment. It is open to eligible companies in the construction, data centre, food services, manufacturing (including food manufacturing), maritime and retail sectors.
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Meanwhile, the government will also extend support for green loans under the Enterprise Financing Scheme (EFS) to March 2031. The EFS is aligned to the Singapore Green Plan 2030 and aims to help enterprises embark on their sustainability journey to reduce their carbon footprint.
Lee Bing Yi, Financial Services Assurance, Sustainability and Climate Change Partner at PwC Singapore, says that businesses should tap the available support schemes including the EEG and EFS-Green to “build resilience and competitive advantage”.
Energy resilience
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On the national energy resilience front, Wong says the republic’s solar push is “delivering results” with Singapore reaching its two gigawatt-peak target ahead of schedule. “We will therefore raise the target to 3 gigawatt-peak by 2030,” he says. “Beyond that, we will continue to maximise solar deployment across all viable surfaces, and progressively set more ambitious targets further into the future.”
Wong adds that Singapore is stepping up plans to import low-carbon electricity from the region and actively seeking to diversify Singapore’s energy mix including sources such as hydrogen, geothermal energy, or civilian nuclear power.
“We are building up capabilities in nuclear energy to be able to assess its safety and viability for Singapore,” says Wong who adds that the country has “initiated” cooperation with the US, France and South Korea on the topic.
Vasconcellos welcomes the government’s efforts to diversify Singapore’s energy mix. “This approach should hopefully attract new investment from industry players and lay the groundwork for Singapore to become a leader in the low carbon energy space, by providing a platform from which companies can deploy cleaner energy technology and innovation solutions across the region.”
Greening transport
Wong stresses that Singapore remains “committed” to achieving 100% cleaner energy vehicles by 2040, noting that the government has rolled out initiatives to encourage early electric vehicle (EV) adoption, including financial incentives and charging infrastructure.
He also highlights that Singapore is aiming to achieve 1% sustainable aviation fuel (SAF) use for flights departing from Singapore this year. The longer term target is to achieve 3–5% by 2030.
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For marine transportation, Wong points out that a low-carbon ammonia bunkering solution is being developed on Jurong Island. “If successful, Singapore will be among the first countries in the world to supply ammonia commercially as a fuel for international shipping.”
“It is particularly encouraging to see positive support measures aimed at accelerating the adoption of lower-carbon fuels in the aviation and maritime sectors, as these are sectors vital to Singapore's economy and global connectivity,” says Vasconcellos.
According to OCBC Group Research, companies that are actively involved in Singapore’s progress towards net zero include Keppel, Sembcorp Industries, Nanofilm Technologies and Keppel Infrastructure Trust. In addition to Keppel and Sembcorp, players in EV charging include ComfortDelGro and LHN Group. Meanwhile, not only is Keppel involved in the afore-mentioned ammonia bunkering project, it is also part of another to develop one of Asia’s first commercial‑scale ethanol‑to‑jet SAF facilities on Jurong Island.
