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As announced during the recent Budget 2022, Singapore will be progressively raising its carbon tax rate to reach SGD50 - SGD80 per tonne of emissions by 2030, a sharp 5-fold increase from the original plan to raise carbon tax to SGD10-15 per tonne. We believe the progressive rate increase will give businesses more time to adjust and implement energy-efficient projects.
As Singapore aims to reach net-zero by or around mid-century, decarbonisation is an investment theme that cannot be ignored.
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Green Ambitions
The impact of the progressive carbon tax increase should be immaterial for businesses as most will likely pass the cost to consumers. However, it should motivate individuals and companies to pursue improved energy efficiencies and other emission reductions over the long term.
Assuming bulk of the payable carbon tax will be passed through to consumers, there should be little impact to Sembcorp Industries and Keppel Infrastructure Trust.
Ride Decarbonisation Theme
With the global carbon market expected to continue its exponential growth trajectory as countries race to reach net-zero by mid-century, decarbonisation is an investment theme that cannot be ignored.
NINETY ONE GSF Global Environment Fund is a way to gain exposure to this theme as its top holdings are in renewables and waste management.
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