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Utility bills in Singapore could go up as carbon tax almost doubles in 2026
Shabana BegumThu, 22 January 2026 at 7:35 pm SGT
5 min read
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The total electricity and gas utility bill of an average 4-room HDB flat will go up by about $3 per month.
(PHOTO: ST FILE)
SINGAPORE - Households’ utility bills are expected to rise, as Singapore’s carbon tax has almost doubled in 2026 to $45 per tonne of greenhouse gas emissions.
The total electricity and gas utility bill of an average 4-room HDB flat will go up by about $3 per month, a Government spokesperson told The Straits Times on Jan 21. This is assuming other market forces that influence the quarterly tariffs remain constant, and excluding GST.
There is some respite until March, at least, as households will pay less for electricity and gas till then due to lower energy and fuel costs. In addition, households are given rebates to help cushion the impact.
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The spokesperson said the decline in energy costs this quarter more than offset the impact of the carbon tax increase. It was previously reported that electricity tariffs for homes will decrease by 0.84 cent per kilowatt-hour (kWh), while gas tariffs will fall by 0.67 cent per kWh, from January to March 2026.
Singapore’s carbon tax rate has been rising since 2024, to further push large emitters – which includes the power sector – to reduce their emissions since the tax puts a price on pollution. The $5 tax rate between 2019 and 2023 was deemed low.
In 2024 and 2025, the tax rate rose five-fold to $25 per tonne, with the monthly utility bills of a typical 4-room flat rising by around $4. The $45 tax rate for emitters will be in place until 2027, with a view to reaching between $50 and $80 a tonne by 2030.
To help households defray their utilities expenses, the Government provides up to $380 per year in U-Save rebates, with double the amount given in recent years “to support living expenses amidst higher inflation and to cushion the impact of the increase in carbon tax and water prices”, said the spokesperson.
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In January, more than 950,000 Singaporean households in HDB flats will receive up to $190 in U-Save rebates.
“We will continue to review our support to ensure households are adequately supported,” she said.
Economist David Broadstock, a partner at energy industry consultancy The Lantau Group, noted that the planned increase in carbon tax in the coming years may nearly double the impact to utility bills in 2030.
“The carbon tax helps to raise money to deal with the pollution impacts created from making energy... but also increase the price of energy to discourage energy consumption where it can be avoided,” he said.
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“Price raises need to be large enough to facilitate real change, but at the same time need to occur at a scale and pace that allows consumers reasonable time to prepare and adjust behaviours,” added Dr Broadstock.
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Climate observer Melissa Low added that while residents can expect U-Save rebates to help them, these may not cover the full increase in the long-term. The research fellow at the NUS Centre for Nature-based Climate Solutions urged households to switch to energy-saving appliances and adopt energy efficient habits to manage rising costs.
There are about 50 carbon tax-paying facilities in Singapore, mainly in the manufacturing, power, waste and water sectors. These emitters account for about 70 per cent of the total national emissions.
While the higher carbon tax is in place, eligible companies here that face strong competition globally are granted “carbon tax relief” in the form of allowances. Such companies may come from the chemicals, electronics and biomedical manufacturing sectors, but the amount of these “tax discounts” are not made public.
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ST reported in June 2025 that the expected revenue from Singapore’s carbon tax for 2024 – the year the tax rate increased fivefold to $25 – is lower than expected.
The revenue was projected to be about $642 million, when calculations showed that the total tax revenue should be about $1 billion, assuming Singapore’s emissions are similar to previous years.
Experts said this discrepancy was likely due to the allowances given to trade-exposed emitters to help them stay competitive and ease cost strains.
The actual carbon tax revenue for the emissions in 2024 will be published in the next Government Financial Statements document.
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Asked if the allowances will be increased or extended to more firms amid the tax hike, the spokesperson said: “The Government reviews and adjusts allowances based on how companies have fared in lowering their emissions, as well as international developments and advancements in decarbonisation technologies.”
The allowances will be calibrated to spur companies to invest in methods and technologies to reduce their emissions. These allowances will be provided only for a proportion of the companies’ emissions, and are based on international benchmarks or the companies’ decarbonisation plans, she added.
In Sept 2025, several environment groups here penned an open letter, pressing the Government for more transparency on the tax “discounts” given to some large emitters here.
Later that month, Deputy Prime Minister Gan Kim Yong told Parliament that the Government plans to release aggregated data on carbon tax allowances in 2027.
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This balances providing transparency on allowances with respecting the legitimate commercial sensitivities of companies, the Minister for Trade and Industry had said.
To date, none of the carbon tax-paying facilities have used carbon credits to offset a fraction of their taxes, said the spokesperson.
Since 2024, such firms have been allowed to offset up to 5 per cent of their emissions each year, by buying carbon credits that could be cheaper than the $45 rate.
Due to a constrained supply of credits in 2024, firms were allowed to roll over their unused 5 per cent limit in 2024 to 2025.
