The Government does not ring-fence sources of fiscal revenue for specific purposes. This ensures that there is flexibility in allocating resources to priority areas with the most important spending needs.

The Government does not expect to derive additional revenue from the carbon tax increase in this decade. The carbon tax collected will fund decarbonisation measures and cushion the impact on businesses, such as the Resource Efficiency Grant for Energy and the Energy Efficiency Fund, to support industries in improving energy and carbon efficiency. Funds have also been earmarked under the Research, Innovation and Enterprise 2025 plan for the research, development and demonstration of sustainable urban solutions, as well as emerging low-carbon technologies that can drive deeper decarbonisation.

Other than funding enhanced support for companies to improve energy efficiency, carbon tax revenue will also be used for household assistance and other measures to reduce emissions, such as increasing the deployment of solar photovoltaic systems and improving energy efficiency for buildings.