Singapore has implemented a Fixed-Price Credit-based (FPCB) tax mechanism where companies will pay the carbon tax by purchasing and surrendering non-tradeable carbon credits representing the equivalent amount of verified emissions generated. These carbon credits can be purchased from the Government at a fixed price.

We recognise that there may be benefits in expanding the mode of carbon tax payment to include international carbon credits and linking our carbon tax framework to other carbon pricing jurisdictions in the longer term. We are studying the feasibility of doing so and how we can leverage robust international market mechanisms to complement our domestic mitigation efforts. The FPCB system provides the flexibility to accommodate international carbon credits and link up with external partners, should we decide to do so in future.