Shell's Singapore Exit due to Carbon Tax

[escveritas]

Shell in its 2021 Annual Report stated that the its refinery business in Singapore paid more than S$25 Million in Carbon Tax, which immediately have had an impact on its businesse.

Singapore's Government in 2019 introduced a carbon tax as part of the government’s strategy to reduce emissions and transition to an energy-efficient, low-carbon economy. Singapore’s carbon tax applies to any industrial facility in any sector that emits direct greenhouse gas emissions equivalent to or more than 25,000 tonnes of CO2 each year (tCO2e). The carbon tax rate in Singapore will be applied at S$5/tCO2e until 2023.

In 2022, Singapore announced it would accelerate its climate ambition to achieve net-zero emissions by or around 2050. To achieve this, the government plans to raise the carbon tax rate to S$25/tCO2e for 2024-2025, to S$45/tCO2e for 2026-2027 and to S$50-80/tCO2e by 2030.

The increasing carbon tax means that Shell's refinery businesses in Singapore would face significant headwinds in profitability in an area where the businesses already faced challenges due to smaller economy of scale versus other refineries regionally and globally.

The Carbon Tax is a major accellerator of de-industrialisation especially in developed nations which had implemented such policies.