Oil & Gas Editorial: On The Brink Of A Great Carbon Schism

In Southeast Asian city-state of Singapore, the government has proposed a carbon emissions tax that could shake up the nation’s oil industry.

As part of the 2017 budget, Finance Minister Heng Swee Keat, announced that a tax of between S$10-S$20 per tonne of greenhouse gas will be meted out to the largest emitters from 2019 onwards. The tax will be applicable to companies that emit the equivalent of 25,000 tonnes of carbon dioxide per year, which will encompass some 40 companies, including power stations, utilities and refineries.

The island nation is one of the world’s primary refining hubs, with approximately 1.5 million barrels of oil per day passing through the country’s three refineries. One of these three, ExxonMobil’s Singapore Refinery based on Jurong Island, is the eighth largest in the world. Petroleum products account for one quarter of Singapore’s annual export capacity, making up five per cent of the country’s economy as a whole.

Singapore has been a refiner’s haven for the past six decades, on the back of tax incentives for oil companies enacted shortly after self-governance was secured. The move to clamp down on a vital part of the country’s prosperity will represent a sticking point for many, and an opportunity for the clean energy sector.

The decision comes as China, the world’s largest energy consumer, prepares to establish an emissions trading system in 2018.

As constituent parts of the Asian oil market, the world’s largest, embrace a carbon-cutting future, the rhetoric emanating from the Trump administration stand in stark relief. Could the East and West be heading for a Great Carbon Schism? The times, they are a changin’….