How MNC density drives Singapore’s carbon market lead

A $45 per tonne carbon tax—one of the steepest in ASEAN—is driving aggressive internal decarbonisation targets.

Singapore is positioned as a pivotal player in the global carbon market, backed by a robust regulatory environment and a high density of multinational offices committed to aggressive internal decarbonisation targets.

“Singapore combines a strong legal and regulatory framework, deep institutional capital, and a high concentration of multinational regional headquarters – many with firm sustainability targets,” RHB experts said in the Carbon Trading: Decarbonising The Future, From Policy To Practice report.

The report noted that 46% of multinationals’ Asian headquarters are based in Singapore, anchoring a substantial pool of corporate demand.

Citing the Singapore Economic Development Board, RHB also said that the local carbon services and trading sector hosts more than 150 firms, which is double the number in 2021, with the potential to contribute up to $7.6b in gross value add.

“This growth is driven not by domestic credit supply, but by the concentration of advisory, financing, procurement, verification, data, and market infrastructure,” the report read.

This role is further supported by Singapore being a centre for international aviation and shipping, which gives it natural relevance for compliance schemes.

Under Singapore’s Green Plan, the government has committed to reducing emissions to around 60 MtCO2e in 2030, with a long-term goal of reaching net zero by 2050. Amongst its efforts to achieve this is the implementation of a carbon tax, which rose to $45 per tonne in 2026, with further increases to between $50 and $80 projected by 2030.

RHB experts said this tax policy is a key pillar for Singapore’s carbon market.

“Singapore's carbon pricing regime, governed by the Carbon Pricing Act (CPA) and the Carbon Pricing (Amendment) Act 2022, covers facilities emitting 25,000 tCO2e or more annually. About 80% of Singapore’s total GHG emissions are covered by carbon tax and fuel excise duties on the country’s transport fuels,” the report read.

“Of the country’s emissions, c.70% are covered by the carbon tax levied on about 50 facilities in the manufacturing, power, waste, and water sectors,” it added.

RHB noted that this coverage is one of the most comprehensive globally and that the tax trajectory is amongst the steepest in ASEAN.

Analysts have suggested that the carbon tax, coupled with the plan to import 6 gigawatts of low-carbon electricity by 2035, is driving up the cost of carbon-intensive power. Whilst this shift enhances the appeal of cleaner energy, companies must still navigate a complex set of risks that extend well beyond fuel and carbon pricing.