Building the carbon markets of tomorrow: Singapore’s blueprint

Carbon markets have a key role to play as countries look to scale up their climate finance and decarbonise. However, more than two decades since the earliest market activity, gaps still remain, which lead to emissions reduction opportunities being missed as projects go unfinanced, solutions fail to scale, and uncertainty mounts for buyers. These three challenges hinder progress, and stymie climate finance flows.

Enter Singapore. Quietly, the country has been building what the market needs, addressing all three challenges simultaneously. Located in the heart of Southeast Asia, which is seeing a surge of carbon market activity, Singapore is well positioned to support the region’s decarbonisation potential, including – but not limited to – blue carbon, sustainable agriculture, and transition credits.
 

Catalysing high-quality carbon credits

The first challenge to overcome is finding sufficient financing so that high-quality projects can get off the ground. The initial stage can be capital intensive, as it requires funds to conduct feasibility studies and design monitoring and verification systems. Even the project validation and registration process is costly, and often capital is absent for this crucial stage of project development.

To address this, the Singapore Economic Development Board (EDB) in 2024 launched the Carbon Project Development Grant to support Singapore-based companies engaged in early-stage project activities and financing that could lead to the issuance of high-quality Article 6 credits. The first round of the programme saw three experienced project developers awarded grants in May 2025: 3Degrees, Climate Bridge International, and The Nature Conservancy (TNC).

The investment has already paid off, with TNC using some of its grant to expand its Singapore team ahead of scaling up its work in Southeast Asia. All three are developing projects – including nature-based and technology-based solutions – that are aligned with the country’s International Carbon Credit (ICC) Framework. These projects are situated in countries across the region where Singapore has signed Implementation Agreements or Memorandums of Understanding on carbon credits collaboration under Article 6 of the Paris Agreement.

A second round of grants were awarded in May 2026 to Anew Climate and VNV, both of which will be using the funds to carry out feasibility studies for potential Article 6 projects – such as VNV’s planned trial of an alternate wetting and drying method across Southeast Asia, cutting methane emissions and generating carbon credits. Anew meanwhile has just established an office in Singapore, which is aiming to grow carbon market demand, as well as low-carbon fuels.

Additionally, EDB in 2025 launched a donor-advised fund in partnership with Temasek Trust’s philanthropic arm, TT Foundation Advisors, to help unlock capital from foundations and family offices to further fill the finance gap, with S$20 million secured at the time of launch. Money raised by the fund will be redirected to the same organisations awarded the Carbon Project Development Grant, further bolstering their chances of success – while ensuring a supply of high-quality credits for Singapore.

Innovate to accelerate

Another challenge is that some of the most promising project types – such as blue carbon, with coastal wetlands typically offering greater sequestration than forests – are struggling to scale due to implementation difficulties and measurement, reporting, and verification (MRV) hurdles. Without data and an understanding of how to measure and monitor these projects, their potential will remain untapped.

To try to overcome this, EDB supported WWF-Singapore and aquaculture investor Hatch Blue to launch Blue Catalyst, an open innovation challenge to develop solutions aimed at scaling high-integrity blue carbon projects across Asia and beyond. Launched in September 2025, the inaugural cohort was announced during Ecosperity week in May.

Out of more than 130 applications from 37 countries, 10 finalists were selected and invited to participate in an accelerator programme in Singapore. The finalists include data providers, restoration developers, and MRV platforms from around the world, working on needed innovations such as geospatial mapping, carbon stock and flux modelling and biodiversity monitoring. Following the two-week programme, WWF-Singapore is exploring collaborations with the finalists to co-develop and deploy technology solutions at project sites, thus contributing to the scaling of high-integrity blue carbon projects across the region.

Innovation is required to unlock the potential of other nature-based carbon projects, including in project methodologies, MRV systems, and technologies. A key enabler in this space is satellite remote sensing, which offers the ability to monitor and measure carbon stocks and fluxes at scale with greater accuracy and cost-effectiveness. Recognising this opportunity, the National Space Agency of Singapore announced a grant earlier this year to advance research, data solutions, and methodologies for biomass projects, with a focus on utilising satellite remote sensing for digital MRV. The grant will primarily support research institutes and institutes of higher learning, while encouraging collaboration with the private sector.

Beyond project development, innovation also supports the needed research to find ways to scale a solution and open new opportunities. These initiatives complement Carbon Integrity SG, led by National University of Singapore’s Centre for Nature-based Climate Solutions, a S$15 million research programme to support the establishment and monitoring of NbS projects across Southeast Asia. 

Navigating the carbon complex

The third piece of the puzzle is demand, and specifically navigating the complexity of the carbon market while ensuring that credits purchased are of high integrity. For many corporates, this is akin to fumbling in the dark, with your reputation at risk if you buy the “wrong” units.

To address this, Singapore has championed efforts to help both businesses and governments navigate carbon credit transactions.

In the compliance market, the Singapore Carbon Market Alliance (SCMA), launched by EDB in 2024 with IETA, helps corporations build capacity and networks to access high-quality Article 6 credits, through workshops and connecting project developers with potential buyers.

On the government front, Singapore’s Ministry of Trade and Industry (MTI) is partnering with the Singapore Cooperation Enterprise to help would-be selling nations tap carbon markets for decarbonisation and development. Most recently, Singapore announced a contribution of US$15 million to the Global Green Growth Institute’s Carbon Transaction Facility, which aims to support capacity building in developing countries for Article 6 carbon markets and scale the supply of high-integrity credits.

Voluntary carbon market (VCM) efforts are also riddled with just as much, if not more, complexity than compliance ones.

Besides efforts by The Integrity Council for the Voluntary Carbon Market (ICVCM) and Voluntary Carbon Markets Integrity Initiative (VCMI) to provide clarity on quality benchmarks, governments can also offer domestic clarity. To that end, Singapore released the VCM guidance last year, spelling out how companies can use voluntary credits as part of a credible decarbonisation plan. At the international level, Singapore also co-chairs the Coalition to Grow Carbon Markets, which has convened over 10 member countries to strengthen private sector demand for high-quality carbon credits aligned with a set of shared principles.

Corporates and industry players are also playing their part. Launched at the GenZero Climate Summit 2026 and convened by Enterprise Singapore, the Action for a Resilient Climate (ARC) Coalition brings together a range of corporate and institutional players to aggregate demand for high-integrity voluntary carbon credits, channel financing towards projects that generate them, and strengthen the credibility of carbon markets. The emergence of such industry-led coalitions reflects the importance of partnerships in driving transformation and promoting participation in the VCM for Singapore.
 

The heart of carbon services in Asia

Singapore's carbon market journey reflects a clear conviction: that credibility, connectivity, and collaboration are the foundations of a market built to last. By closing the finance gap, driving innovation, and strengthening the capabilities of market participants, Singapore has built an ecosystem where every part of the carbon market value chain is supported. With over 160 carbon services and trading companies based in the island nation, spanning carbon advisory, project development, research and beyond, Singapore is well-positioned as the base from which companies can access, develop, and scale Asia's carbon market opportunities.