Singapore, Indonesia sign carbon credits pact to deepen green cooperation

Singapore and Indonesia have signed a new agreement on carbon credits, deepening cooperation on climate finance as both countries seek to advance their climate goals amid an increasingly uncertain global environment.

Both countries will collaborate on carbon credits under a memorandum of understanding (MOU) signed on 6 July at the annual Singapore-Indonesia Leaders’ Retreat held in Jakarta, where Prime Minister Lawrence Wong met Indonesian President Prabowo Subianto.

Areas of cooperation include identifying high-integrity carbon credit projects, exchanging information and technical expertise on carbon markets, and working towards an implementation agreement under Article 6 of the Paris Agreement, the Ministry of Trade and Industry (MTI) said in a statement on 6 July.

The agreement was signed by Deputy Prime Minister and Minister for Trade and Industry Gan Kim Yong and Indonesian Minister of Environment and head of the Environmental Control Agency, Mohammad Jumhur Hidayat.

Speaking after the signing, Gan said Singapore was committed to building carbon markets that are “credible, transparent, and mutually beneficial”.

“This MOU signals Singapore’s and Indonesia’s intent to work towards creating a framework for channelling climate finance into high-integrity projects, from protecting forests and restoring coastal ecosystems, to deploying clean technology solutions that reduce emissions and create new economic opportunities,” he said.

High-integrity carbon credits represent verified, permanent, and additional carbon reductions without double counting, designed for compliance with the Paris Agreement.

Meizani Irmadhiany, senior vice-president and executive chair of Konservasi Indonesia, the Indonesian affiliate of international conservation organisation Conservation International, welcomed the agreement.

“This expanded cooperation between Indonesia and Singapore will help support high-integrity carbon projects, which in turn will reduce emissions, help reverse biodiversity loss, improve resilience, and generate sustainable livelihoods for the communities closest to these irreplaceable forests, mangroves, and other coastal ecosystems,” she said.

The carbon credits agreement was one of several economic initiatives unveiled at the retreat, where President Prabowo announced that Danantara Indonesia, the country’s sovereign investment fund, will spearhead cooperation with Singapore on cross-border electricity trade.

A statement from Singapore’s Ministry of Foreign Affairs said the leaders also witnessed the exchange of MOUs on cross-border electricity exports and the development of transmission assets to support cross-border electricity trade.

Danantara Indonesia, through its investment arm Danantara Investment Management, signed MOUs with Singapore companies Keppel Electric and Sembcorp Utilities to explore the purchase, or “offtake”, of imported low-carbon electricity.

It also signed an MOU with Singapore Energy Interconnections to facilitate information sharing and explore potential collaboration on developing cross-border transmission infrastructure.

In a joint statement, Singapore’s MTI and Danantara Indonesia said the two governments were working towards developing 3.4 gigawatts or more of cross-border electricity projects by 2035 on a commercial basis.

“The projects will advance energy connectivity between and decarbonisation for both countries, including by catalysing new investments and jobs in Indonesia’s clean energy sector,” the statement said.

The statement said both Singapore and Indonesia would develop the regulatory frameworks, policies, and investment conditions needed for cross-border electricity trade.

Both governments will also develop a common framework for renewable energy certificates, aligned with international standards, to support the tracking and accounting of renewable electricity traded between the two countries.

At the retreat, both countries also announced a two-year partnership to help small and medium-sized enterprises expand cross-border trade through digital tools, policy engagement, and capability building.

Under a business partnership between the Singapore Business Federation and the Indonesian Chamber of Commerce and Industry, the SBF’s AI-powered Trade AI Advisor platform will be expanded to include Indonesia’s network of free trade agreements.

A Bahasa Indonesia version will also be introduced to help Indonesian firms navigate tariffs, rules of origin, export procedures, and market access opportunities.

Separately, Gan and Indonesian Coordinating Minister for Economic Affairs Airlangga Hartarto issued a joint statement on 6 July reaffirming both countries’ commitment to keeping trade flowing and strengthening supply chain resilience amid disruptions stemming from the conflict in the Middle East.

They said they remained committed to “keeping our markets open and connected, including through maintaining unimpeded trade flows”, while ensuring airports, seaports, and trade infrastructure remained operational to minimise disruptions to trade flows.

The two ministers also pledged to work towards ratifying key ASEAN trade agreements, upholding commitments under the upgraded ASEAN Trade in Goods Agreement, including refraining from trade-restricting non-tariff measures, and strengthening cooperation on customs procedures, digital trade facilitation, and regulatory transparency.

The joint statement also expressed concern over the ongoing conflict in the Middle East and its impact on global energy markets and supply chains.

It called for the restoration of transit passage through the Strait of Hormuz and the protection of seafarers and commercial shipping.
 

Source: The Straits Times © SPH Media Limited. Permission required for reproduction.