Singapore seals carbon credit deal with Mongolia

The home to some of the world’s largest temperate grasslands has become the latest country to seal a carbon trading deal with Singapore.

This pact with Mongolia marks the 10th such agreement that the Republic has finalised since the end of 2023.

The bilateral agreement allows the Singapore Government, and carbon tax-liable firms here, to buy eligible carbon credits from Mongolia to offset a fraction of their planet-warming emissions.

The deal, dubbed an implementation agreement, was signed on 6 October by Minister for Sustainability and the Environment Grace Fu, and Mongolian Minister of Environment and Climate Change Batbaatar Bat.

Ms Fu, who is also Minister-in-charge of Trade Relations, said the signing of the agreement marked the 55th anniversary of the establishment of diplomatic relations between Singapore and Mongolia.

“It reflects our shared ambition to build a sustainable, low-carbon future, and signals our commitment to work together to drive meaningful climate action, and open up pathways towards sustainable development,” she added.

Mr Batbaatar said the endeavour will pave the way for a new model of international cooperation that benefits both people and the planet.

“This partnership will not only advance Mongolia’s transition towards green and sustainable development, but also contribute to global climate neutrality goals,” he said.

The 6 October agreement was also signed by Deputy Prime Minister and Minister for Trade and Industry Gan Kim Yong, and Mongolian First Deputy Prime Minister and Minister of Economy and Development Uchral Nyam-Osor.

The nine other countries that have such deals with Singapore are Bhutan, Chile, Ghana, Papua New Guinea, Peru, Paraguay, Rwanda, Thailand, and Vietnam.

An implementation agreement is a legally binding framework that governs the international transfer of carbon credits between two countries.

This is aligned with the Paris Agreement – an international treaty adopted by 195 parties to limit global warming – which allows countries to buy carbon credits generated in other jurisdictions to meet domestic goals to reduce emissions.

In Singapore, credits used to offset national emissions can be bought only from projects in countries with which the Republic has implementation agreements.

Carbon tax-liable firms can also buy credits to offset up to 5 per cent of their carbon tax bill.

One carbon credit represents one tonne of carbon dioxide that is either prevented from being released, or removed from the atmosphere. Singapore has estimated that it would use high-quality carbon credits to offset about 2.5 million tonnes of emissions a year from 2021 to 2030.

A key element of the implementation agreement is to prevent double counting, a situation where both the buyer and host country count the same emissions reductions, or removals, towards their own targets.

Under such agreements, the host country must agree to make a “corresponding adjustment” to add the sold emissions back to its national inventory.

Singapore’s Ministry of Trade and Industry said the collaboration will direct finance to carbon mitigation projects in Mongolia.

“The carbon mitigation projects authorised under this implementation agreement will promote sustainable development, and deliver tangible benefits to local communities, such as creation of jobs, improved access to clean water, enhanced energy security, and reduction of environmental pollution,” the ministry said.

The Republic is committed to channelling a sum equivalent to 5 per cent of the proceeds from authorised carbon credits to measures in Mongolia to help the country adapt to the impacts of climate change.

Mitigation refers to efforts to reduce or remove planet-warming carbon dioxide emissions, while adaptation refers to initiatives to protect people from the impacts of climate change.

Under the agreement, Singapore is also committed to having 2 per cent of the carbon credits authorised under its agreement with Mongolia to be cancelled at first issuance.

This means that these purchased credits cannot be sold, traded, or counted towards Singapore’s or Mongolia’s emission targets. 

This serves as a contribution to a net reduction of global emissions.

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