Singapore rushes to ink carbon credit deals at COP28

Singapore has inked a number of preliminary carbon credit deals at the UN Climate Change Conference in Dubai, as a national emissions offsetting scheme is set to begin without any eligible credits currently available.

On Sunday (Dec 3) and Monday, Singapore managed to “substantively conclude” separate negotiations with Bhutan and Paraguay, which will pave the way for carbon credit trading aligned with Article 6 of the Paris Agreement.

Article 6 aims to prevent double counting, so that both seller and buyer cannot claim reductions or removals on the same amount of credits.

With conclusions also substantively concluded with Ghana and Vietnam, Singapore has now wrapped up negotiations on Article 6 implementation agreements with four countries. However, none has been signed yet.

Singapore negotiators also used their time in Dubai to lock in memorandums of understanding (MOUs) for collaboration on carbon credits with Rwanda and Fiji.

Those bring to 13 the number of countries with which Singapore has signed MOUs, aimed at eventually reaching implementation agreements.

The other 11 countries are Cambodia, Chile, Columbia, the Dominican Republic, Indonesia, Kenya, Mongolia, Morocco, Papua New Guinea, Peru and Sri Lanka.

Sealing at least one implementation agreement – a negotiated country-to-country deal under which a country selling a carbon credit makes a “corresponding adjustment” to its inventory to give up its claim to the offset in favour of the buying entity – is key to Singapore’s ability to operationalise its new carbon tax regime as scheduled.

The new regime, governed by a new International Carbon Credit (ICC) framework, will enable companies here to offset up to five per cent of their taxable emissions from 2024, the year Singapore’s carbon tax rate is set to rise to S$25 per tonne of emissions, from the current S$5 per tonne.

Carbon credits eligible under the ICC framework must be from a country with a standing implementation agreement with Singapore. The government has indicated that it will unveil a list of eligible host countries by the end of the year.

Progress with Paraguay came out of a Dec 2 meeting between the South American country’s president, Santiago Pena, and Singapore’s Senior Minister and Coordinating Minister for National Security Teo Chee Hean.

In a statement, Singapore’s National Climate Change Secretariat (NCCS) said the implementation agreement with Paraguay is targeted to be signed in early 2024. It also noted that the agreement, when signed, could be Paraguay’s first such agreement, and Singapore’s first with a Latin American country.

Paraguay’s Minister of Industry and Commerce Javier Gimenez Garcia added that the agreement with Singapore would be “a step towards positioning Paraguay as a ‘lung’ market for the world”.

The Bhutan deal, when signed, will be Singapore’s first such agreement with a carbon negative country – a country that removes more carbon than it emits. Panama and Suriname are other carbon-negative countries.

Implementation agreements, when signed, will provide clarity on which credits can be sold to Singapore entities and counted by Singapore towards its climate targets. Singapore has committed to achieving net zero emissions by 2050.

NCCS, a part of the Strategy Group under the Prime Minister’s Office, said project applicants may register a carbon project under an implementation agreement, and trade carbon credits with Singapore buyers from there.

While carbon credits traded under an implementation agreement can be used to offset a company’s carbon tax liabilities in Singapore, NCCS said their uses are not limited to that. The credits with corresponding adjustments can also be used towards voluntary corporate targets, among other purposes, it noted.

 

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