Singapore to buy S$76.4 million worth of nature-based carbon credits from projects in Ghana, Peru, and Paraguay

Singapore, on 16 Sept, made headway in contributing to nature conservation globally by establishing contracts for carbon credits generated from nature restoration and protection projects in Ghana, Paraguay, and Peru.

This is the first time the Republic is sourcing for carbon credits from nature-based projects.

This development, announced by the National Climate Change Secretariat (NCCS) and the Ministry of Trade and Industry (MTI), is also significant as it marks the first tranche of carbon credits that the Republic has secured.

The Republic will spend S$76.4 million to buy more than two million tonnes of nature-based carbon credits from four projects in the three countries.

These projects aim to preserve Peruvian forests and prevent deforestation, reforest degraded pastureland in Ghana, and sequester carbon in soil in the grasslands of Paraguay through sustainable management practices, said NCCS and MTI.

The 2.175 million tonnes of carbon credits are equivalent to offsetting close to 4 per cent of Singapore’s greenhouse gas emissions in 2022.

One carbon credit represents one tonne of carbon dioxide that is either removed from the atmosphere, such as through restoration efforts, or prevented from being released, such as when a forest is saved from the axe.

The sale of carbon credits from such projects provides a financial incentive to keep natural habitat standing, instead of cutting it down for conversion for other purposes.

In establishing these purchase contracts, Singapore contributes to ensuring these habitats persist into the future.

In Peru, for example, two of the projects involve protecting forested areas from logging, and the emissions that are prevented from being released will be monetised as carbon credits.

The Kowen Antami Redd+ Project aims to protect the Yanachaga Chemillen National Park and the San Matias-San Carlos Protection Forest. Redd+ refers to reducing emissions from deforestation and forest degradation.

“Protection of these two areas has been challenging due to the expansion of both commercial and small-scale agriculture, construction of new roads, and wildfires in and around the project area, resulting in extensive deforestation,” said MTI and NCCS.

The second project, called Together for Forests Redd+, aims to reduce deforestation in three provinces within the Madre de Dios region of Peru, which comprise forestry land and smallholder forests.

Three firms, including Temasek-backed investment firm GenZero, won the bid to sell the credits to Singapore to help the country meet its 2030 climate targets.

The other two awardees are commodities trader Mercuria Asia Resources and US-headquartered carbon project developer Boomitra, government procurement portal GeBiz showed.

Mercuria will be supplying the credits from the two Peruvian projects.

The call for proposals closed in February, and the plan is for the nature-based credits to offset Singapore’s emissions from 2026 to 2030.

Singapore had earlier estimated that it would use high-quality carbon credits to offset about 2.51 million tonnes of emissions a year over this decade.

For example, in 2030, the country’s total greenhouse gas emissions are expected to be 62.51 million tonnes, and will be brought down to 60 million tonnes with the use of carbon credits.

Under the Paris Agreement – an international treaty adopted by 195 parties to limit global warming – countries can buy carbon credits generated in other jurisdictions to meet domestic climate targets to reduce emissions.

For Singapore to use credits to offset its national emissions, the credits must be purchased from countries it has such agreements with. Ghana, Peru, and Paraguay are three of nine countries that Singapore has inked carbon trading agreements with.

The other countries are Papua New Guinea, Bhutan, Chile, Rwanda, Thailand, and most recently Vietnam in a deal sealed on 16 Sep.

The carbon project in Paraguay – overseen by Boomitra – involves putting in place sustainable practices in ranches across the Pampas grasslands in Paraguay to increase the amount of carbon the soil can hold.

Livestock farming is the key form of livelihood in the region, which has led to overgrazing and unsustainable grassland management, which reduce the soil’s ability to store carbon.

To address this, the project will regulate grazing to ensure livestock is moved frequently, to allow grazed areas to recover. Other activities include conserving water and controlling burning.

Boomitra will deliver the soil carbon credits to the Singapore Government on a scheduled basis from 2026 through 2031, said the firm’s spokesperson.

The fourth project is one that aims to restore the Kwahu tropical forest landscape in Ghana, to be overseen by GenZero.

Ghana’s tropical forests had declined to less than 2 million hectares due to extensive logging and devastation by bushfires to expand cocoa farms. Farmers were also urged to remove native trees from their farms to increase production.

To reverse the damage to the land and biodiversity, the 40-year project in Ghana’s Kwahu region aims to restore 51,000 ha of degraded land by replanting native trees and employing agroforestry and regenerative planting.

MTI and NCCS said the projects were selected based on the quality of the proposal, the tenderers’ track records and price competitiveness.

The prices of each credit under each project were not revealed.

Nature-based solutions globally have the potential to reduce carbon emissions by more than 10 gigatonnes a year. Additionally, studies have shown that nature-based projects are more cost-effective than technological options, such as expensive carbon capture projects.

In choosing the four projects, the authorities assessed them based on whether they can be of high environmental integrity.

Key features of these projects include ensuring they provide co-benefits to surrounding communities and low risks of leakage.

Leakage occurs when a forest plot is conserved as a carbon project, but logging moves to a neighbouring plot instead. In other cases, saplings for reforestation can die before taking root, or wildfires can wipe out swathes of protected forests, causing previously stored carbon to be released back into the atmosphere.

Later in 2025, the government will launch another call for proposals to find other high-quality carbon credits.

Mr Rueban Manokara, global lead of the carbon finance and markets task force at conservation group World Wide Fund for Nature, said the move by the government to secure nature-based credits signals that such credits have a role to play in high quality carbon markets.

This comes at a time when the inclusion of nature-based carbon credits into a UN-managed global carbon market is being questioned, he noted.

Apart from country-to-country trading, a UN-led carbon market is being shaped up to allow countries and businesses to buy and sell credits.

Recent reports have stated that the standards of the UN carbon market have set the bar of entry too high for nature-based projects.

Ms Melissa Low, research fellow at the National University of Singapore’s Centre for Nature-based Climate Solutions, said environmental and social safeguards have to be implemented on the ground to optimise the amount of carbon removed from the atmosphere.

There needs to be laws to ensure that locals who help to manage forests and take steps to prevent water pollution, among other ecosystem services, should be fairly compensated to prevent disputes on the ground.

Mr Manokara added that activities that destroy nature should also be prevented outside the boundaries of the carbon project.

“(The safeguards) can include ensuring that destructive activities outside the project boundary are compensated for when the credits are generated,” he said.

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