Singapore Implements Criteria for High-Quality International Carbon Credits
Singapore has introduced a set of eligibility criteria for international carbon credits (ICCs) to ensure their high quality and use by companies to offset their taxable emissions. The Ministry of Sustainability and the Environment (MSE) and the National Environment Agency (NEA) jointly launched the Eligibility Criteria under the ICC Framework, aligning with the Paris Agreement’s Article 6 and international standards such as CORSIA. These criteria will support Singapore’s efforts to achieve net zero emissions by 2050. Additionally, they will assist carbon taxpayers in reducing their carbon tax bills.
Under Singapore’s Carbon Pricing (Amendment) Bill, tax liable companies will face a five-fold increase in carbon tax next year. Currently, they pay S$5 per tonne of carbon emissions, which will rise to S$25 per tonne in 2024. By 2030, the tax will reach S$50 to S$80 per tonne. To offset their carbon emissions, taxable companies can use international carbon credits, representing a tonne of carbon removed or avoided between January 1, 2021, and December 31, 2030.
To ensure the environmental integrity of the credits, Singapore has established seven principles that must be followed. These principles include not double-counting emissions reductions or removals, requiring additional reductions or removals beyond legal requirements, and quantifying and verifying emissions reductions through transparent third-party verification. The credits must also represent permanent emissions reductions and must not cause net harm or leakage of emissions elsewhere.
The NEA will oversee the administration of the carbon tax regime in Singapore and develop processes to determine the eligibility of ICCs for offsetting emissions. The agency plans to release a list of eligible host countries, programs, and methodologies that meet Singapore’s criteria. Singapore has already entered agreements with countries such as Ghana, Vietnam, Indonesia, Bhutan, Papua New Guinea, Peru, Mongolia, and Sri Lanka. The NEA is also in discussions with other countries, including Thailand, Brazil, and Brunei.
To further support the use of high-quality international carbon credits, a digital exchange in Singapore called ACX plans to offer standardized contracts that meet the ICC eligibility criteria. This initiative aims to improve price discovery in the global voluntary carbon markets.
By implementing rigorous standards for international carbon credits and aligning with international agreements and standards, Singapore is taking a proactive approach to combat carbon emissions and encourage sustainable practices among businesses. This move not only contributes to the fight against climate change but also supports Singapore’s goal of achieving net zero emissions by 2050.