Late last year, the Ministry of Sustainability and the Environment (MSE) and the National Environment Agency (NEA) introduced the Eligibility Criteria within the International Carbon Credit (ICC) Framework. Aligned with Article 6 of the Paris Agreement, Singapore’s ICC Framework promotes global cooperation to reach climate sustainability goals. Collaborating with international carbon markets will further propel Singapore’s aim to achieve net-zero emissions by 2050.
In 2023, Singapore’s Carbon Credit market size hit US$14.5 million. Forecasts indicate a surge to US$55.14 million by 2030, showcasing a Compound Annual Growth Rate (CAGR) of 21% from 2023 to 2030. Examining the market size and key players reveals a promising trajectory. (Source: Coherent Market Insights)
Delving deeper, let’s analyze the Singapore Carbon Credit Market, evaluating its current landscape, emerging trends, and future opportunities. Singapore’s Carbon Credit Market – Current Scenario
In December 2021, Singapore’s Finance Minister Lawrence Wong expressed confidence in Singapore’s potential as a hub for carbon services and trading in Southeast Asia and the Asia Pacific. With over 70 carbon services and trading firms operating in Singapore, the nation leverages its status as a regional center for professional services, commodity trading, and financial services. The rise of Singapore’s carbon market is fueled by factors such as heightened climate change awareness, government regulations, and corporate sustainability commitments.
Singapore heavily relies on renewable energy sources like solar, wind, and hydropower to drive demand for carbon credits. Government initiatives, notably the Carbon Pricing Act, play a crucial role in achieving the projected value of the domestic carbon credit market. The Act mandates greenhouse gas emissions disclosure and imposes taxes linked to these emissions to incentivize businesses to reduce their carbon footprint. The tax, initially set at S$5 per tonne of CO₂ equivalent (tCO₂e) in 2019, is set to increase to S$25/tCO₂e in 2024 and 2025, reaching S$45/tCO₂e in 2026 and 2027, and potentially S$50-80 by 2030. This aligns with the target to achieve US$55.14 million by 2030.
Additionally, the government focuses on Energy Efficiency Programs to promote clean and renewable energy sources. Reports indicate a target to cut down 50% of carbon dioxide emissions by 2030 and achieve net-zero emissions by 2050 at the earliest. The emphasis on ESG policies and commitments towards decarbonization underscores the collective efforts of organizations to achieve net-zero emissions by 2050.
ESG Policies Driving Decarbonization Commitments
Organizations in Singapore prioritize energy efficiency, cost savings, energy security, and decarbonization in alignment with their long-term sustainability goals. The corporate sector’s commitment to achieving net-zero emissions by 2050 is evident through various initiatives. Singapore hosts over 70 organizations offering carbon services, positioning itself as a key player in Southeast Asia. Global corporations and local entities are investing in carbon services platforms, with notable efforts from companies like GoNetZero, KPMG, Sembcorp Industries, Microsoft, and the Global Centre for Maritime Decarbonization (GCMD). These entities play a significant role in Singapore’s decarbonization efforts.
Singapore’s Strong Carbon Trading Ecosystem
Singapore’s robust commitment to environmental sustainability and initiatives towards carbon neutrality position it as a prominent player in the carbon credit trading market. The government’s support creates a conducive environment for carbon exchange, bolstered by the Singapore Green Plan 2030. Leading market players such as Climate Impact X, Carbon Credit Capital, Carbonbay, South Pole, and Triple Oxygen contribute to the vibrancy of Singapore’s carbon credit market.
In September 2022, Carbonbay introduced an innovative carbon trading and offsetting platform tailored for the Asia Pacific markets, enhancing opportunities for organizations to engage in regional offset projects. Live streaming emerges as a powerful tool to promote and understand carbon markets, providing a platform for discussions on market trends, policy changes, and carbon credit prices.
With Singapore’s strategic positioning and commitment to carbon services and trading, the goal of reaching US$55.14 million by 2030 with a 21% CAGR appears within reach. The city-state’s trajectory towards becoming a central hub for carbon services and trading in Southeast Asia and the Asia Pacific region is promising, reflecting a strong foundation for sustainable growth.
