Singapore is eying its first carbon trading deal to meet its net zero targets with an Asean country within the next few months, a government official has revealed.
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The city-state is in “advanced discussions” with a number of countries in this region, including Thailand,” said Benedict Chia, director-general of climate change at the republic’s National Climate Change Secretariat at International Emissions Trading Association (IETA)’s Asia Climate Summit in Bangkok last week.
To date, the republic has signed memorandums of understanding (MOU) with over 20 countries, but only seven have translated into definitive agreements under Article 6, which lays out the rules for countries to meet their national climate targets through carbon trading in the Paris Agreement, said Chia.
Within the region, Singapore has signed MOUs with four countries: Cambodia, Laos, the Philippines and Malaysia.
The bulk of its existing carbon trading partners – Papua New Guinea, Ghana, Bhutan, Peru, Chile, Rwanda and Paraguay – are currently located in Latin America and Africa, he noted. None have generated any eligible credits for trading so far.
Muhammad Ridzwan bin Ali, senior assistant secretary of the climate change division at Malaysia’s natural resources and environmental sustainability ministry, who was speaking on the same panel at Chia, said that the country has commenced several discussions with Singapore on reaching an implementation agreement since signing an MOU in January. “Hopefully we can work towards finalising the negotiations, so let’s pray for that,” he said.
Chia had previously cautioned countries not to “jump too quickly” into trading credits without having a good understanding of how much they are emitting and how they plan to cut their carbon footprint.
Singapore is the only Asean country that has submitted its new 2035 climate targets to the United Nations, which outlined plans to slash its emissions to between 45 to 50 million tonnes by 2035. But the extent to which it will rely on carbon credits to meet this goal remains unclear.
Since 2023, Singapore has been working with carbon credit registries Gold Standard and Verra to develop an Article 6.2 crediting protocol aimed at standardising procedures for governments to leverage existing independent standards when firming up country-to-country trading deals.
While Article 6.2 allows for a lot of flexibility for countries to decide how the units are generated, transacted and accounted for under each each national registry, it can be “a bit bewildering and confusing” to newer participants, said Chia. The protocol is meant to “standardise processes as far as possible and streamline the different options that are available,” he added.
The Singapore government, which published its initial recommendations last November, is looking to roadtest the protocol with some countries by end-2025 before finalising it. Chia did not reveal which countries the city-state plans to pilot its draft protocol with.
Using ratings to review Article 6 projects
In May, Singapore published a tender for the provision of rating services to review Article 6 projects procured by the government. London-headquartered rating agencies BeZero and Sylvera, France’s Carbonx SAS and United States-based Calyx Global and MSCI were the five companies that submitted bids for the tender, which closed in June.
Chia said that the government is in the process of evaluating the offers and expects to make a decision “within the next couple of weeks” as to which ratings provider it will award the tender to.
Since 2023, Sylvera has been providing ratings services to the Singapore government to identify credible carbon credits that can be used to meet the country’s climate targets in the Article 6.2 context.
The role of rating agencies in national carbon crediting programmes is “still something we are trying to ascertain,” said Chia. “One of the things that struck us is that the same methodology can produce projects of varying degrees of ratings, with one being rated higher and another rated lower.”
“Projects that are rated higher – based on evidence so far – have been able to command a higher price. That reflects the fact that there are project-specific risks that need to be managed that go beyond the methodology, and ratings give us a better sense of how some of these risks can potentially be better managed,” he said.
