Singapore and Indonesia have struck new agreements on carbon credits and cross-border power trade, signalling a deeper push to link climate finance with clean energy cooperation as both countries seek to advance their climate goals in a more uncertain global environment.
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The deals, concluded at the Singapore-Indonesia Leaders’ Retreat in Jakarta on 6 July, build on earlier cooperation covering cross‑border electricity trade, carbon capture and storage, and plans for a joint sustainable industrial zone.
Under a new memorandum of understanding (MOU) on carbon markets, the two countries will identify high‑integrity carbon credit projects, share information and technical expertise, and move towards an Article 6 implementation agreement that sets out legal rules for generating and trading credits under the Paris Agreement.
At the same meeting, Indonesia appointed its sovereign wealth fund, Danantara Indonesia, to lead power exports to Singapore.
Danantara, through its investment arm, signed a MOU with Singapore-based energy firms Keppel Electric and Sembcorp Utilities to explore the offtake of low‑carbon electricity imports, and with Singapore Energy Interconnections to support commercial and technical cooperation on interconnector development. Ministers from both sides said they expect at least 3.4 gigawatts of projects to materialise by 2035 on a commercial basis.
The initiatives are aimed at boosting energy connectivity and decarbonisation for both countries and accelerating investment in Indonesia’s clean energy sector, with each government updating regulatory frameworks, policies and requirements to enable cross‑border trade and investment.
A key outstanding issue in cross-border trade between both countries is electricity pricing. Indonesia’s energy ministry has said negotiations are ongoing, noting that under current regulations the government sets prices and is seeking an arrangement that opens export opportunities while delivering balanced economic benefits for both countries.
Singapore and Indonesia also plan to develop a cross-border renewable energy certificate (REC) framework to track power trade ahead of physical electricity delivery. The framework aims to standardise how countries track the physical flow of electricity and the associated RECs, decide which registries/instruments are allowed for cross‑border deals, and calculate the residual mix, to avoid double‑counting and give buyers confidence in exclusive claims.
