How SG supports carbon markets

Collaborating with other countries to support our climate ambition

As Singapore decarbonises our economy, we recognise our limited ability to deploy renewable energy is limited given our constraints as a small island city state that is densely populated. Effective international cooperation through carbon markets, aligned with the Article 6 of the Paris Agreement, can thus help us achieve our climate targets.

One such means of international cooperation is carbon trading, aligned with the Article 6 of the Paris Agreement.

International cooperation aligned with Article 6 of the Paris Agreement can raise global climate ambition and help countries that are alternative energy disadvantaged (such as Singapore) to achieve their target through the transfer of mitigation outcomes between countries. To unlock the potential of Article 6, bilateral agreements between countries must be in place to govern and facilitate the use of Article 6 compliant carbon credits to offset the NDC of a country.

Singapore is pursuing cooperation with other countries under Article 6.2 of the Paris Agreement to enable the transfer of international mitigation outcomes to Singapore. More details can be found in this link.

From 2024 onwards, taxable facilities in Singapore will be allowed to use high quality international carbon credits to offset up to 5% of their taxable emissions, under Singapore’s carbon tax system.

Building a Vibrant Carbon Services Ecosystem

Singapore aspires to develop into a carbon services and trading hub by tapping on its thriving ecosystem and locality in Southeast Asia, one of the largest carbon credit sources. Based on a study commissioned by the Economic Development Board (EDB) and Enterprise Singapore (ESG), it is estimated that this could create a projected gross value added (GVA) of US$1.8-5.6 billion.

Setting up bilateral cooperation mechanisms with host countries will unlock more green growth opportunities for our carbon services and trading ecosystem beyond Southeast Asia. These opportunities include carbon credit project financing and development, sustainable financing product structuring, and market intermediaries.