Singapore has set up an alliance to increase the supply of state-approved credits for corporations either looking to meet their net zero targets or to offset their carbon tax obligations.
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The city-state has already inked definitive cooperation deals with two countries – Papua New Guinea and Ghana – under Article 6, a section in the Paris Agreement which lays out the rules for countries to meet their national climate targets through trading carbon credits. It has also signed Memorandums of Understanding with 14 countries and is in talks with over 20 countries to sign more of such agreements.
But to date, the host countries have yet to deliver any eligible credits.
“We’ve signed these agreements. But as yet, there are no credits. So we need to work together on this,” said Jacqueline Poh, managing director of the Economic Development Board (EDB), a government body under the country’s trade and industry ministry, at the launch of the Singapore Carbon Market Alliance (SCMA) on Wednesday.
“The SCMA aims to serve as the platform for service providers, buyers and government agencies to connect, share and collaborate. It is the first platform in Singapore focused on catalysing Article 6 credits,” said Poh.
Last month, Singapore sent a delegation to Ghana to generate a pipeline of carbon projects between the two countries. More of such “carbon credit mission trips” can be expected in the future, she said.
SCMA will also hold discussions around “promising classes of credits in Southeast Asia” like blue carbon and transition credits. The latter refers to a novel class of carbon credits to accelerate the phase-out of coal, which the Monetary Authority of Singapore (MAS) launched a separate global coalition for last year, alongside two pilot projects in the Philippines.
Poh clarified that “the alliance is not a marketplace,” adding that there is no point being so very far downstream in the carbon market and only reaching end buyers, when there is no one providing upstream solutions on the project development side.
IETA, formerly known as the International Emissions Trading Association, will provide guidance for sellers and project developers in SCMA to get their carbon credits endorsed by the International Carbon Reduction and Offset Alliance (ICROA) accreditation programme which it administers.
Over 50 members have joined the body, including oil and gas majors Chevron and Shell as well as the world’s two largest oil traders Vitol and Trafigura.
From 2024, large emitters in Singapore will be allowed to offset up to 5 per cent of their carbon tax obligations, which was raised to S$25 (US$19) per tonne this year. But Reuters reported last month that the government has offered refiners and petrochemical companies up to 76 per cent carbon tax rebates from 2024 to 2025.
It remains unclear what other sectors will be receiving rebates and how these allowances might affect demand for offsets by carbon tax-liable companies.
Tie-ups with regional carbon market associations
Earlier this month, Malaysia also formed a new carbon market association, which includes state-owned oil company Petronas and national bourse Bursa Exchange, to support its carbon market development.
The Malaysia Carbon Market Association has told Eco-Business that the country is in talks with its Thai and Indonesian counterparts to set up an Asean association for carbon markets, ahead of the country assuming chairmanship of the intergovernmental group in 2025.
“I haven’t tested the potential of whether an Asean association would be valuable, or whether there’s enough overlap with the Singapore programme… but it is something that we can look at more strategically,” said Dirk Forrister, president and chief executive of IETA.
“The priority at the outset is really stimulating that activity. If there is success with the first 20 partner countries, then there’s a big world out there of potential partners for getting to net zero.”
When asked about Malaysia’s recent proposal for an Asean standard for carbon projects, Forrister told Eco-Business that while there is potentially a role for regional standards, the “use of familiar standards may accelerate investment, as opposed to creating a new one that people have to conform to.”
“My current view is that we have high quality standards that are all being upgraded right now, that are applied globally. There is Verified Carbon Standard, Gold Standard, American Carbon Registry and Global Carbon Council. These are all approved for use in the international aviation programme CORSIA,” he said.
“But at the same time, going back to Colombia, there’s a local standard that some people use on forestry. But if they have international aspirations, they tend to go to Verra or Gold Standard, because that way your credit might be good both domestically and internationally. That international fungibility, especially for players in Singapore, will be a high premium product.”
