COP31: Financing strategies, policy handbook launched by Singapore and partners to strengthen carbon markets

[SINGAPORE] Singapore launched several initiatives that could advance carbon markets at the United Nations climate summit in Antalya, Turkey, on Thursday (Nov 12).

A partnership between Singapore and the World Bank – known as the Singapore Carbon Markets for Development Programme – has come up with an activity plan for between 2027 and 2029 that could help developing countries build the infrastructure and capabilities to participate effectively in carbon markets.

Unveiling the activity plan on the sidelines of the COP31 summit at the Singapore Pavilion, Singapore’s ambassador for climate action, Ravi Menon, said that the programme aims to address three gaps in carbon markets: Weak and fragmented market infrastucture, difficulties securing financing especially for smaller carbon projects, and lack of capacity.

The activity plan will develop a carbon registry toolkit and provide digital monitoring, reporting and verification capabilities to carbon projects that are critical for future carbon markets, including those in regenerative agriculture, blue carbon and community-based clean energy.

To address the issue of financing, the activity plan is developing and testing ways to aggregate projects and credits.

When smaller projects are brought together into larger portfolios, it spreads transaction costs across many projects, and creates opportunities big enough to attract investors and buyers, said Menon.

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“Aggregation simplifies access for buyers, and makes a portfolio of projects more investable,” he added.

There are already examples of such aggregation to help viable projects get off the ground sooner.

One example is the Bhutan Climate Fund, which aims to raise US$25 million, and has a pipeline of about 4.6 million tonnes of carbon credits.

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Another is a carbon fund jointly developed by Brazilian bank Banco do Brasil and the World Bank, which provides upfront financing to forestry and agricultural projects against the credits they will generate later.

As for capacity, groundwork has been laid to start a knowledge academy with Nanyang Technological University, where policymakers can receive training on carbon markets.

Growing corporate demand for carbon credits

Separately, a government-led coalition aimed at growing carbon markets also launched a guide at the summit which lays out the policy levers governments can use to grow corporate demand for high-integrity carbon credits.

Some of these include:

• setting clear expectations on how corporates can use carbon credits in their climate strategies,
• ensuring that buyers can identify and source high-integrity carbon credits, and
• pooling buyer demand through centralised platforms to reduce costs and risk.

The policy recommendations aim to support countries’ demand growth for carbon credits, foster international consistency across policy approaches, and incentivise businesses to invest.

The handbook was endorsed by 14 governments on Thursday at the COP31 climate summit as a “vital tool for government climate action”, as they signed the Antalya Statement, which highlighted the role high-integrity carbon credit markets can play in directing capital to climate action.

The statement, which was issued by The Coalition to Grow Carbon Markets, was signed by countries including Canada, France, Indonesia, Ireland and Singapore.

The policy handbook comes after the coalition, which was founded by Singapore, the UK and Kenya in June last year, launched a set of sovereign-backed shared principles on how companies can utilise carbon credits to offset their emissions.