Corporates may look forward to trading cross-border renewable energy certificates with new framework
This comes as Singapore gradually steps up its low-carbon electricity imports from its neighbours
CORPORATIONS in Singapore may one day be able to purchase renewable energy certificates (RECs) originating from its neighbouring countries, as plans to establish a cross-border trading framework are now under way.
The city-state is working with Australia, along with industry partners, to establish a framework that aims to provide the market confidence that the RECs purchased from renewable energy projects overseas are properly accounted for, announced the Ministry of Trade and Industry (MTI) on Tuesday (Oct 22).
This comes as Singapore gradually steps up the amount of low-carbon electricity it will be importing from its neighbours in South-east Asia.
RECs are tradeable assets that are issued when one megawatt-hour of electricity is generated and delivered to the electricity grid from a renewable energy resource. Companies are able to purchase these certificates to reduce their Scope 2 emissions, which are emissions arising from their use of electricity generated from power stations.
Currently, there are no well-established international standards that recognise RECs associated with cross-border trading of electricity, outside of single markets such as the European Union.
The Energy Market Authority (EMA) had previously launched standards governing measuring, reporting and verification of RECs. This is to ensure their credibility, especially when it comes to reducing the risk from double counting.
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However, these standards only apply to RECs produced and claimed in Singapore.
Given that Singapore has limited renewable energy resources, the amount of RECs that can be generated locally is also constrained. There would only be a small pool of such RECs for companies to buy to offset their Scope 2 emissions.
If plans to set up a framework for the cross-border trading of RECs within Asean comes to fruition, the supply of RECs that companies can purchase to credibly offset their emissions will grow.
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The viability of trading cross-border RECs also depends on the development of a regional power grid that can transmit the green electrons across countries.
It is also expected to catalyse demand for cross-border electricity trading projects, which will in turn drive investment to support the long-term viability of renewable energy projects in the region, said MTI.
In a separate announcement, companies in Singapore will soon have additional resources on how they can reduce their Scope 2 emissions with the launch of a new guidebook, the full version of which will be available in the first quarter of next year.
The guidebook, developed by EMA, Nanyang Technological University’s energy research institute, and Enterprise Singapore, will provide businesses with information on Singapore’s existing policies towards decarbonisation and the importance of managing their Scope 2 emissions.
It will include practical solutions for developing sustainability strategies that improve energy efficiency and lower electricity-related carbon emissions, noted a joint media statement released on Tuesday by the co-authors.
“Adopting such solutions can help businesses tap into new business opportunities, reduce costs, and enhance resilience against climate risks while supporting Singapore’s sustainability goals,” read the release.
The guide also aims to help small and medium-sized enterprises understand the regulatory requirements for sustainability reporting. Listed companies are required to report their carbon emissions as part of sustainability disclosure requirements from the 2025 fiscal year.
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