Singapore contributes US$15 million to support carbon credit projects aligned with Paris Agreement
It is the first Asian country to pitch in to the carbon transaction facility
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[SINGAPORE] The Republic will contribute US$15 million to support the development of Paris Agreement-aligned carbon credit projects, the Ministry of Trade and Industry said on Tuesday (May 19).
The amount will be across two facilities, which are part of a carbon transaction programme under the Global Green Growth Institute.
The treaty-based intergovernmental organisation supports sustainable economic growth in emerging markets.
Of the sum, US$10 million will go towards establishing the Singapore Article 6 carbon facility, which will finance the development of projects that satisfy Article 6 of the global climate action treaty.
Article 6 governs rules on the bilateral and international trading of carbon credits. Carbon credits generated from the projects funded by this facility will be used to meet Singapore’s national climate targets.
Under Article 6, credits come with corresponding adjustments. This means that the country selling the credits will have to increase its reported emissions by the amount it has transferred to Singapore, to avoid double counting.
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One carbon credit represents a reduction, avoidance or removal of one tonne of carbon dioxide equivalent.
The remaining US$5 million will be directed to an Article 6 readiness facility, which builds the capacity of Global Green Growth Institute members and partner countries to participate effectively in Article 6 carbon markets.
Minister of State for Trade and Industry Alvin Tan noted the Article 6 carbon credit market is of paramount importance in helping Singapore meet its climate goals, given its disadvantage in alternative energy.
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Speaking at a sustainable financing conference organised by GenZero, Temasek’s decarbonisation-focused investment platform, he said: “Singapore is not alone in this strategy. Sovereign buyers around the world are similarly looking to Article 6 markets to bridge their transition gaps.
“This is why international cooperation in this space is so critical.”
Singapore joined the Global Green Growth Institute to strengthen international collaboration on high-integrity Article 6 carbon markets and scale climate action.
This is in view of several barriers that have hindered progress in such carbon markets, from high transaction costs and limited institutional capacity in host countries to the lack of project development funding.
Singapore is the first Asian country to contribute to the carbon transaction facility, joining the likes of the United Kingdom, New Zealand, Norway and Sweden.
Coalition to raise corporate demand formed
Tan also announced the formation of a coalition that aims to raise corporate demand for high-quality carbon credits.
Supported by government agency Enterprise Singapore (EnterpriseSG), it has a target for corporates to purchase at least 10 million tonnes of carbon credits by 2030.
Called Action for a Resilient Climate, the coalition will also look at channelling financing towards carbon projects that generate these credits.
These include developing a financing facility to deploy capital to early stage, high-quality carbon projects.
The coalition seeks to increase investment in credible climate solutions and enable more corporates to participate in global carbon markets, a separate joint media release said.
Besides EnterpriseSG and GenZero, organisations such as Bain & Company, Climate Impact X, Mitsubishi Corp, Tencent and World Wide Fund for Nature Singapore are supporting the industry alliance.
In the immediate term, the coalition will focus on finding corporate buyers and aggregating demand from Asia. This will help high-quality carbon projects scale while increasing trust in global carbon markets.
It aims to bring together stakeholders to improve market integrity, strengthen practices and give companies greater confidence in purchasing high-integrity carbon credits.
It will support credible and efficient carbon credit procurement as well. This includes setting standards to guide carbon credit selection and use by drawing on frameworks from the Coalition to Grow Carbon Markets and the Integrity Council for the Voluntary Market. It will be done while retaining flexibility to support projects with high potential that are at earlier stages of recognition.
Further, the alliance will partner another buyers’ group – Symbiosis Coalition – that is working to purchase high-quality nature-based carbon removal credits.
“Both coalitions aim to identify areas of common interest, with a focus on exchanging best practices and promoting robust approaches to carbon credit quality standards, due diligence and contracting practices,” said the release.
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