Temasek’s GenZero carbon project among four contracted to offset Singapore’s emissions
Republic will buy total of 2.175 million carbon credits from these initiatives for S$76.4 million
[SINGAPORE] A carbon project in Ghana, which has Temasek’s decarbonisation-focused investment platform among its investors, was one of four that was awarded a contract by the Singapore government to offset national emissions.
A total of 2.175 million carbon credits will be generated across all four projects located in Ghana, Peru and Paraguay, which Singapore will buy for S$76.4 million, said the Ministry of Trade and Industry (MTI) and the National Climate Change Secretariat (NCCS) in a joint media statement on Tuesday (Sep 16).
The Ghana project, which received an investment of US$30 million from GenZero and its developer AJA Climate Solutions in June 2023, was awarded a project size of S$15 million, according to tender documents seen on the government’s procurement portal GeBiz. The funding will go towards restoring degraded land in the African country.
Carbon project developer Boomitra was awarded a contract worth S$22.8 million for deploying sustainable management practices to restore grassland in Paraguay.
Singapore will also buy S$38.7 million worth of carbon credits from two forest protection programmes in Peru under the United Nations-backed Redd+ framework, which are financed by energy and commodities company Mercuria Asia Resources. Redd stands for “Reducing Emissions from Deforestation and Forest Degradation”.
The purchase of 2.175 million carbon credits will be used to offset the same amount of carbon emissions from 2026 to 2030. One carbon credit is meant to represent one tonne of carbon emissions.
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These contracts mark the first international transfer of carbon credits into Singapore to meet its climate targets, a process governed under Article 6 of the Paris Agreement.
Singapore has set a climate target – known as nationally determined contributions – to be net-zero by 2050, but has interim targets of reducing emissions to about 60 million tonnes by 2030.
The government had previously estimated that it would have to offset about 2.51 million tonnes of carbon dioxide equivalent (tCO2e) every year between 2021 and 2030 to achieve this target.
Total emissions are expected to peak at 64.4 million tCO2e in 2028, though this will be reduced to 61.9 million tCO2e through carbon offsets. By 2030, total emissions are projected to drop to 62.5 million tCO2e, and be brought down further to 60 million tonnes.
Nature-based credits
These three bids beat 14 other submissions in a request for proposal launched in September last year. It was the first time the clean-energy-disadvantaged city-state put out a tender for the purchase of nature-based carbon credits, which received bids totalling more than S$1.3 billion when it closed in February this year.
Nature-based carbon credits are generated from projects that protect, sustainably manage or restore natural ecosystems. Examples of such projects are reforestation, afforestation, improved forest management, as well as the protection of wetlands or coastal zones.
These solutions globally have the potential to offer net emissions reductions equivalent to more than 10 gigatonnes of carbon dioxide per year, said MTI and NCCS.
They added that Singapore had sought to identify projects from around the world that could generate high-quality nature-based credits with high environmental integrity through this tender.
“The projects have been selected based on the quality of the proposal, the tenderer’s track record, and price competitiveness,” read the joint statement.
The contracted projects must use methodologies that have been agreed between Singapore and the host country. They must also receive authorisation under the carbon credit transfer agreement that the city-state has entered with the host country.
Thus far, Singapore has signed nine such agreements. The latest partnership with Vietnam was also inked on Tuesday.
Many benefits
Key features of the four awarded projects include ensuring additionality, low leakage risks, permanence and co-benefits to surrounding communities, said MTI and NCCS.
Additionality refers to a principle that a carbon project must deliver emission reductions or removals that would not have occurred without the project’s intervention, while leakage describes a situation where environmentally harmful activities have been shifted to another location or project. Permanence refers to whether the carbon reductions or removals can be maintained over the long term.
MTI and NCCS said that these four projects aim to reduce carbon emissions from deforestation, increase carbon sequestration of soil organic carbon stock in grasslands through sustainable management practices, and remove carbon emissions through the reforestation of degraded pastureland.
They added that carbon credits help to channel funds towards the preservation or regeneration of host countries’ natural carbon sinks and biodiversity, safeguarding of local communities’ access to income from sustainable land use, and provision of ecosystem benefits such as improved water quality.
Singapore’s supply of Article 6-compliant carbon credits will come from taxable facilities, as well as direct procurement from government agencies. A second request for proposal to procure Article 6-compliant carbon credits will be launched later this year, read the statement.
Under Article 6 of the Paris Agreement, the international transfer of carbon credits between countries must result in corresponding adjustments. This means that the emissions being offset are counted only by the country that bought the credits; the country that produced the credits cannot use them to meet its own climate targets.
Besides being correspondingly adjusted, the carbon credits will also have to meet the environmental integrity criteria previously laid out by the authorities.
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