Govt to consider ‘phantom credits’ report, Verra’s response in finalising criteria for carbon tax offset

THE Singapore Government will take into account The Guardian’s report, which claimed that more than 90 per cent of rainforest carbon offset credits approved by Verra are “phantom credits”, as it finalises its criteria for credits that will be eligible for carbon tax offsetting in the country.

Minister for Sustainability and the Environment Grace Fu said this in Parliament on Tuesday (Feb 7) as she addressed whether the National Environment Agency’s (NEA) memorandum of understanding (MOU) with Verra will remain in force, in light of the development. Verra is the world’s largest certifier of carbon credits and administers the Verified Carbon Standard Programme.

Workers’ Party Member of Parliament (MP) Louis Chua had asked this, while questioning if the NEA had done its due diligence on carbon credits issued by Verra and Gold Standard, another certifier, before signing MOUs with the two standard bodies last year. (*see amendment note)

Fu said the two were selected as MOU partners as they are the largest carbon crediting programmes which have been accepted by the International Civil Aviation Organisation (ICAO), to issue carbon credits for compliance under the Carbon Offsetting and Reduction Scheme for International Aviation, or Corsia. 

Corsia standards have been developed and backed by a multilateral process led by ICAO, in consultation with green groups and experts, and are widely regarded as being among the most rigorous standards in the industry, she added.

Nevertheless, Fu said: “We take all scrutiny of carbon markets and projects seriously, and are committed to ensuring that carbon credits uphold high environmental integrity standards.”

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She also noted that the Government is not just aware of the report by the British daily newspaper, but also Verra’s response to the article.

Verra had strongly disputed the report, which is based off a nine-month investigation undertaken by The Guardian, German weekly Die Zeit and non-profit investigative journalism organisation SourceMaterial.

The report cited findings that about 94 per cent of credits produced by a selection of projects should not have been approved, and that the baseline scenarios of forest loss appeared to have been overstated by about 400 per cent in some cases, among others.

Verra, which is based in the US, argued that conclusions reached by the studies are incorrect and questioned the methodology, stating that its projects faced unique local threats that a standardised approach cannot measure.

Fu, meanwhile, said that the MOUs entered into are “not legally binding” and do not qualify for all international carbon credits issued by Verra and Gold Standard. Carbon credits are tradable certificates or permits, each meant to represent a reduction of one tonne in greenhouse gas emissions, to compensate for emissions made somewhere else.

She added that companies must ultimately meet the environmental integrity criteria set out by the Government, adding that a whitelist of acceptable credits will be published later this year. 

Fu had previously stated, when debating change to the Carbon Pricing Act last November, that the whitelist will highlight eligible host countries, carbon crediting programmes and methodologies. 

She also reiterated that the MOUs were signed with an aim of facilitating Singapore-based companies in exercising the option to use high-quality international carbon credits to offset up to 5 per cent of their taxable emissions from 2024.

Chua, who serves Sengkang Group Representation Constituency, followed up with a question on how the Government intends to ensure that Singapore-based companies buy only verified or legitimate credits. (*see amendment note)

To this, Fu said she does not believe that the Government should dictate this, since different companies have different purposes and motivations for buying credits, but “reputable companies” may want to monitor standards set up by governments. 

“If necessary, they may like to follow what the Government has stated in the whitelist and also in our methodologies,” she said.

She added: “Ultimately, I think all companies, players in the carbon credit markets, will have to look at standards, methodologies and assumptions therein...

“The carbon credit market is a very, very broad and extensive one, covers many, many sectors, and so companies will have to pick and choose the sector they are interested in, and pay attention on methodologies.”

*Amendment note: A previous version of this story incorrectly named Louis Ng as the MP who had fielded the parliamentary question. We are sorry for the error.