Singapore has signed a carbon credits implementation agreement with Papua New Guinea at the COP28 climate summit, as reported by Strait Times on December 8. The agreement sets out a legally binding framework and processes for the generation and international transfer of carbon credits between the two countries. Under the agreement, project developers are required to cancel 2% of the authorized carbon credits at first issuance, to ensure additional contribution to the mitigation of global emissions. Moreover, a mandatory 5% share of proceeds from authorized carbon credits must be allocated to support climate adaptation initiatives in Papua New Guinea. Meanwhile, enterprises in Singapore can buy these credits to offset up to 5% of their taxable carbon emission. Notably, Singapore’s carbon tax will rise from SGD5 (USD3.6) per ton currently to SGD25 (USD18) during 2024-2025, before eventually reaching SGD80 (USD57) by 2030.

The implementation agreement is the outcome of a Memorandum of Understanding (MoU) for carbon markets collaboration inked between Singapore and Papua New Guinea at COP27. Under the MoU, the two countries will work towards an implementation agreement and identify mutually beneficial carbon credit projects that comply with the Article 6 of the Paris Agreement. Trading these credits through Singapore is expected to unlock new business opportunities in areas such as carbon services and sustainability solutions, fostering Singapore’s position as a carbon services and trading hub. To establish a diversified portfolio of carbon credits, Singapore has also signed similar implementation agreements with Bhutan, Paraguay, Ghana, and Vietnam.

Sources:

https://www.straitstimes.com/singapore/singapore-inks-first-carbon-credit-agreement-with-papua-new-guinea

https://www.channelnewsasia.com/singapore/implementation-agreement-singapore-papua-new-guinea-carbon-credits-3975011

https://carbonmarketwatch.org/2022/11/02/cop27-faq-article-6-of-the-paris-agreement-explained/

https://www.mse.gov.sg/resource-room/category/2022-11-14-speech-by-minister-grace-fu-mou-signing-ceremony-papua-new-guinea