Singapore looking to buy technology-based carbon offsets, more nature-based carbon credits

SINGAPORE - Singapore on Oct 31 made its second bid to source for carbon credits globally, with the Ministry of Trade and Industry (MTI) calling for proposals for credits from both nature-based and technological solutions.

Such credits will help the country meet its 2030 target to reduce harmful carbon emissions.

This follows an earlier call by the Government in 2024 for nature-based credits. In September, the Government said it will spend

$76.4 million

to buy more than two million tonnes of nature-based carbon credits from four projects in Ghana, Paraguay and Peru.

These projects range from the preservation of Peruvian forests to the reforesting of degraded pastureland in Ghana.

Technology-based carbon projects involve the use of technologies to prevent the production of planet-warming carbon dioxide or remove the gas from the atmosphere. Such technologies include direct air capture plants, for instance.

The latest call for proposals marks the first time that Singapore is sourcing for credits from technological solutions.

One credit represents one tonne of emissions that is either removed from the atmosphere or prevented from being released. Buyers can use these credits to offset their own emissions.

These credits are bought by the Government and companies that have to pay a carbon tax in Singapore, as they can offset up to 5 per cent of their tax bill with credits.

In a statement, MTI said the diversification of project types in the latest call for proposals will help Singapore tap a wider range of emissions reduction and removal efforts. These projects can deliver valuable co-benefits such as conservation of biodiversity, improved air quality and enhanced energy security, MTI said.

As a city-state with limited natural resources, the Republic had

previously projected

that it would need carbon credits to offset about 2.51 million tonnes of emissions a year over this decade to meet its climate target.

These credits will bring down total emissions projected for 2030 from 62.51 million tonnes to 60 million tonnes – the target Singapore committed to under the Paris Agreement.

In a notice on the Government’s procurement proposal, each project under the latest request for proposals has to deliver at least 25,000 tonnes per annum of carbon credits.

Developers are also required to deliver a diverse portfolio of carbon credits from three distinct project types. Experts previously told The Straits Times that buying credits from a range of projects can reduce the risks of a project not delivering on its climate benefits.

An ideal developer, for instance, could be involved in improving agricultural land management, rolling out energy-efficient cookstoves and capturing potent landfill gas.

For Singapore to be able to use carbon credits to meet its targets under the Paris Agreement, the credits must come from countries that it has implementation agreements with.

The Republic has so far inked such pacts with 10 countries – Bhutan, Chile, Ghana, Papua New Guinea, Peru, Paraguay, Rwanda, Thailand, Vietnam and Mongolia.

MTI said that project developers from these countries will be able to participate in the pre-qualification process, which closes on Jan 16.

The implementation agreements set out the framework for countries hosting carbon projects to sell carbon credits to buyer nations like Singapore.

A key element of such agreements is to ensure that the same emissions reduction effort is not double-counted, a scenario where both the buyer and host country count the same emissions reductions or removals towards their own targets.

Said MTI: “Singapore is home to a growing ecosystem of over 150 companies active in the carbon services and trading sector, operating in areas including carbon project financing, trading, verification and legal advisory.

“These companies stand to benefit as domestic and international demand increases the use of carbon credits.”