Singapore is working with industry partners and experts to strengthen the trust in and verifiability of carbon offsets, as part of its ambitions to become a global carbon services and trading hub.

To this end, it is developing a classification system and guidelines to ensure the quality and credibility of carbon credits that firms can buy and sell, Second Minister for Trade and Industry Tan See Leng told Parliament yesterday.

The Republic had earlier announced under the Singapore Green Plan 2030 that it aims to be a leading carbon services and trading hub.

Singapore's robust legislative, commodities trading, and financial services foundation has put it in a very good position to develop an internationally trusted carbon services and trading ecosystem in Asia, said Dr Tan.

Carbon trading ecosystem in the region primarily focuses on the trading of voluntary carbon credits, which are used to offset emissions and help companies meet their voluntary corporate climate targets alongside other decarbonisation strategies, he added.

"The main risk for buyers in voluntary carbon credit markets has been on the integrity and the quality of such carbon credits," he said.

"The Government is working with industry, with international and local experts, as well as environment groups to address this risk."

Besides developing a carbon offsets taxonomy, the Emerging Stronger Taskforce's Alliance for Action on sustainability is also looking at setting up a marketplace and exchange to improve transparency in carbon credit transactions, he added.

Dr Tan was responding to a question raised by Nominated MP Janet Ang on how Singapore is working to ensure the credibility of carbon products to be traded through Singapore and reduce the country's exposure to the risks of carbon trading.

He also highlighted opportunities in the carbon services market, and how Singapore looks to anchor key sustainability activities such as in project development, carbon credits trading and financing here.

Addressing a follow-up question from Ms Ang on how the Government will raise awareness of carbon offsetting among companies here, Dr Tan said companies and individuals can purchase carbon offsets on a voluntary basis to manage their carbon emissions.

The key, he said, is to articulate and communicate this strategy to companies as they prepare to align themselves with Singapore's Green Plan 2030 and its reduced carbon emissions targets.

Dr Tan added that many companies looking to invest in Singapore, such as semiconductor players, have moved to source carbon credits, and it is an opportune moment for the Government and firms to work together towards fulfilling the country's green objectives.