High-quality international carbon credits will complement domestic emission reduction efforts to achieve net zero by 2050
JOINT NEWS RELEASE BETWEEN NEA AND MSE
Singapore, 4 October 2023 – The Ministry of Sustainability and the Environment (MSE) and the National Environment Agency (NEA) have set out the Eligibility Criteria under the International Carbon Credit (ICC) Framework.
2. The ICC Framework was introduced in November 2022, alongside the progressive increase in carbon tax rate under the Carbon Pricing (Amendment) Bill from the current S$5 per tonne of emissions to S$25 per tonne in 2024 and 2025, and S$45 per tonne in 2026 and beyond. This ICC Framework will allow carbon tax-liable companies to use eligible ICCs to offset up to five per cent of their taxable emissions from 1 Jan 2024.
3. The ICC Framework supports the development of carbon markets, by enabling the demand and supply of high-quality carbon credits to be matched. Companies can gain access to alternative decarbonisation pathways for hard-to-abate emissions, and in the process, channel financial resources to support emissions reduction or removal projects globally.
4. The ICC Framework will be aligned with Article 6 of the Paris Agreement, enabling Singapore to cooperate with other countries to support our respective climate targets. Effective international cooperation, such as through carbon markets, is an important part of Singapore’s efforts to achieve net zero emissions by 2050, given Singapore’s national circumstances as an alternative-energy disadvantaged country with limited domestic mitigation potential.
Ensuring High Environmental Integrity of ICCs
5. The Eligibility Criteria requires ICCs to represent emissions reductions or removals that occur within the timeframe specified under Article 6 of the Paris Agreement, and meet seven principles to demonstrate high environmental integrity. These seven principles were developed in consultation with more than 70 stakeholders across the industry and non-governmental organisations. They take reference from the most rigorous and reputable international standards, such as the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA [1]).
6. The seven principles and their definitions are listed in Table 1 below. Please see Annex A for an illustration of how a carbon credit project is assessed against each principle. As environmental integrity standards continue to evolve, the Eligibility Criteria will be reviewed periodically to align with developments in Article 6 of the Paris Agreement and high-integrity carbon markets.
Table 1: Eligibility Criteria for ICCs
Principle | Definition |
To comply with Article 6 of the Paris Agreement, the certified emissions reductions or removals must have occurred between 1 January 2021 and 31 December 2030. |
Not double-counted | The certified emissions reductions or removals must not be counted more than once in contravention of the Paris Agreement. |
Additional | The certified emissions reductions or removals must exceed any emissions reduction or removals required by any law or regulatory requirement of the host country, and that would otherwise have occurred in a conservative, business-as-usual scenario. |
Real | The certified emissions reductions or removals must have been quantified based on a realistic, defensible, and conservative estimate of the amount of emissions that would have occurred in a business-as-usual scenario, assuming the project or programme that generated the certified emission reductions or removals had not been carried out. |
Quantified and verified | The certified emissions reductions or removals must have been calculated in a manner that is conservative and transparent, and must have been measured and verified by an accredited and independent third-party verification entity before the ICC was issued. |
Permanent | The certified emissions reductions or removals must not be reversible, or if there is a risk that the certified emissions reductions or removals may be reversible, there must be measures in place to monitor, mitigate and compensate any material reversal of the certified emissions reductions or removals. |
No net harm | The project or programme that generated the certified emissions reductions or removals must not violate any applicable laws, regulatory requirements, or international obligations of the host country. |
No leakage | The project or programme that generated the certified emissions reductions or removals must not result in a material increase in emissions elsewhere, or if there is a risk of a material increase in emissions elsewhere, there must be measures in place to monitor, mitigate and compensate any such material increase in emissions. |
7. As the administrator of the carbon tax regime under the Carbon Pricing Act, NEA will develop processes to determine which ICCs adhere to the Eligibility Criteria before carbon tax-liable companies use the ICCs to offset their taxable emissions. More details on these processes and a list of eligible host countries, carbon credit programmes and methodologies that adhere to the Eligibility Criteria will be released by the end of this year.
Establishment of International Advisory Panel for Carbon Credits
8. An International Advisory Panel for Carbon Credits (IAPCC) has also been set up to advise the Singapore Government on Singapore’s policies relating to carbon credits, including matters on environmental integrity and carbon market development.
9. The Panel comprises six esteemed members with expertise across the fields of sustainability, international development and finance. The panel is chaired by Professor Bertil Andersson, President Emeritus of Nanyang Technological University (NTU). Membership of the IAPCC can be found in Annex B.
10. Professor Bertil Andersson said, “High-quality carbon credits have much potential to advance global climate ambition. It is important to promote transparent and robust carbon markets and uphold high environmental integrity of carbon credits. I look forward, together with my fellow panel members, to working with the Singapore Government in efforts to unlock carbon financing to accelerate the global net zero transition.”
Other Developments on ICCs
11. The establishment of the ICC Framework and the International Advisory Panel for Carbon Credits are among the latest initiatives to support Singapore’s position as a carbon services and trading hub. Other notable initiatives include:
12. Fostering international partnerships in the global carbon market to open new sources of ICCs that meet Singapore’s Eligibility Criteria.
a) Singapore has substantively concluded negotiations with Ghana and Vietnam on Implementation Agreements setting out the requirements and processes for Article 6 compliant carbon credit cooperation. Carbon tax-liable companies can source for ICCs generated under these Implementation Agreements to offset their taxable emissions.
b) Memoranda of Understanding (MOUs) to work towards Implementation Agreements have also been signed with other host countries: Bhutan, Cambodia, Chile, Colombia, Dominican Republic, Indonesia, Kenya, Mongolia, Morocco, Papua New Guinea, Peru and Sri Lanka. Singapore is also in active discussion with several other countries including Brazil, Brunei and Thailand.
13. Developing enabling infrastructure and the carbon services ecosystem. As part of the ICC Framework, NEA is developing a national registry to account and track the ICCs surrendered by taxable facilities in compliance with Article 6 rules.
14. NEA has signed MOUs with five carbon credit programmes to leverage on their capabilities in ensuring that ICCs issued under their programmes and subsequently used to offset taxable emissions are robustly validated, verified, issued and retired. These programmes include the Gold Standard, Verra’s Verified Carbon Standard, Global Carbon Council, American Carbon Registry and the Architecture for REDD+ Transactions. We intend to expand our partnerships to more programmes in the future.
15. Singapore has also partnered the World Bank and the International Emissions Trading Association (IETA) on the Climate Action Data Trust (CAD Trust) initiative. CAD Trust is developing a Data Dashboard to provide an open-source, decentralised blockchain infrastructure that allows the public to access information about carbon credits issued across different registries globally, enhancing transparency and minimising double counting risk. The Dashboard is expected to be launched later this year.
[1] CORSIA standards were developed and backed by a multilateral process led by the United Nations International Civil Aviation Organisation (ICAO) in consultation with green groups and experts. It was adopted in 2016 to address emissions from international aviation.
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Annex A
Illustration of how a Carbon Credit Project is Assessed under each Principle
1. Eligible ICCs must fulfil all principles under Singapore’s Eligibility Criteria.
2. Table A-1 illustrates a simplified assessment of a carbon credit project against each principle. This is meant to facilitate understanding, and is not representative of the actual processes applied in evaluating and verifying individual projects.
Table A-1: Simplified assessment of a carbon credit project against each principle
ICC Project type | Provision of biogas digesters that convert organic waste into clean energy for heating and cooking |
Principle under Singapore’s Eligibility Criteria | Key considerations in assessing this principle in relation to the ICC Project |
Not double-counted | Singapore has an Implementation Agreement in place with Country X, which sets out the requirements and processes for carbon credits to come with corresponding adjustments, i.e., the emissions reductions represented by the carbon credit used by carbon tax-liable companies in Singapore to offset their taxable emissions will only be counted towards Singapore’s climate targets. These emissions reductions will not also be counted towards Country X’s climate targets. |
Additional | Under a business-as-usual (BAU) scenario where the project did not occur, residents would have continued to collect and burn firewood to heat up their homes and cook food. This would have resulted in carbon emissions from deforestation. However, with the implementation of the project and the financing from carbon credits, households are provided with biogas digesters which ferment organic waste such as manure, offering an alternative source of clean energy in the form of biomethane. This reduces the reliance on firewood, and the resulting carbon emissions from deforestation. Hence, the project fulfils the “additional” principle. |
Real | With the implementation of the project, emissions have been reduced from a credible and conservative baseline, resulting in real emissions reductions. This baseline is the BAU scenario whereby firewood continue to be used, and was determined from field studies that ascertain the prevalence and entrenchment of firewood use as a community practice. |
Quantified and verified | Independent, third-party verifiers have quantified and verified the emissions reduced by the project during the entire project timeframe, based on a robust measurement, reporting and verification framework. |
Permanent | The emissions reductions derived from biogas digesters and resulting reduction in use of firewood are not reversible, as the energy needs of the rural community across the project timeframe have already been met through biomethane from biogas digesters instead of firewood or other emissive fuels. |
No net harm | Biogas digesters has resulted in no net harm, and even delivered co-benefits to local communities in Country X, such as cleaner air quality from burning biomethane, a smokeless fuel, instead of firewood. |
No leakage | The use of biogas digesters in the community did not lead to an increase in deforestation in other communities or elsewhere. Hence, the project does not cause leakage, i.e., an increase in emissions elsewhere. |
Annex B
Membership of the International Advisory Panel for Carbon Credits (IAPCC)
No. | IAPCC Members | Designation |
1 | Prof Bertil Andersson [Chairperson] | President Emeritus, Nanyang Technological University (NTU) |
2 | Ms Catherine McKenna | Chair, United Nations High-Level Expert Group on the Net-Zero Emissions Commitments of Non-State Entities |
3 | Prof Koh Lian Pin | Associate Vice President and Chief Sustainability Scientist, National University of Singapore (NUS) |
4 | Ms Patricia Espinosa | Chief Executive Officer and Founding Partner, Onepoint5 |
5 | Ms Usha Rao-Monari | Former Under-Secretary-General and Associate Administrator, United Nations Development Programme (UNDP) |
6 | Ms Yuki Yasui | Regional Director of Asia Pacific, Glasgow Financial Alliance for Net Zero (GFANZ) |
Annex C
Factsheet on ICCs and Article 6
Figure C-1: Life cycle of ICCs 
Article 6
1. Article 6 of the Paris Agreement sets out the framework for countries to voluntarily cooperate to achieve their Nationally Determined Contributions (NDCs) and advance global climate action and ambition. As an alternative-energy disadvantaged country with limited domestic mitigation potential, Singapore is keenly exploring cooperation on carbon markets.
2. The rules and guidelines under Article 6 facilitate the transfer of carbon credits between countries, and was finalised at the 26th United Nations Climate Change Conference (COP-26) in November 2021, following negotiations co-facilitated by Singapore and Norway. Under the Article 6 rules, the transfer of carbon credits between countries requires corresponding adjustments to be made to each country’s national greenhouse gas inventory. Corresponding adjustments prevent the double-counting of emissions reductions towards both the buyer and host country’s NDCs [2].
3. Article 6 also does not allow the use of carbon credits that represent emissions reductions or removals that occurred outside of the current NDC period. To illustrate, as countries’ 2030 NDCs encompass the years 2021 to 2030, countries ought not to trade carbon credits that represent pre-2020 emissions reductions or removals.
4. In compliance with Article 6 rules, Singapore’s Eligibility Criteria require ICCs to be authorised by the host country for corresponding adjustment, and represent emissions reductions or removals that occurred between 1 January 2021 and 31 December 2030.
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[2] Corresponding adjustment is the transfer of emissions reductions across countries’ greenhouse gas inventory. For example, when Country X (buyer) receives five tonnes of carbon dioxide equivalent (tCO2e) of carbon credits from Country Y (host country), Country Y (host country) has to add five tCO2e to its greenhouse gas inventory while Country X (buyer) will reduce five tCO2e from its greenhouse gas inventory.