The Eligibility List sets out the approved host countries, carbon crediting programmes, and methodologies that meet the established Eligibility Criteria in Singapore.
On 19 December 2023, the Ministry of Sustainability and the Environment (MSE) and the National Environment Agency (NEA) in Singapore published the Eligibility List under Singapore’s International Carbon Credit (ICC) Framework, which took effect from 1 January 2024 and was published on Singapore’s Carbon Markets Cooperation website.
The Eligibility List followed the signing of an inaugural Article 6 implementation agreement with Papua New Guinea on carbon credits cooperation.
Under Article 6 of the Paris Agreement, countries may enter into an implementation agreement to cooperate to achieve their nationally determined contributions (NDCs) by trading Paris Agreement compliant carbon credits. Parties to the implementation agreement must also effect certain corresponding adjustment mechanisms to ensure that any emission reductions or removals are struck from the host country’s NDC accounts to prevent double-counting.
The Singaporean government introduced the ICC Framework in November 2022, in tandem with the progressive increase in carbon tax rate under the Carbon Pricing (Amendment) Act 2022 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. These measures aim to allow carbon tax-liable companies to use eligible ICCs to offset up to 5% of their taxable emissions.
In addition, the MSE and NEA set out the Eligibility Criteria under the ICC Framework, which requires ICCs to meet seven internationally recognised principles to demonstrate high environmental integrity (no double-counting, additional, real, quantified and verified, permanent, no net harm, and no leakage) and represent emissions reductions or removals that occur between 1 January 2021 and 31 December 2030.
List of Eligible Host Countries Under the ICC Framework
The Singapore government compiled an Eligibility List of approved host countries, carbon crediting programmes, and methodologies that meet the established Eligibility Criteria. The Eligibility List is subject to annual reviews to ensure ongoing relevance and to maintain stringent environmental integrity standards informed by the most recent scientific data and evidence. These reviews may potentially lead to the inclusion of new carbon crediting programmes and methodologies from the Eligibility List, or the removal of those that no longer meet the criteria.
The eligible carbon crediting programmes and methodologies included on the Eligibility List may vary across host countries depending on each nation’s unique criteria. The Eligibility List for a given host country will be established under the corresponding implementation agreement. Accordingly, each respective agreement will outline the structure and procedures for producing and transferring carbon credits in accordance with Article 6 of the Paris Agreement. It is worth noting that the Eligibility List excludes renewable energy projects (with a few exceptions) and Reducing Emissions from Deforestation and Forest Degradation (REDD/REDD+) projects or programmes in High Forest cover, Low Deforestation (HFLD) countries. HFLD countries are defined as developing countries with more than 50% forest cover and a deforestation rate of less than 0.22% per year.
Presently, pursuant to the implementation agreement signed with Papua New Guinea, there are four carbon crediting programmes in Papua New Guinea that fall under the Eligibility List:
- Gold Standard for the Global Goals
- Verified Carbon Standard
- American Carbon Registry
- Global Carbon Council
Notably, the Eligibility List only includes REDD+ projects from Papua New Guinea if they consider deforestation across entire jurisdictions. REDD+ projects limited to specific areas within a jurisdiction have been excluded from the Eligibility List.
A majority of the carbon credits available for sale in Papua New Guinea are yet to meet the established Eligibility Criteria. However, companies are only expected to inform the NEA by 30 June 2025 of the credits they intend to use as tax offsets for 2024, giving any pipeline projects in Papua New Guinea time to work towards the Eligibility Criteria.
The current status of Singapore’s carbon credit collaboration with other countries is as follows:
|Countries that have signed an implementation agreement
|Papua New Guinea
|Countries that have concluded negotiations on an implementation agreement
|Countries that have signed a memorandum of understanding
Singapore is also in discussion with several other countries in relation to potential carbon credit collaboration, including Brazil, Brunei, and Thailand.
Latham & Watkins will continue to monitor developments relating ESG regulatory updates in Singapore and globally.