On 23 May 2025, Singapore signed an Implementation Agreement on carbon credits collaboration under Article 6 of the Paris Agreement with Paraguay (“Implementation Agreement“).
Key Points under the Implementation Agreement
- The Implementation Agreement will create a legally binding bilateral framework for the international transfer of correspondingly adjusted high-integrity carbon credits aligned with Article 6 of the Paris Agreement.
- Both countries will set out the process to seek authorisation for carbon credit projects and corresponding adjustments for implemented mitigation outcomes. More information will be provided in due course.
- Correspondingly adjusted carbon credits authorised under this Implementation Agreement may be used for various purposes, such as:
- to offset up to 5% of a company’s taxable emissions under Singapore’s International Carbon Credits (“ICC“) framework from 1 January 2024, subject to eligibility; and
- to comply with binding mandates such as Nationally Determined Contributions (NDCs) and other international mitigation purposes, e.g. the requirements under the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA).
- Potential project developers should take note of Singapore’s commitments under this Implementation Agreement:
- to channelling the value equivalent to 5% share of proceeds from authorised carbon credits towards climate adaptation measures in Paraguay; and
- to having 2% of the correspondingly adjusted carbon credits authorised under this Implementation Agreement cancelled at first issuance. Such cancelled carbon credits cannot be sold, traded, or counted towards any country’s emission targets.
Carbon market enterprises and companies impacted by the ICC framework may reach out to our team regarding this development.
Small and medium-sized enterprises (SMEs) can also tap on our Environmental, Social, and Governance (ESG) legal fee subsidy for environmental or climate related work under the Sustainability Legal Catalyst Programme with Enterprise Singapore, subject to the applicable terms and conditions. You can reach out to us at [email protected].
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