Singapore – Malaysia MOUs on Carbon Credits, Carbon Capture and Storage; Renewable Electricity Pilot Study

At the 11^th Malaysia-Singapore Leaders’ Retreat on 7 January 2025, Singapore and Malaysia considered steps to address climate change challenges.

Carbon Credits and Carbon Capture and Storage

Two Memorandums of Understanding (“MOUs“) were signed:

1. Carbon credits cooperation. The MOU on carbon credits cooperation aligns with Article 6 of the Paris Agreement, which signals the intent of both countries to pursue voluntary cooperation to achieve the emissions reduction targets set out in their Nationally Determined Contributions.

    The MOU will lead to a legally binding Implementation Agreement that establishes a bilateral framework
    for the generation and international transfer of correspondingly adjusted carbon credits. Singapore and
    Malaysia will work together to identify and enable mutually beneficial carbon credits projects.

    This marks the sixth of similar bilateral MOUs that Singapore  has  signed  with  other  Southeast  Asian 
    countries, which are Cambodia, Indonesia, Lao PDR, the Philippines, and Vietnam. 

2. Cross-border carbon capture and storage (“CCS”). The MOU on cooperation in the field of CCS enables both countries to engage in bilateral discussions to enable cross-border CCS, and discuss components of a legally binding Government-to-Government agreement.

    The  MOU  also  facilitates  information sharing, best  practices, and  industry-led  research projects  on
   CCS.  This  evelopment will  support  the  growing need  to  clarify  the  role and  potential  for  CCS  in      decarbonisation  and  in achieving  net  zero emissions  by 2050, in the face of a continued rise in global
   greenhouse  gas emissions  under  current policies  condition  and  the recognition  in the near-term of a
   lack of mature technologies that can adequately address emissions from the hard-to-abate sectors.   

Renewable Energy

The Energy Exchange Malaysia (“ENEGEM“) project and the Joint Study on Renewable Energy Certificates (“RECs“) were also considered during the retreat.

1. ENEGEM project. On 9 December 2024, Sembcorp Power Pte Ltd (“SP Group“) signed a supply agreement to import 50 megawatts (MW) of renewable electricity from Malaysia’s Tenaga Nasional Berhad (“TNB“) to Singapore for a duration of two years, which had commenced on 13 December 2024. 

    This  is  the  first  power import  project  into Singapore  where  the  renewable  power  is coupled  with
    Renewable  Energy Certificates  (“RECs“).  To date,  approximately  15,000  megawatt-hours  (MWh) of
    electricity  has  been traded  thereunder.  Moving  forward,  SP  Group  and TNB are undertaking a joint
    feasibility study to expand interconnector capacity and infrastructure between Singapore and Malaysia.

2. Joint study on RECs by Singapore and Malaysia. The joint study will explore pathways towards a credible framework to recognise RECs associated with cross-border electricity trade, which will catalyse demand and investment for renewable energy projects in the region.

     The ENEGEM pilot and joint study on RECs demonstrate positive momentum in the expansion of cross-
     border electricity trade between Singapore and Malaysia.

Moving Forward

With the MOUs, and hopefully the binding Government-to-Government Agreements in the near future, we expect this to be a firm foundation on which cross-border electricity trade will be established. The progress between Singapore and Malaysia can also be a model for cross-border electricity trade in ASEAN.

Click on the following links for more information (available on the Ministry of Trade and Industry (“MTI“) website at www.mti.gov.sg)

• MTI Press Release titled “Agreements and MOUs exchanged between Singapore and Malaysia at the 11th Malaysia-Singapore Leaders’ Retreat”
• MTI Factsheets