DUBAI - Singapore has inked its first agreement with Papua New Guinea on Dec 8 that will allow companies in the Republic to purchase carbon credits from projects there to offset part of their carbon tax liability.
Minister for Sustainability and the Environment Grace Fu, who signed the agreement with her counterpart Simo Kilepa, Papua New Guinea’s Minister for Environment, Conservation and Climate Change, said the agreement was significant as both countries are from the Alliance of Small Island States, or Aosis.
The agreement, signed at the COP28 climate conference, will require project developers to cancel 2 per cent of the authorised carbon credits to go towards the mitigation of global emissions, and 5 per cent of the share of proceeds of authorised carbon credits to go towards climate adaptation in Papua New Guinea, said Ms Fu, who was speaking at the Singapore Pavilion.
“This ensures that we can advance both mitigation and adaptation actions required to deliver the Paris Agreement goals,” she added.
The carbon crediting projects under the agreement will also bring sustainable development benefits to local communities, including the creation of sustainable jobs, improved energy security and reduced pollution.
From 2024, Singapore’s carbon tax will increase from $5 per tonne currently to $25 per tonne.
If the carbon projects meet Singapore’s seven eligibility criteria – which include real and permanent emissions reductions – companies in the Republic will be able to purchase these credits to offset up to 5 per cent of their taxable emissions.
To create a diverse portfolio of credits, Singapore has also substantively concluded similar implementation agreements with Bhutan, Paraguay, Ghana and Vietnam.
Ms Fu added that the agreement will set up a bilateral framework to allow for the transfer of carbon credits between the two countries, with measures in place to prevent double counting.
“This will create the avenue for worthwhile climate mitigation projects to be financed,” she added.
“High-integrity carbon markets can contribute to much-needed climate action globally, and it is imperative that the environmental integrity of carbon credits under the implementation agreement meets internationally recognised standards,” said Ms Fu.
