SINGAPORE – The Republic could be buying its first set of carbon credits to offset its greenhouse gas emissions in 2025, with the Ministry of Trade and Industry (MTI) set to launch a request for proposals to procure eligible credits later in 2025.
Second Minister for Trade and Industry Tan See Leng gave this update in Parliament on March 6, during the debate on his ministry’s budget.
Responding to Mr Edward Chia (Holland-Bukit Timah GRC) and Ms Tin Pei Ling (MacPherson), who asked for an update on Singapore’s carbon market initiatives, Dr Tan pointed to how Singapore had on Feb 28 finalised a bilateral carbon trading agreement with Bhutan.
This is the third such deal that Singapore has – the other two were inked with Papua New Guinea and Ghana.
Such bilateral pacts – called implementation agreements – will pave the way for Singapore to eventually buy carbon credits from projects in the three countries to meet its climate targets under the Paris Agreement.
The framework that allows countries to cooperate with one another through the international carbon market was agreed upon in 2021. Singapore has yet to purchase any carbon credits to offset its emissions, although it has since then been actively laying the groundwork to enable it to do so.
Being alternative-energy disadvantaged, Singapore has limited options to decarbonise on its own. Buying credits from elsewhere, such as Ghana, Bhutan or Papua New Guinea, will offer Singapore alternative pathways to shrink its carbon footprint.
According to the emissions projections in a climate report that Singapore submitted to the UN in late 2024, the Republic will start to use carbon credits to offset its emissions this decade.
The biennial transparency report showed that Singapore’s emissions in 2025 are expected to be 62.21 million tonnes (Mt), although the use of eligible carbon credits can bring this down to 59.7Mt. For context, its total greenhouse gas emissions in 2022 amounted to 58.59Mt.
Singapore’s total emissions in 2028 will reach a peak of 64.43Mt, but will be brought down to 61.92Mt with the use of carbon credits. By 2030, total emissions will drop to 62.51Mt, and be brought down further to 60Mt – which is the Republic’s emissions target for that year.
By 2035, Singapore aims to reduce its emissions to between 45Mt and 50Mt, down from the 60Mt in 2030. The eventual goal is for the country’s emissions to reach net zero by mid-century.
The Republic is expected to use these credits only as a last resort, to shave off the residual emissions to meet its climate targets.
Dr Tan also said that Singapore will be staying the course on climate action despite geopolitical developments, adding that the nation’s decarbonisation initiatives are an important factor in companies’ investment decisions.
The Government will continue to support businesses in this area with various initiatives.
“We will calibrate our speed of adoption for energy technologies and solutions. For less mature solutions, we will strengthen research efforts and accelerate commercialisation,” Dr Tan said.
To that end, the Government will be committing $62.5 million to develop a test facility that will enable companies to translate prototypes from laboratory to real life. Its focus will be on accelerating emissions-cutting technologies that are harder to scale up.
For example, hydrogen has the potential to be a low-carbon fuel in future, though high adoption costs and technical challenges remain, noted Dr Tan. This is where the new facility can come in to help.
This facility, called the Low-Carbon Technology Translational Testbed, will be housed on Jurong Island and hosted at the A*Star Institute of Sustainability for Chemicals, Energy and Environment.
The new facility will translate and scale up different emerging low-carbon technologies in areas such as carbon utilisation and hydrogen, to bring them closer to full-scale real-world deployment, said A*Star in a statement on March 6.
It will focus on projects like turning carbon dioxide into useful products such as sustainable aviation fuel, and breaking down ammonia to release hydrogen.
“(The test bed) will reduce the time and resources required for technology optimisation, validation and deployment, thus accelerating commercialisation and adoption of these technologies by industry,” added A*Star.
“Companies will be able to test their technologies and processes much faster and at a lower cost than if they had constructed a test bed just for themselves,” it said.
Dr Tan noted that international and local companies such as heavy machinery maker IHI Corporation and low-carbon fuels start-up CRecTech have expressed interest in using the translational test bed.
Companies will be able to access the $62.5 million facility through pay-per-use projects to demonstrate their tech, or by collaborating with the A*Star institute on Jurong Island.
As Singapore pushes on with its emissions-cutting measures – from importing greener electricity to exploring nuclear energy – Dr Tan acknowledged MPs’ concerns about the potential impact of decarbonisation on energy costs.
Energy experts previously told The Straits Times that the public may have to brace themselves for higher electricity costs as the country seeks to meet its 2035 climate goals.
“For households, we will provide support through measures such as U-save rebates. For businesses, we will co-fund investments in energy efficiency through initiatives like the Energy Efficiency Grant,” said Dr Tan.
He added: “Our aim is to strike the right balance between decarbonising towards net zero, ensuring our energy security and maintaining cost-competitiveness.”
Carbon tax revenues will also be channelled back to decarbonisation solutions. “We do not expect, therefore, to derive additional net revenue from the carbon tax in this decade,” he said.
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