SINGAPORE – The Republic is looking to buy its first set of nature-based carbon offsets to meet its 2030 climate change target, a move that observers say could help further efforts to conserve the planet’s remaining natural ecosystems amid global biodiversity decline.
This request for proposal – the first for credits here – drew 17 submissions before it closed in mid-February, and the Government is currently evaluating the proposals.
The Government had in September 2024 called on carbon project developers and credit suppliers to propose nature-based projects that can deliver at least 500,000 credits each.
One carbon credit represents one tonne of carbon dioxide that is either removed from the atmosphere, such as through a restoration effort, or prevented from being released, such as when a forest is saved from the axe.
This amount is equivalent to offsetting about 0.85 per cent of Singapore’s greenhouse gas emissions in 2022.
Singapore had earlier estimated that it would use high-quality carbon credits to offset about 2.51 million tonnes of emissions per year over this decade.
For example, in 2030, the country’s total greenhouse gas emissions are expected to be 62.51 million tonnes, and will be brought down to 60 million tonnes with the use of carbon credits.
Carbon credits can come from technological solutions, such as carbon capture, or from nature-based projects.
The Ministry of Trade and Industry (MTI) is expected to launch another call for proposals to find other high-quality credits later in 2025.
Nature-based credits could come from projects such as forest restoration and conservation, as well as sustainable agriculture.
Carbon markets can help to channel funds to often underfunded forest conservation and other nature preservation projects, as they provide a monetary incentive to replant a degraded area or keep an existing forest standing.
Under the Paris Agreement, countries can buy carbon credits from elsewhere to meet their climate change targets. This expands the list of ways that countries can cut emissions, as it means they no longer have to rely solely on domestic efforts.
For Singapore to use credits to offset its national emissions, however, the credits can be purchased only from countries it has carbon trading agreements with.
To date, the Republic has signed only three such pacts, called implementation agreements, with Papua New Guinea, Ghana and Bhutan. Such pacts lay out the carbon projects and methods that both the host country and Singapore have agreed on, as well as ways to address disputes that may arise when a project is under way.
Singapore is also progressing on negotiations with more than 15 other countries on this front, in hopes of advancing those partnerships into implementation agreements. These countries include Malaysia, Cambodia and Colombia.
But firms can propose credits from projects elsewhere, as long as it is in Asia, or in the more than 15 countries that Singapore is collaborating with on carbon markets, documents on the government procurement portal GeBiz stated.
But the applicants have to engage the host country’s government and secure written confirmation of its willingness to negotiate an implementation agreement with Singapore, added the documents seen by The Straits Times.
This request for proposal – by the National Climate Change Secretariat and MTI – may be awarded to either one or more firms under a five-year contract, stated those documents.
Among the 17 respondents, Temasek-backed investment firm GenZero is offering its credits at the highest price of $55 per tonne for a total sum of $27.5 million.
According to GeBiz, it is proposing a total of 500,000 credits from two projects. One involves restoring stretches of degraded land in Ghana’s Kwahu region and planting cocoa trees sustainably in shaded farms. The other project involves sustainable forestry in Paraguay.
The highest bidder is global commodities trader Trafigura, which put up an offer of nearly $300 million for an undisclosed amount of credits and their price.
Nature-based carbon projects have come under fire in recent years.
For example, a 2023 Guardian newspaper investigation claimed that more than 90 per cent of rainforest carbon offsets by a top certifier were “junk credits” that did not represent genuine carbon reductions.
Since then, however, efforts have been made globally to strengthen the standards of nature-based carbon credits, said a Singapore government spokesperson.
A key issue in determining the effectiveness of nature-based projects in tackling climate change, especially forest conservation and restoration projects, is how permanently they can remove or store carbon.
For example, saplings can die off before taking root, or wildfires can wipe out swathes of forests earmarked for protection. In these cases, emissions reversal occurs as previously stored carbon is released back into the atmosphere.
Leakage is another consideration. This occurs when a forest plot is conserved as a carbon project, but deforestation activity moves to a neighbouring plot instead.
Recent efforts to address leakage include assessing deforestation risk at a broader, jurisdictional level, instead of at a project level.
This means that all the forests in a state or province must be taken into account when setting a baseline level of deforestation for the region. The forests are monitored with government policies in place. Credits are issued when deforestation stays below the baseline.
“We welcome such developments, which will help to improve the quality of nature-based credits and strengthen trust in carbon markets,” said the spokesperson.
Singapore has adjusted its stance on nature-based carbon credits over the years.
For instance, when Singapore first published its eligibility list of carbon project methods it is willing to accept at the end of 2023, nature-based projects were listed, but they were primarily in the agricultural land management, blue carbon, and grassland sectors, the spokesperson said.
Such projects tend to be smaller in scale with clearer project boundaries, thereby reducing risks of leakage, for instance, the spokesperson added.
Under the request for proposal, Singapore is prepared to accept 13 nature-based project methods. Three of them involve jurisdictional approaches to forest conservation.
Mr Rueban Manokara, global lead of the carbon finance and markets task force at conservation group World Wide Fund for Nature, said: “Jurisdictional conservation projects have the potential to generate a larger amount of credits with higher environmental integrity. While increasing the access to carbon credits, it leads to knock-on benefits to the biodiversity of the protected forests, and the communities that depend on them.”
Ms Melissa Low, a climate policy observer and research fellow at the NUS Centre for Nature-based Climate Solutions, said: “Singapore investing in nature-based projects now will also help us understand the complexities associated with such projects, particularly around the risk of emissions reversals.”
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