SINGAPORE – Chile has become the fifth country that can sell carbon credits to Singapore, after both nations inked a carbon trading agreement on April 7.
Singapore has similar pacts with Bhutan, Ghana, Papua New Guinea and, most recently, Peru – agreed on April 1 – to eventually offset some of its national greenhouse gas emissions.
Under the Paris Agreement, countries can buy carbon credits generated in other nations or regions to meet domestic climate targets. Singapore had earlier estimated that it would use high-quality carbon credits to offset about 2.5 million tonnes of emissions per year from 2021 to 2030.
For example, in 2030, the country’s total emissions are expected to be 62.51 million tonnes, and will be brought down to 60 million tonnes with the use of carbon credits.
Credits used to offset national emissions can be purchased only from carbon projects in countries that have bilateral pacts, formally known as implementation agreements, with Singapore. The Republic has not yet purchased such offsets.
Through these agreements, carbon tax-liable companies here can also buy carbon credits from projects in partner countries to offset up to 5 per cent of their taxable emissions.
One carbon credit represents one tonne of carbon dioxide that is either removed from the atmosphere, or prevented from being released, such as when a forest is saved from logging.
The implementation agreement on April 7 was signed by Minister for Sustainability and the Environment Grace Fu and Chile’s Minister of Foreign Affairs Alberto van Klaveren, who is on an official visit to Singapore from April 6 to 8.
This is the latest in a series of developments in carbon markets in 2025.
In another move, the Republic is looking to buy its first set of nature-based carbon offsets. It called on carbon project developers and credit suppliers to propose nature-based projects that can deliver at least 500,000 credits each.
The request for proposal drew 17 submissions before it closed in mid-February, and the Government is currently evaluating them.
The Ministry of Trade and Industry (MTI) is expected to launch another call for proposals to find other high-quality credits later in 2025.
Singapore and Chile marked 45 years of diplomatic relations in 2024. Both countries have worked together on various initiatives, said Ms Fu, citing the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, Pacific Alliance-Singapore Free Trade Agreement and Digital Economy Partnership Agreement.
“This implementation agreement will unlock additional mitigation potential in Chile and will help Singapore meet our climate target while bringing climate investments into Chile. I look forward to active private sector participation when we operationalise this agreement,” she added.
Singapore has also agreed to voluntarily contribute 5 per cent of the proceeds from the carbon credits it eventually buys to help the current five carbon project-hosting countries reduce the impact of climate change.
There are two main types of carbon credits – nature-based and technological, such as carbon capture. Nature-based credits could come from projects such as forest restoration and conservation, as well as sustainable agriculture.
The carbon projects authorised under the bilateral deal will promote sustainable development and deliver benefits to local communities in Chile, such as new jobs and better energy security, said MTI in a statement on April 7.
Apart from the five deals, Singapore is also progressing on negotiations with more than 15 other countries on this front, in the hope of advancing those partnerships into implementation agreements. They include Malaysia, Cambodia and Colombia.
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