Singapore to launch 2nd request for proposal in 2025 to procure Article 6 carbon credits

Singapore will launch its second request for proposal (RFP) to procure Article 6-compliant carbon credits later in 2025, the trade and industry ministry said March 6, without specifying the types of Article 6 credits it will seek.

This announcement comes weeks after the city-state closed its first RFP to source high-quality, nature-based carbon credit supplies. The RFP has sent a clear signal to Article 6 project developers and traders regarding Singapore's requirements as a pilot buyer country in this emerging market.

"Our decarbonization initiatives are an important factor in companies' investment decisions," said the ministry's Second Minister Tan See Leng during Singapore's Committee of Supply Debate in Parliament.

A spokesperson from Singapore's National Climate Change Secretariat (NCCS) told Platts, part of S&P Global Commodity Insights, that they "are currently evaluating the proposals [for the first RFP] and will publish the outcome in due course."

Singapore's requirements

Singapore's recently concluded call for proposals occurred at a time when carbon credits have been under public scrutiny, facing criticism regarding their reliability in genuinely reducing emissions.

Additional concerns from market participants include policy risks, particularly uncertainties about whether Article 6 credits can be authorized by host countries and transferred to buyer countries, as nature-based credits are often considered sovereign assets.

"The proposals we select must meet our environmental integrity criteria and must be supported by the host countries to address policy risks," the NCCS spokesperson said, adding that the contractor must also implement risk management measures and backup plans to secure alternative carbon credits as part of this RFP.

Following the closure of the initial RFP, some industry participants have said that the Prime Minister's Office appears to favor projects that adopt local monitoring, reporting and verification (MRV) services, which could entail relatively high costs. Meanwhile, the requirement for a high-security deposit has also discouraged some companies from submitting offers.

In response to industry feedback gathered by Platts, the NCCS spokesperson said that the RFP does not mandate tenderers to collaborate with local MRV companies or deploy costly technologies.

"The RFP also provides for tenderers to put forward alternative proposals, which we will evaluate accordingly. We will take into account the feedback received from this RFP for subsequent RFPs," the NCCS spokesperson said.

Oversupply concerns

Considering Singapore's relatively small domestic emissions of under 60 million mtCO2e, market participants said Singapore could have sourced more Article 6 credits than needed, especially as these credits can only offset up to 5% of taxpayers' emissions under the local carbon tax scheme.

"I do not think oversupply is a way to think about it, but we see increasing optionality," GenZero Vice President of Policy and Analytics Edmund Siau said at Carbon Forward Asia on March 4.

Siau said the city-state's purpose is to leverage its domestic carbon pricing policy to create a diverse market that supports decarbonization projects globally.

GenZero is a decarbonization investment platform under Singapore's state investment company Temasek. One of the offers submitted during the initial RFP includes supplying carbon credits from the Kwahu landscape restoration project in Ghana that is financed by GenZero.

The initial RFP attracted 17 offers, some from international energy and commodity traders such as Trafigura, Shell, Mercuria and PetroChina.

The Chinese government has not released any policy yet regarding Article 6 implementation. When asked about PetroChina's participation in Singapore's RFP, Jay Mariyappan, the head of carbon and renewables, said that the company needs to ensure its assets comply with carbon pricing schemes in the EU, US and Singapore. He added that PetroChina has implemented various strategies to optimize compliance costs.

Meeting climate targets

In addition to procuring Article 6 credits, Singapore has been actively sourcing renewable electricity imports and maximizing domestic renewable deployment to meet its Nationally Determined Contributions (NDCs), which are climate targets submitted to the UN, the ministry's Tan said in the parliament.

"Electricity trading is crucial to achieving our climate goals. We are working toward progressing the first batch of electricity import projects with conditional licenses to reach final investment decisions," Tan said, reaffirming the city-state's target of importing about 6 GW of renewable electricity by 2035.

Singapore has achieved the 2025 deployment target of 1.5 GW of renewables ahead of schedule and is on track to achieve the 2030 target of at least 2 GW, according to Tan.