Singapore, Thailand sign Article 6 deal in boost to ASEAN carbon market

Singapore signed an implementation agreement under Article 6 of the Paris Agreement with Thailand, its first such deal with an ASEAN country, the countries said in a joint statement Aug. 19.

This comes amid increased focus on the adoption of carbon markets across Southeast Asia, and further reiterates Singapore's importance in the growth of carbon markets.

The implementation agreement sets out a legally binding bilateral framework for the international transfer of correspondingly adjusted and high-integrity carbon credits aligned with Article 6 of the Paris Agreement.

Article 6 of the Paris Agreement enables countries to transfer carbon credits earned from eligible domestic projects to other countries, helping them meet their climate targets. Article 6.2 sets out a system of national accounting for greenhouse gas emissions, with common principles that countries can adopt to allow cross-border exchanges of credits.

"Both countries will set out the process to seek authorization for carbon credit projects and corresponding adjustments for implemented mitigation outcomes," the statement added.

Article 6.2 activity

This cooperation is "a clear signal that ASEAN can drive high-quality, internationally aligned greenhouse gas mitigation," said Thailand's Minister of Natural Resources and Environment Chalermchai Sri-on during the signing ceremony.

"We value Singapore's partnership in unlocking climate finance and advancing credible carbon credit projects in Thailand – from forestry and clean energy to zero-emission transport – that deliver environmental, economic, and social benefits for our people," the minister added.

This deal could help boost Thailand's role as a potential regional hub for such projects and could accelerate the adoption of similar frameworks by other ASEAN members.

In early-2024, Switzerland and Thailand completed the first-ever transfer of Article 6.2 carbon credits, when the Swiss-based KliK Foundation purchased 1.906 million Internationally Transferable Mitigation Outcomes, or ITMOs, from the Thai company Energy Absolute Public Co. Ltd. for the Bangkok E-Bus Program.

This is Singapore's eighth Article 6 implementation agreement, following deals with Papua New Guinea, Ghana, Bhutan, Peru, Chile, Rwanda and Paraguay.

Several Asian countries are seeking to attract climate finance while meeting nationally determined contributions under the Paris Agreement.

Activity under Article 6.2 is starting to grow sharply in 2025 after key rules and guidelines for international carbon trading under Article 6 of the Paris Agreement were formally adopted by world leaders on Nov. 23 at the UN Climate Change Conference in Baku, Azerbaijan.

Many countries see Article 6 as a key tool to stimulate decarbonization and private investment, which can lead to reductions in greenhouse gas emissions.

Platts, part of S&P Global Commodity Insights, assesses a wide range of high-quality voluntary carbon credits funding projects that demonstrate additionality, permanence, exclusive claim and co-benefits.

The value of these credits can vary from CORSIA-eligible offsets (Platts CEC, $22/mtCO2e) to household device offsets ($3/mtCO2e) and blue carbon offsets ($27.50/mtCO2, all Aug. 18 assessments).