Singapore announced criteria for international carbon credits that can be used by local companies to offset their emissions liable under the national carbon tax regime, the government said in a statement published Oct. 4.
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The clarification of eligibility criteria is expected to provide carbon taxpayers with clues in terms of what can be done to reduce their carbon tax bills, in the backdrop of a fivefold rise in carbon tax next year, from S$5/mtCO2e ($3.64/mtCO2e) currently to S$25/mtCO2e ($18.19/mtCO2e).
The statement was jointly made by Singapore's Ministry of Sustainability and the Environment (MSE) and National Environment Agency (NEA).
The eligibility criteria are consistent with the Paris Agreement's Article 6, and align with the widely accepted international standards, such as the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA), according to the statement.
As Article 6 required, the certified emissions reductions or removals must have occurred between Jan. 1, 2021 and Dec. 31, 2030, the statement highlighted.
The first criterion is "not double-counted". The government emphasized that, for eligible carbon credits, the certified emissions reductions or removals must not be counted more than once in contravention of the Paris Agreement.
This follows the "corresponding adjustment" requirement under Article 6. When Singapore imports a carbon credit from the host country of the emission reduction or removal project, the host country needs to make an authorization to give up using this carbon credit to meet its own climate targets committed under the Paris Agreement, namely the Nationally Determined Contributions or NDCs.
The second criterion is "additional", which means the certified emissions reductions or removals must exceed any emissions reduction or removals required by any law or regulatory requirement of the host country.
The third criterion is "real", which means, for eligible credits, the amount of emission avoided or removed must have been quantified in a realistic, defensible, and conservative manner.
The fourth criterion is "quantified and verified", which means the amount of emission avoided or removed should be calculated transparently and must have been verified by an accredited and independent third-party verification entity before the credit was issued.
The fifth criterion is "permanent", which means, for each eligible credit, the emission avoided or removed must not be reversible, or, if there is a risk that it may be reversible, there must be measures in place to monitor, mitigate and compensate.
The sixth criterion is "no net harm", which means the project or program that generated the certified emissions reductions or removals must not violate domestic laws and regulations as well as international obligations of the host country.
The seventh criterion is "no leakage", which means the project or program that generated the certified emissions reductions or removals must not incur a material increase in emissions elsewhere, or if there is such a risk, there must be measures in place to monitor, mitigate and compensate.
NEA, as the administrator of the carbon tax regime, will develop processes to determine which international carbon credits adhere to the eligibility criteria before carbon tax-liable companies use the credits to offset their taxable emissions, according to the statement.
The government authorities said more details on these processes and a list of eligible host countries, carbon credit programs and methodologies that adhere to the eligibility criteria will be released by the end of this year.
Singapore has substantively concluded negotiations with Ghana and Vietnam on implementation agreements setting out the requirements and processes for Article 6-compliant cooperation for carbon credits, according to the statement.
Singapore has also signed Memorandum of Understanding (MOUs) to work towards such cooperation with Bhutan, Cambodia, Chile, Colombia, Dominican Republic, Indonesia, Kenya, Mongolia, Morocco, Papua New Guinea, Peru and Sri Lanka. It has been in active discussion with Brazil, Brunei and Thailand.
Meanwhile, NEA has signed MOUs with five carbon crediting programs, the Gold Standard, Verra's Verified Carbon Standard, Global Carbon Council, American Carbon Registry and the Architecture for REDD+ Transactions.
An International Advisory Panel for Carbon Credits (IAPCC) has also been set up to advise the Singapore Government on Singapore's policies relating to carbon credits, the statement showed.
The government added, as environmental integrity standards continue to evolve, the eligibility criteria will be reviewed periodically.
Platts, part of S&P Global Commodity Insights, assessed CORSIA-eligible carbon credit price was $0.8/mtCO2e Oct. 3. The correspondingly adjusted, Article 6-compliant carbon credit is expected to have a significant premium.