Singapore carbon credit buying to grow as 2026 tax hike looms: participants

Singapore's compliance carbon market is expecting fresh buying interest in March as entities look to procure credits for the 2026 compliance cycle and beyond, according to market sources who spoke to Platts, part of S&P Global Energy, over Feb. 28-March 6. The market participants, including developers, buyers and traders, noted the expected uptick in activity.

"As power generation companies are able to predict with accuracy their carbon emissions, they are able to purchase for several years," a power generation company said on March 5.

A spokesperson from Tuas Power said on Feb. 27, "Tuas Power has been actively exploring the purchase of carbon credits up to the quantity allowed under the relevant carbon pricing regulation."

The Platts Singapore-eligible International Carbon Credits current-year assessment debuted at S$37/metric ton of CO2 equivalent ($28.94/mtCO2e) on Jan. 15. Platts is part of S&P Global Energy. The assessment has since hovered between S$35/mtCO2e ($27.38/mtCO2e) and S$40/mtCO2e ($31.29/mtCO2e), closing at S$35/mtCO2e ($27.38/mtCO2e) on March 5.

The assessment reflects the value of voluntary carbon credits that meet Singapore's high-integrity criteria, which allow tax-liable facilities to offset up to 5% of their taxable emissions from 2024.

Market participants said there is a shortage of eligible credits that meet Singapore's criteria under its International Carbon Credit framework for 2026, as no projects have been granted approval due to the stringent process.

Eligible carbon credits must be sourced from countries with which Singapore has signed carbon credit transfer agreements, namely the first Article 6 agreement and, consequently, an implementation agreement.

A Singapore-based consultant said in early February, she expects only a small number of Singapore-eligible carbon credits to be available by the end of 2026, though the market could suffer from oversupply thereafter as demand is limited.

Singapore's carbon tax is expected to climb approaching 2030, though weak global climate action is expected to keep the tax at the low end of S$50-S$80/mtCO2e ($39.11-$62.58/mtCO2e), Prime Minister Lawrence Wong said during his budget speech on Feb. 12, local news media reported.

The Platts Singapore-eligible International Carbon Credits third-year assessment closed at $43.50/mtCO2e ($34.03/mtCO2e) on March 5, reflecting a contango structure versus the first-year assessment.

Meanwhile, a Ghana-based developer who has applied for approval for his company's projects for ICC eligibility expressed doubts about the successful conclusion of the proposed buying.

"I still haven't seen a company that committed to any purchase," the developer said. "They say they're interested verbally, yet don't sign any offtake agreement. And the government keeps rolling over compliance obligations."

In September, Singapore said it plans to procure 2.17 million mtCO2e of nature-based carbon credits from four projects in Peru, Ghana and Paraguay, marking its first significant contract for international mitigation outcomes under Article 6.2 of the Paris Agreement.

Singapore's carbon tax rose to S$45/mtCO2e on Jan. 1, 2026, from the 2025 rate of S$25/mtCO2e.

Platts is part of S&P Global Energy.