Singapore signs first implementation agreement with Papua New Guinea to collaborate on carbon credits under Article 6 of Paris Agreement

30 January 2024

On 8 December 2023, the Ministry of Trade and Industry (“MTI”) issued a press release announcing that Singapore and Papua New Guinea signed an implementation agreement (“Agreement”) on carbon credits cooperation under Article 6 of the Paris Agreement.

The Agreement was signed on the sidelines of the 2023 United Nations Climate Change Conference, also known as the Conference of Parties (COP28). The Agreement comes after both countries signed a memorandum of understanding on the sidelines of COP27 in 2022 to collaborate on carbon credits.

This marks the first implementation agreement for Singapore. The Agreement sets out a legally binding framework and processes for the generation and international transfer of carbon credits aligned with Article 6 of the Paris Agreement, between Singapore and Papua New Guinea.

This collaboration will advance both countries’ climate ambition and help to channel financing towards additional mitigation efforts through carbon credit projects which would otherwise not be possible. The carbon credit projects authorised under the Agreement will also promote sustainable development and generate benefits for local communities, such as creation of jobs, access to clean water, improved energy security, and reduction of environmental pollution.

As part of Singapore’s Article 6 cooperation, project developers will be required to cancel 2% of the carbon credits authorised under the Agreement at first issuance to ensure additional contribution to overall mitigation of global emissions. They will also be required to make a contribution equivalent to 5% share of proceeds or authorised carbon credits towards climate adaptation in Papua New Guinea.

Singapore is also supporting the development of carbon markets, by enabling the demand and supply of high-quality carbon credits to be matched. Under Singapore’s International Carbon Credit (“ICC”) framework, Singapore-based carbon tax-liable companies can source for eligible ICCs generated under this Agreement to offset up to 5% of their taxable emissions. Trading these credits through Singapore will help to unlock new business opportunities in areas such as carbon services and sustainability solutions, strengthening Singapore’s position as a carbon services and trading hub.

Reference materials

The press release is available on the MTI website www.mti.gov.sg.