Singapore signs carbon credit deal with Ghana

Singapore signed a carbon credit implementation agreement with Ghana yesterday, its second after the first was signed with Papua New Guinea in December last year.

The latest agreement with Ghana sets out a legally binding framework and processes for generating and transferring carbon credits between the two countries, and is aligned with Article 6 of the Paris Agreement. This is similar to Singapore's previous agreement with Papua New Guinea.

Carbon credit projects authorised under the agreement will seek to promote sustainable development and generate benefits for local communities — such as job creation, access to clean water, improved energy security, and reduced environmental pollution.

Project developers will have to make a contribution equivalent to 5pc of proceeds from authorised carbon credits towards climate adaptation in Ghana. Project developers will also have to cancel 2pc of authorised carbon credits at first issuance to ensure additional contribution to the overall mitigation of global emissions.

Under Singapore's International Carbon Credit (ICC) framework, eligible ICCs generated under this agreement may also be used by Singapore-based carbon tax-liable companies to offset up to 5pc of their taxable emissions.

The Singapore government had published a list of eligible ICCs last December. The list was effective from 1 January, and will be reviewed annually.

Singapore's carbon tax has been set at S$25/t ($18/t) of CO2 equivalent (CO2e) for 2024-25 and will be raised to S$45/t CO2e in 2026-27. The tax will be reviewed with a long-term view of increasing it to S$50-80/t CO2e by 2030.

By Sarah Giam