Singapore launches carbon market alliance

Singapore today launched the Singapore Carbon Market Alliance (SCMA), which aims to scale up the availability and trade of high-quality carbon credits that are in line with Article 6 of the Paris Agreement.

The SCMA has been jointly established by Singapore's Economic Development Board and the International Emissions Trading Association (Ieta), a non-profit organisation that works with businesses to help them achieve net zero targets.

The SCMA is "by invitation only" and will connect international developers and suppliers of carbon credits with Singapore-based corporate entities that are interested in purchasing Article 6 carbon credits, Ieta said.

In order to be eligible for Article 6, carbon credits must feature a letter of authorisation for corresponding adjustment, which means the country buying the credits reduces its emissions in line with the volume purchased, while the seller adds the same number to its own emissions inventory to avoid double counting.

The SCMA will be a platform for Singapore's carbon services and trading ecosystem to convene, Singapore minister of state for culture, community and youth, Low Yen Ling, said on 31 July. "It will bring together businesses with strong climate commitments, trusted carbon services firms and government agencies to share expertise and networks, starting with the Article 6-compliant carbon credits."

The launch of the SCMA is the latest in a series of moves that Singapore has taken to establish a carbon market as part of its decarbonisation goals, and demand for high-quality carbon credits is growing in the country.

Singapore in December published a list of eligible international carbon credits under the International Carbon Credit framework, which companies can use to offset up to 5pc of their carbon tax liability.

A consortium of firms led by the Singapore Business Federation earlier this year announced that it will set up a registry to help local businesses establish more accurate emission inventories, with the first phase targeted to be ready by the end of the year.

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

By Prethika Nair and Felix Todd