Singapore has released new draft guidance to support the credible use of voluntary carbon credits, aiming to bring clarity, confidence and environmental integrity to companies integrating these instruments into their decarbonisation plans.
According to Singapore Business, the guidance was jointly issued by the National Climate Change Secretariat (NCCS), Ministry of Trade and Industry (MTI), and Enterprise Singapore (EnterpriseSG), in collaboration with the Singapore Sustainable Finance Association (SSFA) and other industry stakeholders. It is designed to help companies incorporate carbon credits in line with international standards, especially when addressing hard-to-abate emissions. The public is invited to provide feedback by 20 July 2025.
Carbon credits are tradable certificates that represent the reduction or removal of greenhouse gas emissions. They are used by companies to offset emissions that are difficult to eliminate, while also helping to channel capital into climate-positive projects in emerging markets. However, concerns over inconsistent quality and lack of clear usage standards have hampered the growth of the voluntary carbon market (VCM).
To address these issues, the draft guidance outlines key principles, including prioritising direct abatement wherever possible and ensuring that credits used for residual emissions have high environmental integrity. It also clarifies that corresponding adjustments—which are relevant to national carbon accounting under Article 6 of the Paris Agreement—do not apply to credits used on a voluntary basis.
This initiative is part of a broader push by Singapore to establish a trusted and high-quality carbon ecosystem. Related measures include enabling companies subject to carbon taxes to offset up to 5% of taxable emissions using credits compliant with Article 6 of the Paris Agreement, and requiring firms to disclose the role of offsets under reporting frameworks aligned with the International Sustainability Standards Board (ISSB).
The government is also supporting the development of high-integrity credits through the Carbon Project Development Grant and promoting a local carbon services industry. Meanwhile, the SSFA is developing a complementary Claims Guidance Code and collaborating with ASEAN partners under the Common Carbon Framework to encourage a vibrant market for credible credits.
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