A significant advancement has occurred in international carbon reduction efforts with Singapore and Thailand signing an implementation agreement on carbon credit cooperation. This agreement establishes a concrete framework for transferring carbon credits generated from carbon mitigation projects under Article 6 of the Paris Agreement, presenting a new model for bilateral cooperation in international climate action. Under Singapore"s International Carbon Credits (ICC) Framework, companies can offset up to 5% of their taxable emissions with adjusted carbon credits.
Singapore"s carbon tax is being gradually increased from S per tonne of CO2 equivalent emissions in 2024 (approximately 2,875 yen) to S in 2026-2027, and S-80 by 2030. This tax restructuring strengthens economic incentives for corporate decarbonization and is expected to expand demand in the international carbon credit market.
Notably, Singapore has established a mechanism to allocate 5% of revenue to Thailand"s climate adaptation measures (sustainable forest management, flood resilience, etc.). Additionally, 2% of certified carbon credits are retired upon issuance to ensure contribution to global net emission reduction. This achieves substantial global carbon reduction rather than mere emission transfers.
Through this agreement, Singapore has concluded its eighth implementation agreement following Papua New Guinea, Ghana, Bhutan, Peru, Chile, Rwanda, and Paraguay, marking the first such agreement within ASEAN. With implementation agreement negotiations with Vietnam substantially concluded, Singapore is establishing its position as a hub for international carbon markets.
This agreement serves as a precedent for climate cooperation within ASEAN and potentially creates opportunities for Japanese companies to procure carbon credits through Singapore and participate in decarbonization projects in Southeast Asia. As international carbon markets expand and institutional frameworks develop, this represents a noteworthy new option for corporate decarbonization strategies.