S’pore steps up carbon market push forward with grants, new initiatives at COP31

ANTALYA, Turkey — Singapore’s push for carbon markets as a way for it to contribute to global climate action and channel funds into developing countries is gaining momentum, with a slew of initiatives announced at the UN climate conference COP31 in the Turkish city of Antalya.

The announcements, made over several days since the opening of the summit on Nov 9, include the disbursement of grant funding from the Singapore Government to two organisations to help establish carbon projects in South-east Asia.

These projects – announced on Nov 12 – include ventures to protect forests and mangroves as sources of carbon credits.

The set-up of a new Singapore office by a global carbon credit registry, Climate Action Reserve, was also announced on Nov 12. The environmental non-profit will help to ensure that carbon credit projects in the region are trustworthy and have a true positive impact on the climate.

Two other initiatives were launched to ensure demand for carbon credits.

On Nov 10, a new platform was launched to allow companies in Singapore to buy credits in a more straightforward manner, without having to build their own sourcing, contracting and settlement capabilities.

The other initiative, which is supported by Enterprise Singapore, aims to aggregate demand among companies for carbon credits. The Action for a Resilient Climate Coalition said on Nov 12 that it aims to buy at least 10 million tonnes of carbon credits by 2030.

It will issue its first call for proposals for one million tonnes of nature-based credits in the first half of 2027.

One carbon credit represents one tonne of carbon dioxide that is either prevented from being released – by saving a forest from the axe, for example – or removed from the atmosphere, such as from a direct air capture plant.

Large emitters, such as countries or companies, can buy these credits to offset their carbon footprint and meet their climate targets. Singapore has identified the growth of this sector as a driver of its green economy.

But this has been hampered by allegations of fraud, where carbon projects do not actually result in true benefits to the climate.

The recent announcements signal a step forward for Singapore to become a regional hub for high-integrity carbon markets, said Rueban Manokara, global lead of the carbon finance and markets taskforce at environmental group WWF.

High-integrity carbon credits refer to those whose climate benefit can be trusted and verified.

Manokara added that in South-east Asia, carbon markets have not reached their full potential. Funding is another obstacle.

For instance, nature-based solution projects need upfront financing as such projects may not generate revenue until their first credits are issued, typically five to seven years after they begin, he added.

The new initiatives could help close that gap, and funnel funds into the protection and restoration of nature, while supporting local communities, Manokara said.

Frederick Teo, the chief executive of Temasek-backed investment firm GenZero added that the new initiatives can help develop the infrastructure and capabilities to attract investment and boost the supply of credits.

“While the supply of Singapore-eligible credits will not increase overnight, these efforts… reflect the consistent, long-term approach that Singapore has taken to grow an important capability to address our decarbonisation challenges and to do so in an economically sustainable way,” he said.

The global trade in carbon credits is provided for under Article 6 of the Paris Agreement, the world’s climate pact that aims to limit global warming to 1.5 deg C above pre-industrial levels.

Carbon markets can promote climate action as it allows countries to cooperate to achieve their climate targets.

For instance, large emitters can buy carbon credits generated in other jurisdictions to meet their climate targets, instead of relying solely on efforts to cut emissions within their own borders.

This is an important avenue for countries like Singapore to meet its climate targets, due to its lack of low-carbon energy alternatives that would enable it to reduce its emissions.

At COP31, Singapore joined 13 other countries including Switzerland and Zambia in signing the Antalya Statement, which called for the need to grow high-integrity carbon credit markets to attract private investment.

A policy playbook was launched alongside the statement with levers to guide governments to drive demand for such credits.

For example, policymakers should set clear expectations for the use of carbon credits in corporate climate strategies. Another lever is to pool buyer demand through centralised platforms to reduce cost and risk.

Developing carbon projects

One of Singapore’s efforts to grow the carbon market is to increase the pipeline of projects.

On Nov 12, Singapore’s Economic Development Board (EDB) announced that it will be providing grants to two organisations that could help in the development of carbon projects in the region.

Swiss firm myclimate will from 2027 establish a presence in Singapore, and develop a dedicated local team of five specialists with the skills to develop carbon projects, in areas such as carbon accounting.

Non-profit Conservation International will use the funds to develop nature-based carbon projects in South-east Asia.

The grant, which EDB declined to reveal due to commercial sensitivities, will support the early development of projects that protect and restore carbon-rich ecosystems such as forests and mangroves in Asia-Pacific.

These projects could be in the form of conserving and restoring forests in Philippines, Bhutan and Cambodia, although CI’s director for regulated natural climate solutions market Anirudh Krishnan said the projects have yet to be identified.

The projects will also focus ecosystems that are critical not only for carbon storage but also on biodiversity, climate resilience and the livelihoods of local communities.

Krishnan added that the plan is to identify five projects and assess and develop them over five years.

The grant will support early stage work such as feasibility assessments, project design and stakeholder consultations. Such work range from identifying potential projects to crafting financial analysis and engaging with stakeholders, he said.

GenZero’s Teo said that such grants can help lower project risks and help more projects become ready for commercial investment.

Improving trust in the carbon markets

Besides funding potential projects, efforts are also under way to strengthen confidence in carbon credits.

A global carbon credit registry, Climate Action Reserve, will be setting up an office in Singapore to expand its work across the Asia-Pacific region.

The reserve is a non-profit that develops carbon-crediting standards and operates a registry to issue and track carbon credits.

One gap to be addressed in ensuring carbon credits are credible, is the need to have standards contextualised to this region.

For example, Climate Action Reserve largely uses forestry methodologies developed for the US or Latin America, said Manokara.

Having the reserve in the region allows them to understand how forestry projects, for instance, are different in South-east Asia and adapt those methodologies to be more applicable for its forests, he said.

This way, more high-quality and region-specific carbon projects can be developed, he added.

The reserve will develop protocols for projects relevant to Singapore and the greater Asia-Pacific region. Prioritised projects could include coastal ecosystems, peatlands and industrial decarbonisation.

The reserve will also provide technical guidance and training to government agencies, project developers, verification bodies and other industry players to strengthen the region’s regulated and voluntary carbon markets.

Making carbon credit purchases easier for companies

Lastly, efforts are also under way to connect carbon credit projects with buyers by simplifying the process to buy them.

Global environmental markets exchange Climate Impact X is launching a centralised platform to make it easier for carbon tax-liable companies to buy carbon credits to shrink their tax bill.

These companies can buy eligible carbon credits to offset up to 5 per cent of their taxable emissions. If the price of the credits is lower than the cost of paying the carbon tax, buyers could reap some economic savings.

Instead of having the companies to source credits, arrange contracts and settlement on their own, the platform will help coordinate these processes. This will make it more straightforward and efficient for companies to procure the credits once they are available.

By pooling the demand, CIX aims to help buyers coordinate procurement, access more competitive prices and lower administrative burdens.

CIX’s chief executive Choo Oi-Yee said that buying carbon credits is challenging for many companies as they often lack expertise to navigate eligibility rules and fragmented supply, among others.

“By bringing demand together, we can also give suppliers a clearer signal of what the market needs, turning Singapore’s compliance framework into a catalyst for climate finance beyond our shores.”