This marks the eighth legally binding pact Singapore has signed for the bilateral trading of carbon credits to meet its national climate targets.
The implementation agreement was signed on the sidelines of the Singapore Regional Business Forum in Bangkok. The list of eligible carbon crediting methodologies that will be recognised between the two countries, which is still pending, “will be published in due course,” stated Singapore’s Ministry of Trade and Industry (MTI) in its press release.
Under the agreement, project developers will be required to make contributions equivalent to 5 per cent of share of proceeds from authorised carbon credits toward climate adaptation in Thailand, including sustainable forest management, flood resilience projects and water resources management, according to the release.
In addition, Singapore will be required to cancel 2 per cent of correspondingly adjusted carbon credits at first issuance to ensure additional contribution to overall mitigation of global emissions.
Following the bilateral deal, Eco-Business understands that the Singapore government has plans to organise a business mission to Thailand to help local companies source for potential opportunities. Last year, the city-state conducted its first-ever carbon credits business mission in Ghana with a delegation that included project developers, traders and financiers eyeing opportunities in cookstoves and green mobility solutions.
Dubbed a “pathfinder for the region,” Singapore’s manpower minister and minister-in-charge of energy and science and technology Tan See Leng said he looks forward to seeing the agreement “[demonstrate] how Southeast Asia can develop and scale high-quality carbon credit projects that will drive meaningful emissions reductions.”
Thailand’s minister of natural resources and environment Chalermchai Sri-on said that the deal is “a clear signal that Asean can drive high-quality, internationally aligned greenhouse gas mitigation.”
“We value Singapore’s partnership in unlocking climate finance and advancing credible carbon credit projects in Thailand – from forestry and clean energy to zero-emission transport – that deliver environmental, economic, and social benefits for our people,” said Chalermchai.
“Thailand is committed to becoming a hub for such projects and is ready to share our approach as a model for the region.”
Last year, Switzerland and Thailand concluded the world’s first Article 6.2 transaction, when Swiss-based KliK Foundation, a group representing motor fuel importers, bought 1,916 carbon credits generated from electrifying a fleet of privately-owned buses in Bangkok.
Despite being hailed as an important milestone, an umbrella group of Swiss charities has raised concerns around the additionality of the offsetting scheme, arguing that the switch from diesel to electric buses would have occurred regardless.
Last month, a Thai government official told Eco-Business that Article 6 deals could help bring forward the country’s net zero target from 2065 to 2050 in its latest climate plan, which is due to be submitted to the United Nations climate body by September.
Challenges sourcing Article 6 credits
The announcement comes barely a month after a Singapore government official said that the city-state was close to sealing its inaugural Article 6 agreement with a country in the region.
On Friday, the Philippines’ Department of Energy also commenced a public consultation on its draft carbon credit policy, which will touch on the memorandum of understanding (MOU) the country struck with Singapore last August to work towards a similar binding agreement for the transfer of carbon credits.
Apart from the Philippines, the republic has signed three other MOUs in Southeast Asia with Cambodia, Laos and Malaysia.
To meet its emissions reduction commitments, the city-state has estimated that it would need to use 2.51 million tonnes of carbon dioxide equivalent worth of offsets annually from 2021 to 2030.
These credits will be sourced from host countries Singapore has signed implementation agreements with, either through authorised credits purchased by carbon tax-liable companies or direct government procurement.
Since 2024, large emitters in Singapore have been allowed to offset up to 5 per cent of their carbon tax obligations – which currently stands at S$25 (US$19) per tonne – with authorised credits, but are required to surrender them to the government.
Earlier this year, local media reported that the government would allow firms to roll over their unused offset limit from 2024 to 2025 – effectively allowing them to offset up to 10 per cent of their emissions with credits, on top of rebates that have been offered to refiners and petrochemicals firms.
However, none of Singapore’s existing carbon trading partners – the majority of which are located in Latin America and Africa – have generated any eligible credits thus far.
Earlier this year, the government closed its first tender put out by the Prime Minister’s Office to procure at least 500,000 Article 6-compliant nature-based credits generated between 2021 and 2030.
It attracted 17 offers – including some from oil and gas majors and commodity traders such as Trafigura, Shell and PetroChina – ranging between US$19 to US$41 per metric tonne of carbon dioxide equivalent.
This is largely in line with Singapore’s carbon levy, which will be raised to S$45 (US$35) in 2026, with aims to reach up to S$80 (US$62) by 2030.
Singapore is expected to launch its second request for proposal to source Article 6-aligned offsets later in 2025, according to MTI. The ministry has not shared further updates on the timeline for the tender and the types of credits it will seek.
