Singapore and Chile Ink carbon credit deal to enable future offsets. (Photo: Ministry of Trade & Industry of Singapore)
Singapore is steadily expanding its network of carbon credit trading partners, having signed cooperation agreements with both Peru and Chile within a week.
These efforts aim to diversify the country's carbon offset sources and increase access to high-quality carbon credits, reducing market uncertainty. The government also plans to launch a new round of international carbon credit procurement tenders by the end of the year.
Carbon pact with Chile opens door to offshore wind investments
Following the adoption of Article 6 of the Paris Agreement at COP29—which established the framework for cross-border carbon credit cooperation to help countries meet their Nationally Determined Contributions (NDCs)—Singapore has accelerated its outreach for international carbon credit deals.
So far this year, it has signed bilateral agreements with Chile, Peru, and Bhutan, enabling future carbon credit purchases to offset part of Singapore’s emissions and achieve its climate goals.
Singapore’s Minister for Sustainability and the Environment, Grace Fu, noted that the agreement with Chile not only supports Singapore’s decarbonization efforts but also provides climate financing for Chile. She encouraged private sector participation, highlighting that under current regulations, companies subject to Singapore’s carbon tax may use such credits to offset up to 5% of their taxable emissions.
Rueban Manokara, head of the global carbon finance and markets taskforce at WWF, emphasized that Chile's offshore wind, green hydrogen, afforestation, and reforestation projects are promising carbon credit opportunities. Offshore wind in particular stands out due to its high development costs and need for substantial investment.
According to the International Energy Agency (IEA), renewable energy accounts for 55% of Chile’s total electricity generation, attracting significant investments in wind and solar power from major developers.
WWF's Rueban Manokara believes that Chile's offshore wind, green hydrogen, afforestation, and reforestation projects are promising investments for carbon credits. (Image: iStock)
Singapore targets global carbon trading hub status
To date, Singapore has signed carbon credit agreements with five countries and is in discussions with 15 more, including Malaysia, Cambodia, and Colombia. Due to its limited land area and constrained renewable energy development capacity, carbon credits have become a key component of Singapore’s net-zero strategy.
In addition to bilateral agreements, the Singapore government procures carbon credits through tenders, focusing on nature-based projects that provide at least 500,000 credits per initiative. The first round of tenders closed in mid-February with 17 suppliers submitting bids, quoting prices between USD 19 and USD 41 per ton.
Beyond emissions offsetting, Singapore is positioning itself as a regional carbon trading hub. The Economic Development Board (EDB) estimates that the carbon credit market could contribute SGD 5.6 billion (USD 4.1 billion) in economic value. The government is expected to announce a new round of tenders by the end of the year to further expand its carbon credit portfolio.
Source: The Straits Times, S&P Global, Carbon Credits
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