Singapore and Papua New Guinea (PNG) have recently signed an Implementation Agreement on carbon credits cooperation under Article 6 of the Paris Agreement.
The Agreement was signed by Minister for Sustainability and the Environment Grace Fu and Papua New Guinea Minister of Environment, Conservation and Climate Change Simo Kilepa on the sidelines of the 2023 United Nations Climate Change Conference (COP28).
The Agreement comes after both countries signed a Memorandum of Understanding (MOU) on the sidelines of COP27 last year to collaborate on carbon credits.
This marks the first Implementation Agreement for Singapore. The Agreement sets out a legally binding framework and processes for the generation and international transfer of carbon credits aligned with Article 6 of the Paris Agreement, between Singapore and Papua New Guinea.
This collaboration will advance both countries’ climate ambition and help to channel financing towards additional mitigation efforts through carbon credit projects which would otherwise not be possible.
The carbon credit projects authorised under the Implementation Agreement will also promote sustainable development and generate benefits for local communities, such as creation of jobs, access to clean water, improved energy security, and reduction of environmental pollution.
As part of Singapore’s Article 6 cooperation, project developers will be required to cancel 2% of the carbon credits authorised under the Implementation Agreement at first issuance to ensure additional contribution to overall mitigation of global emissions.
They will also be required to make a contribution equivalent to 5% share of proceeds or authorised carbon credits towards climate adaptation in Papua New Guinea. This will help Papua New Guinea prepare for and adjust to the impacts of climate change.
Singapore is also supporting the development of carbon markets, by enabling the demand and supply of high-quality carbon credits to be matched. Under Singapore’s International Carbon Credit (ICC) framework, Singapore-based carbon tax-liable companies can source for eligible ICCs generated under this Implementation Agreement to offset up to 5% of their taxable emissions.
Trading these credits through Singapore will help to unlock new business opportunities in areas such as carbon services and sustainability solutions, strengthening Singapore’s position as a carbon services and trading hub.
“High-integrity carbon markets can contribute to much-needed climate action globally. As an alternative energy disadvantaged country, effective international cooperation, such as through carbon markets, will also help us to achieve our climate ambitions. We are delighted to sign our first Implementation Agreement with Papua New Guinea, a fellow Alliance of Small Island States (AOSIS) member. We look forward to working with Papua New Guinea to advance climate action together,” Minister Fu said.
BusinessNewsAsia.com