Singapore publishes eligibility list for international carbon credits under carbon tax regime

On 19 December 2023, the Ministry of Sustainability and the Environment (“MSE”) and the National Environment Agency (“NEA”) issued a press release setting out the eligibility list under the International Carbon Credit (“ICC”) Framework (“Eligibility List”), which will take effect from 1 January 2024. This follows the signing of an implementation agreement with Papua New Guinea on carbon credits cooperation under Article 6 of the Paris Agreement on 7 December 2023.

NEA has also published a guidance document for companies on the administrative processes under the ICC Framework (“ICC Guidance Document”). It covers the eligibility criteria of ICCs, steps on sourcing and procuring eligible ICCs, and steps on surrendering the ICCs to NEA. Previously in October 2023, MSE and NEA set out the eligibility criteria under the ICC Framework (“Eligibility Criteria”). Read more about the Eligibility Criteria in our article titled “Singapore sets eligibility criteria for international carbon credits under carbon tax regime”.

NEA, as the administrator of Singapore’s carbon tax regime, will review and update the Eligibility List from time to time. In particular, NEA will review the Eligibility List annually to maintain relevance and uphold high environmental integrity standards, based on the latest science and evidence. This will include the addition or delisting of carbon crediting programmes and methodologies.

The MSE/NEA press release sets out the Eligibility List and examples of possible carbon credit project types based on eligible methodologies.

Background

From 1 January 2024, the ICC Framework will allow carbon tax-liable companies to use eligible ICCs to offset up to 5% of their taxable emissions. It was introduced in November 2022 with the progressive increase in carbon tax rate under the Carbon Pricing (Amendment) Act 2022 from the current S$5 per tonne of emissions to S$25 per tonne in 2024 and 2025, and S$45 per tonne in 2026 and beyond.

Reference materials

The following materials are available on the MSE website www.mse.gov.sg and NEA website www.nea.gov.sg:

Press release: Singapore publishes eligibility list for international carbon credits under the carbon tax regime

Press release: Singapore signs first implementation agreement with Papua New Guinea to collaborate on carbon credits under Article 6 of the Paris Agreement

ICC Guidance Document (Version 1 - 19 December 2023) (available on the relevant NEA webpage)

Further information

Should you have any queries on this or any other development, please do not hesitate to get in touch with your usual contact at Allen & Gledhill or any of the following:

Adrian Ang

Partner

+65 9735 9285

[email protected]

Elsa Chen

Partner (Chief Economist)

+65 9846 8004

[email protected]

Allen Choong

Partner

+65 9790 1945

[email protected]