Singapore, Vietnam ink deals on carbon credits, energy

Singapore and Vietnam have signed agreements on 17 October to collaborate on the establishment of transferable carbon credits and other energy initiatives.

The agreement on carbon credits is the first to be signed between Singapore and another Asean nation. The countries will collaborate on carbon credit pilot projects and develop methods and procedures to enable the transfer of correspondingly adjusted carbon credits. Corresponding adjustments are applied when one of the countries transfers an emissions reduction to the other, and then subtracts it from its own greenhouse gas accounting to prevent double counting.

"The MoU on carbon credits collaboration underscores our shared commitment to work together on carbon credit pilot projects aligned to Article 6 of the Paris Agreement," said Singapore's second minister for trade and industry Tan See Leng, who signed the document.

The countries also signed another agreement involving the development and financing of renewable energy, and the development of interconnectors for better grid stability and electricity trading. The countries will also carry out research, development and the deployment of low-carbon energy technologies and solutions such as hydrogen, ammonia, energy storage systems and smart grids. Singapore and Vietnam aim to reach net zero emissions by 2050.

Singapore declared in February that it would raise its carbon tax from 5 Singapore dollars/t ($3.52/t) currently to S$25/t in 2024-25 and S$45/t in 2026-27, as part of its plan to bring forward its net zero carbon emissions target to around 2050 from the second half of this century.

The country subsequently announced in August that companies would be allowed to use carbon credits arising from third-party registries Verra and Gold Standard to meet their carbon tax obligations from 2024.

Carbon credits have been deemed potentially problematic as they allow the continued use of fossil fuels, in the absence of industry-wide methodologies and certifications for these credits. But Singapore aims to "ensure that any credits procured are derived from genuine abatement, are internationally credible, aligned with global climate ambition, and in line with article 6 of the Paris agreement," according to the National Climate Change Secretariat of Singapore.

By Prethika Nair