At the annual United Nations (UN) climate conference held at Dubai this year (COP28), Singapore signed its first ever agreement with Papua New Guinea which will allow for the transfer of carbon credits between the two nations.

The Implementation Agreement falls under Article 6 of the Paris Agreement, an international treaty to limit global temperature rise to below 1.5ºC.

It 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 Dec. 8.

First Implementation Agreement

This is Singapore's first Implementation Agreement, and will allow companies in Singapore to buy carbon credits from projects in Papua New Guinea to offset part of their taxable emissions from 2024.

From 2024, the carbon tax rate in Singapore will rise to S$25 per tonne of emissions, from the current S$5 per tonne.

Under the agreement, project developers will be required to cancel two per cent of the carbon credits authorised at first issuance to ensure additional contribution to overall mitigation of global emissions, according to a press release by the Ministry of Trade and Industry and Ministry of Sustainability and the Environment.

When a carbon credit is cancelled, it will be "permanently retired" from the market, and will not be reissued again.

Project developers will also be required to make a contribution equivalent to five per cent 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.

These carbon credit projects under the agreement will also promote sustainable development and create more jobs for local communities, increase access to clean water, improve energy security, and reduce environmental pollution.

Other agreements with other countries

"I would like to thank Papua New Guinea for a fruitful year of collaboration. Singapore will work closely with Papua New Guinea on the successful implementation of our carbon credit cooperation," Fu said during her speech.

Carbon credits are permits representing a reduction of one tonne of carbon emissions. These are typically generated from projects such as reforestation programmes outside of Singapore.

Companies buy these credits in order to offset up to five per cent of their taxable emissions.

To create a diverse portfolio of credits, Singapore has also concluded similar implementation agreements with Bhutan, Paraguay, Ghana and Vietnam, reported The Straits Times.

Top photo from COP28 Singapore Pavilion