Singapore to Support the Development of High-Integrity Carbon Markets

The Singapore Government, through key agencies including the National Climate Change Secretariat (NCCS), the Ministry of Trade and Industry (MTI), Enterprise Singapore (EnterpriseSG), and the Monetary Authority of Singapore (MAS), announced on 28 October 2025 a comprehensive suite of initiatives to support the development of high-integrity carbon markets. These markets are identified as a critical enabler for the global transition to net zero, channeling capital toward climate action.

While the growth of carbon markets has recently been constrained by factors such as weak demand, limited supply of high-integrity projects, and underdeveloped market infrastructure, Singapore is addressing these gaps by introducing measures designed to catalyze demand for high-quality carbon credits, grow the pipeline of credible projects, and strengthen market infrastructure.

The suite of initiatives includes the publication of voluntary carbon market (VCM) guidance, ongoing discussions to form an industry-led buyers’ coalition, and the introduction of a new Financial Sector Carbon Market Development Grant. These efforts complement existing government support, such as the Carbon Project Development Grant launched at COP29 and active collaboration through Article 6 partnerships.

VCM Guidance: A Blueprint for Credible Corporate Decarbonisation

The joint publication of the VCM guidance by NCCS, MTI, and EnterpriseSG aims to provide companies with clarity on how to incorporate the use of carbon credits in a credible decarbonisation plan. This guidance was developed in close consultation with the Singapore Sustainable Finance Association (SSFA), industry partners, academics, and international organizations.

The guidance emphasizes that companies have a critical role to play in global decarbonisation, which requires an estimated 80% of the USD 2 trillion per year needed for the net zero transition to come from businesses (per IMF estimates).

The guidance frames corporate decarbonisation as a structured, three-step journey, emphasizing that carbon markets are a complementary tool that supports the raising of global climate ambition:

1. Measure and Report: The first step requires companies to measure and report their baseline emissions to establish a reference level and track progress.
   
   
2. Plan and Prioritize Abatement: Companies must develop a credible decarbonisation plan, laying out strategies that prioritize all technically, scientifically, and economically feasible abatement measures across all emissions scopes.
   
   
3. Address Residual Emissions: Only after prioritizing all feasible emissions abatement efforts should a company consider using carbon credits to address its remaining emissions and meet interim net emissions targets. This approach ensures that the use of credits is complementary and does not substitute internal abatement measures, particularly for hard-to-abate sectors.

For carbon markets to be credible and effective, the carbon credits purchased must be of high integrity. Although the VCM is not bound by Singapore’s International Carbon Credit (ICC) Framework, the seven principles outlined in that framework serve as a good guide for assessing high-quality attributes in the VCM and are in compliance with Article 6 of the Paris Agreement.

These principles ensure the integrity of the certified emissions reductions or removals:

1. Not double-counted: The emissions reductions or removals must not be claimed multiple times by the same organization or multiple organizations ("double claiming"), nor issued under multiple carbon crediting programmes ("double issuance"). Companies should acquire credits registered with a reputable registry and claim only credits retired in their name.
   
   
2. Additional: The reductions or removals achieved would not have occurred without the project and must exceed any legal requirements.
   
   
3. Real: Quantification must be based on a realistic, defensible, and conservative estimate of emissions that would have occurred in a business-as-usual scenario.
   
   
4. Quantified and Verified: Calculations must be transparent and conservative, and verified by an accredited and independent third-party verification entity before the credit is issued.
   
   
5. Permanent: If there is a risk of reversal, measures must be in place to monitor, mitigate, and compensate for any material reversal.
   
   
6. Do No Net Harm: The project must not violate any applicable laws, regulatory requirements, or international obligations of the host country.
   
   
7. No Leakage: The project must not result in a material increase in emissions elsewhere.
   
   

While global meta-standards (such as the ICVCM’s Core Carbon Principles) assess quality at the program or methodology level, companies are cautioned that credit quality and the risk of failure can still differ across individual projects due to various project-level factors. Therefore, companies are advised to conduct their own due diligence when purchasing credits.

To manage portfolio quality and risk, companies may consider using labels and carbon ratings, understanding that different providers use different rating scales and methodologies. Furthermore, the use of carbon insurance is noted as a tool to de-risk a portfolio of credits or projects.

Financial Sector Carbon Market Development Grant: S$15 Million Committed

Recognizing the key enabling role financial institutions (FIs) play, from financing projects and structuring transactions to underwriting risk mitigation and trading credits, MAS is introducing the Financial Sector Carbon Market Development Grant. This grant aims to alleviate near-term cost barriers faced by FIs and build the foundation for their sustained engagement in carbon markets.

MAS has set aside S$15 million over three years, extending until 2028, from the Financial Sector Development Fund for this grant. Applications are set to open on November 1, 2025.

The scheme provides support through two primary tracks:

• Track 1: Building Market Capabilities - This track supports the establishment or expansion of in-house teams dedicated to carbon market activities. It co-funds manpower and related costs in vital areas such as carbon project financing, carbon trading, carbon credit insurance, and risk management services.
  
  
• Track 2: Catalysing Financing Solutions and Platforms - This track is designed to support carbon transactions and structuring activities. It defrays upfront costs associated with developing, structuring, and executing carbon credit transactions. Eligible costs include technical due diligence, verification, legal, advisory, and carbon-insurance premiums.

Focus on Demand: The Proposed Buyers' Coalition

To complement its financial and regulatory support for high-integrity carbon markets, the Singapore Government is actively working to catalyze demand for high-quality carbon credits.

This effort includes ongoing discussions led by Enterprise Singapore with leading corporates in Asia to establish an industry-led buyers’ coalition.

The coalition is designed to fulfill two key functions:

• Aggregate and Channel Demand: The primary goal is to align and channel corporate demand towards high-integrity carbon credits in the region and beyond.
  
  
• Demonstrate Integrity: The coalition is also intended to demonstrate the practical application of the key principles outlined within the recently published VCM guidance.

The government has indicated that more details on the buyers’ coalition will be shared in 2026.