Singapore’s Ministry of Trade (MTI), National Climate Change Secretariat (NCCS) and government agency and Enterprise Singapore (EnterpriseSG) announced the release of Draft Guidance on Voluntary Carbon Market, aimed at guiding companies on the use of carbon credits as part of their decarbonization plans.
According to MTI, NCCS and EnterpriseSG, the new publication follows feedback received from industry engagements, on the need for the government to provide guidance on the voluntary carbon markets (VCM), covering topics including the use carbon credits as part of a credible decarbonization plan and how to determine a high-quality carbon credit. The agencies added that the growth of the VCM has been held back by challenges such as a lack of standardization, which has undermined market confidence and led to company concerns over reputational risk from the use of carbon credits.
Key topics covered by the guidance include choosing credits, with the guide setting out a series of principles to help companies assess the environmental integrity of a carbon credit, including ensuring that the emissions reductions from the credits are not double-counted, that the underlying decarbonization project would not occur otherwise (additionality), and that the emissions reductions or removals are quantified and verified, are permanent, and do not result in increased emissions elsewhere, among others.
The publication also includes guidance on the use of carbon credits, notably stating that they should be used only “after a company has prioritised all feasible emissions abatement efforts,” in order to address remaining emissions. The document also guides companies on risk management, encouraging companies to “consider the quality and risk of credits as a portfolio,” and to consider labels and project ratings as possible tools for quality and risk assessment, and to consider the use of insurance to derisk carbon credit portfolios.
Additionally the guidance encourages companies to transparently disclose their use of carbon credits, including reporting on volume and type of credits, project locations, registries in which the credits are held, purpose of use, and third-party ratings if available.
Alongside the publication, the agencies announced the launch of a consultation on the new draft guidance, which will remain open for feedback until July 20, 2025.
Click here to access the new draft guidance.
