Singapore, Bhutan Forge Landmark Carbon Credits Agreement Under Paris Agreement

SINGAPORE, March 1, 2025 – In a significant step towards bolstering global climate action, Singapore and Bhutan have signed an Implementation Agreement to cooperate on carbon credits under Article 6 of the Paris Agreement. The agreement, signed today during Bhutan’s Minister of Energy and Natural Resources Gem Tshering’s visit to Singapore, marks Singapore’s first such partnership with a carbon-negative country.

The agreement was formalised between Singapore’s Minister for Sustainability and the Environment, Grace Fu, and Bhutan’s Minister Tshering. It establishes a legally binding framework for the transfer of high-integrity carbon credits generated from carbon mitigation projects aligned with Article 6 of the Paris Agreement. This collaboration underscores both nations’ commitment to advancing sustainable development and combating climate change.

A Framework for High-Quality Carbon Credits

The Implementation Agreement paves the way for project developers to create carbon credit projects that adhere to the Article 6 rulebook, ensuring transparency and environmental integrity. These projects are expected to deliver tangible benefits to local communities, including job creation, improved access to clean water, enhanced energy security, and reduced environmental pollution.

Minister Fu highlighted the significance of the partnership, stating, “Singapore is pleased to partner with Bhutan, a carbon-negative country and a leader in environmental stewardship, to accelerate climate action through this Implementation Agreement. By working together on high-integrity carbon markets, we can drive sustainable growth, mobilise climate finance, and reduce global carbon levels. This collaboration strengthens our shared vision for a greener and more sustainable future and accelerates the global green transition.”

Bhutan’s Commitment to Environmental Stewardship

Bhutan, renowned for its carbon-negative status, has long prioritised environmental conservation as a cornerstone of its national identity. Minister Tshering emphasised the importance of the agreement, stating, “Bhutan has placed environmental conservation at the heart of our national identity, guided by our deep reverence for nature. As a carbon-negative country, we remain steadfast in our commitment to balancing economic progress with environmental integrity. Our Implementation Agreement with Singapore sends a powerful message on the importance of international collaboration on high-integrity carbon markets to address climate change.”

He added that the partnership would reinforce Bhutan’s vision of sustainable development, which focuses on conserving forests, supporting communities, and ensuring the planet’s long-term health.

Key Features of the Agreement

The agreement sets out a framework for the international transfer of correspondingly adjusted carbon credits, ensuring that emissions reductions are not double-counted in both countries’ greenhouse gas inventories. For instance, if Singapore receives carbon credits from Bhutan, Bhutan will adjust its emissions inventory accordingly to maintain transparency and accountability.

The carbon credits generated under this agreement can be used for various purposes, including:

Offsetting up to 5% of a company’s taxable emissions under Singapore’s International Carbon Credit (ICC) framework from 1 January 2024.

Meeting binding mandates such as Nationally Determined Contributions (NDCs) and international requirements like the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA).

Supporting Climate Adaptation and Global Emissions Reduction

Singapore has committed to channelling the value equivalent to 5% of the proceeds from authorised carbon credits towards climate adaptation measures in Bhutan, such as heat resilience initiatives and climate-resilient agriculture. Additionally, Singapore will cancel 2% of the correspondingly adjusted carbon credits at first issuance, ensuring a net reduction in global emissions. These cancelled credits cannot be sold, traded, or counted towards any country’s emission targets.

This agreement with Bhutan is Singapore’s third Implementation Agreement under Article 6, following similar agreements with Ghana and Papua New Guinea. These partnerships reflect Singapore’s proactive approach to fostering international collaboration on climate action and advancing global efforts to meet the goals of the Paris Agreement.