- Credibility Boost: Singapore’s draft guidance sets principles to strengthen trust and consistency in voluntary carbon credit use, addressing industry concerns around quality and standardisation.
- Government Support: Companies may offset up to 5% of taxable emissions and must disclose carbon credit use in climate reports under ISSB-aligned regulations.
- Stakeholder Collaboration: Industry bodies like SSFA are developing complementary initiatives, including a Claims Guidance Code and ASEAN-wide efforts to enhance credit integrity and market demand.
Singapore has released a draft guidance framework to support businesses in using voluntary carbon credits as part of credible decarbonisation strategies, aiming to bring clarity and consistency to a fragmented market.
The National Climate Change Secretariat (NCCS), Ministry of Trade and Industry (MTI), and Enterprise Singapore (EnterpriseSG), in partnership with the Singapore Sustainable Finance Association (SSFA), jointly issued the document on 20 June 2025. Public feedback is invited through 20 July 2025.
“Carbon markets are a critical enabler for the global transition to net zero,” the agencies said, noting that carbon credits can unlock funding for mitigation projects, particularly in emerging and developing economies.
However, inconsistent standards and confusion in the voluntary carbon market (VCM) have held back corporate adoption due to reputational risk. In response, the guidance sets four key principles:
- Alignment with international frameworks, especially Article 6 of the Paris Agreement;
- Priority on feasible emissions reductions before credit usage;
- Emphasis on high environmental integrity;
- Clarification that “corresponding adjustments do not apply to voluntary credits as these are not counted towards national climate targets.”
These principles are underpinned by quality criteria adapted from Singapore’s International Carbon Credit (ICC) framework. Carbon credits should be real, additional, verified, not double-counted, and free from leakage or harm. Companies are urged to conduct project-level due diligence and consider using third-party verification tools or ratings.
RELATED ARTICLE: Singapore and Chile Sign Carbon Credit Agreement Under Paris Agreement Article 6
The draft guidance is part of a broader national push to establish Singapore as a trusted global hub for carbon trading. Key initiatives include:
- Allowing carbon tax-liable firms to offset up to 5% of taxable emissions with eligible Article 6-compliant credits;
- Mandating corporate disclosure of carbon credit usage under climate reporting aligned with the International Sustainability Standards Board (ISSB);
- Supporting supply through the Carbon Project Development Grant, launched at COP29.
“We support the voluntary use of high-quality carbon credits as part of a credible decarbonisation plan,” the document states. Still, it emphasises that such credits should be used to address only residual emissions—after all feasible reduction options have been exhausted.
In parallel, the SSFA is developing a complementary Claims Guidance Code and coordinating with regional bodies under the ASEAN Common Carbon Framework to align market signals and boost the quality and availability of credits.
Finally, companies are strongly encouraged to publicly disclose the volume, type, registry, and purpose of credits used, as well as any third-party validation. Transparency will play a central role in boosting confidence, attracting investment, and aligning corporate efforts with global climate goals.
Read Full press release here,
Annex A – Draft Guidance on Voluntary Carbon Market
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