Southeast Asia Information Port (www.dnyxxg.com) – Due to a current shortage in the compliant international carbon credit market, the Singapore government has introduced new regulations: local companies subject to carbon tax can carry over unused international carbon credit offset allowances from the 2025 emission year to the 2026 emission year. The carried-over allowances will be adjusted in line with changes in the carbon tax rate.
The Ministry of Sustainability and Environment and the National Environment Agency issued a statement on Monday, May 11th, stating that this carry-over is a transitional regulatory measure aimed at providing a buffer period for the development of the international carbon credit trading market and simultaneously addressing the market's carbon credit supply gap.
Since the 2024 emission year, Singapore has allowed companies to purchase international carbon credits, offsetting up to 5% of their taxable carbon emissions. It is also clarified that carbon offset allowances carried over from the 2024 emission year to the 2025 emission year will automatically expire and cannot be transferred again.
Singapore will reportedly raise its carbon tax in 2026, increasing the tax on greenhouse gases from S$25 to S$45 per metric tonne. Due to this tax adjustment, carbon offset allowances carried over from the 2025 emission year to the 2026 emission year will be proportionally adjusted. For example, an existing 4,000-tonne offset allowance from the 2025 emission year will be adjusted to 2,222 tons after the 2026 emission year.
The authorities stated that the Singapore government will continue to promote the development of a high-quality international carbon market, working with partners who have signed implementation agreements to jointly expand the supply of compliant carbon credits.
Currently, Singapore has signed carbon credit implementation agreements with 11 countries and will begin soliciting carbon credit projects from Bhutan, Ghana, Peru, Rwanda, and Thailand from the end of 2025. Due to the fact that carbon credit projects generally have a development cycle of several years, coupled with the industry's increasing requirements for carbon credit integrity and the continuous iteration and evolution of international carbon market rules, the overall carbon credit allocation progress has been delayed.
