SINGAPORE/CHILE - Singapore has announced the signing of a legally binding Implementing Agreement with Chile for the transfer of high-quality carbon credits under Article 6 of the Paris Agreement. This marks Singapore's fifth such agreement, following similar arrangements with Papua New Guinea, Ghana, Bhutan, and Peru, signaling both nations' commitment to leveraging carbon markets in the fight against climate change.

This agreement ensures corresponding adjustments for internationally transferred mitigation outcomes (ITMOs) to prevent double counting and establishes procedures for approving and verifying eligible emission reduction projects. Carbon mitigation projects undertaken under this agreement are expected to support Chile's sustainable development while contributing to Singapore's climate goals.

Grace Fu, Singapore's Minister for Sustainability and the Environment and Minister-in-charge of Trade Relations, stated, "Singapore and Chile are long-standing partners with shared values. Commemorating 45 years of diplomatic relations last year, we are now joining forces to accelerate climate action through carbon markets." She further added, "This Implementing Agreement will help to unlock Chile's additional mitigation potential and support Singapore in achieving our climate targets, while also catalyzing climate investments into Chile. We look forward to active participation from the private sector in operationalizing this agreement."

Chile's Minister of Foreign Affairs, Alberto van Klaveren, commented, "Chile and Singapore have demonstrated strong leadership in climate change mitigation and adaptation through ambitious commitments and goals. This agreement will create valuable spaces for public-private collaboration, contributing to addressing our shared challenge of climate change."

Key Highlights of the Agreement:

Carbon Credit Utilization: Approved carbon credits can be used by companies in Singapore to offset up to 5% of their taxable emissions under Singapore's International Carbon Credit (ICC) framework, starting from January 1, 2024.
International Application: These credits can also be utilized towards fulfilling Nationally Determined Contributions (NDCs) or binding commitments such as the International Civil Aviation Organization's (ICAO) Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA).

Revenue Sharing and Net Mitigation: Singapore will share 5% of the revenue generated from the transfer of these carbon credits with Chile to support its climate change adaptation efforts. Additionally, 2% of the issued credits will be cancelled, ensuring an overall reduction in global emissions rather than a simple transfer.
This bilateral framework aims to facilitate credible, transparent, and verifiable carbon mitigation efforts, providing a pathway for businesses and investors to engage in international carbon markets while directly supporting the sustainable development of host countries undertaking emission reduction projects.

Article 6 of the Paris Agreement provides guidance on international carbon market mechanisms, outlining how countries can cooperate internationally to achieve their greenhouse gas emission reduction targets. Specifically, Article 6.2 addresses cooperative approaches that involve the international transfer and use of mitigation outcomes, thereby supporting the achievement of each country's NDCs. Corresponding adjustments are a crucial element to avoid double counting of emission reductions during such international transfers.

Through this agreement with Chile, Singapore is reinforcing its leading role in international carbon markets and is expected to contribute significantly not only to its own climate change goals but also to the sustainable development of developing nations.