Regulatory Update: What Your Business Should Know About Singapore's ICC Eligibility List
In October 2023, we published a blog breaking down the Singapore government’s Eligibility Criteria under the International Carbon Credit (ICC) Framework, which is a list of seven principles that ICCs must meet to be surrendered for the carbon tax. In our latest blog post, we explore key details of the recently released Eligibility List under the ICC Framework, which went into effect on January 1, 2024. This significant update by the Ministry of Sustainability and the Environment (MSE) and the National Environment Agency (NEA) will shape the way businesses approach their sustainability goals in 2024 and beyond.
Read more to learn how this could affect your business, and how ACT can support your compliance obligations.
Singapore’s carbon tax policy: A refresher
On January 1st, 2019, Singapore implemented a carbon tax of $5 per metric ton of carbon dioxide equivalent. This was the first carbon pricing scheme in Southeast Asia. In March 2022, the government announced that it would be progressively increasing the carbon tax as part of raising its climate ambition to encourage businesses and individuals to reduce their carbon footprint. The carbon tax will be raised to $25 per ton in 2024 and 2025 and $45 per ton in 2026 and 2027, with the eventual aim of reaching $50 to $80 per ton by 2030. [1]
How are carbon credits related to the carbon tax, and which carbon credits are eligible?
From 2024, companies will be able to surrender high-quality international carbon credits to offset up to 5% of their taxable emissions. The Singapore government has released the Eligibility List, which outlines the eligible carbon credits that companies may use to offset part of their liability under the Singapore carbon tax. [2]
Why is this significant?
Since the announcement of the tax increase, companies have been awaiting more direction from the government on eligible carbon credits. The Eligibility List illustrates the eligible host countries, carbon crediting programs, and methodologies that adhere to the Eligibility Criteria. The National Environment Agency (NEA) - the administrator of the carbon tax regime - will review and update the Eligibility List every year to ensure relevance and adherence to high environmental integrity standards, guided by the latest science and evidence. This will include adding or removing carbon crediting programs and methodologies from the list. [2]
Additionally, the Eligibility Criteria will also be reviewed periodically to ensure alignment with developments in both Article 6 of the Paris Agreement and the carbon markets. [3]
Breaking down the most important points from the Eligibility List
Eligible carbon crediting programs and methodologies may differ based on the host country, as each host country has its own criteria. The Eligibility List for each host country would be agreed under the respective Implementation Agreement, which outlines the processes for generating and transferring international carbon credits aligned with Article 6.
Notably, Papua New Guinea was the sole host country on the latest version of the Eligibility List, with four carbon crediting programs approved for the country: the American Carbon Registry (ACR), Global Carbon Council, Gold Standard for the Global Goals, and the Verified Carbon Standard (VCS).
For Papua New Guinea, the eligible methodologies include all active ones published before March 31st, 2023, with certain exclusions for each carbon crediting program. For example, under the VCS, methodologies under the “Sectoral Scope 14” category (Agriculture, Forestry, and Other and Use (AFOLU)) are not accepted. However, there are a few allowable exceptions to this exclusion, such as tidal wetland and seagrass restoration, improved agricultural land management, and sustainable grassland management. [2]
In the meantime, Singapore continues to work towards signing Implementation Agreements with countries such as Bhutan, Cambodia, Chile, Colombia, Costa Rica, Dominican Republic, Fiji, Ghana, Indonesia, Kenya, Mongolia, Morocco, Paraguay, Peru, Rwanda, Senegal, Sri Lanka, and Vietnam. [4]
How can your organization procure eligible credits to meet its tax obligations?
As the world's leading provider of market-based sustainability solutions, ACT has deep expertise within various compliance carbon markets and can guide companies to navigate them to fulfill their obligations. As the Singaporean government continues to review and update the Eligibility List, our team of experts can support you in keeping up with the latest developments. Your organization can also rely on our expertise in global credit sourcing and project development to help you understand and navigate the whitelist set out by the Singapore government.
For more questions on how ACT can support your organization’s compliance obligations, get in touch with us at info@actcommodities.com.
Sources:
[2] Singapore Publishes Eligibility List For International Carbon Credits Under The Carbon Tax Regime