Singapore Seeks Nature-Based Carbon Credits in Landmark Article 6 Tender
Singapore’s first public tender for carbon credits, seeking at least 0.5 million metric tons (mt) of credits from high-quality nature-based projects, positions the city-state as an early mover in government-led Article 6 transactions under the Paris Agreement, potentially setting a benchmark for the nascent global market, sources said.
The Request for Proposal (RFP), issued by the Prime Minister’s Office in September 2024, is intended to count towards Singapore’s Nationally Determined Contribution (NDC) target to reduce emissions to around 60 million metric tons of CO2 equivalent (mtCO2e) by 2030, after peaking earlier.
Official projections have estimated Singapore will require 2.51 million mtCO2e annually in Internationally Transferred Mitigation Outcomes (ITMOs) from 2021 to 2030 to make up for residual emissions reductions required to meet its NDC target. It has sought bilateral collaboration on ITMOs with partners via Article 6.2 of the Paris Agreement, underpinned by legally binding bilateral Implementation Agreements, which require corresponding adjustments for credits transferred to Singapore to avoid double counting.
The contract will span an expected period of five years, requiring delivery of correspondingly adjusted nature-based credits generated between 2021 and 2030. Final delivery of all credits must be completed by Feb. 15, 2031, according to tender documents seen by OPIS. Initially scheduled to close in November, the submission deadline was extended twice, first to Jan. 17 and now to Feb. 14.
Each proposal must deliver a minimum of 0.5 million mt of credits, though the total procurement volume will be determined after receiving and assessing proposals, a spokesperson from the National Climate Change Secretariat (NCCS) said.
Successful bidders will be subject to a 5% security deposit based on the contract value and must source alternative eligible credits in case of shortfalls. Potential penalties will be tied to Singapore’s prevailing carbon tax, which is set to rise from S$25 ($18.30) per mt now to S$45 in 2026 and as much as S$80 by 2030.
“The security deposit and liquidated damages are safeguards against non and/or late delivery of carbon credits,” the NCCS said.
Market participants noted that these requirements, combined with the risks in securing host-country authorizations under Article 6, could deter smaller players – limiting participation to firms with robust financial backing and host-country relationships.
“The tender could carry more risk for sellers than what has been seen in some early private-sector deals and negotiations, which supply correspondingly adjusted credits contingent on host-country authorization,” a trader said.
One project developer described the penalties as severe, particularly given the potential financial burden if credits are not delivered. “A penalty towards the upper end of Singapore’s potential carbon tax hike to S$80/mt by 2030 if failing to deliver or source alternative credits would be devastating,” the developer said. “It’s far beyond what developers can expect to sell credits for.”
Credits for the tender must meet Singapore’s Environmental Integrity Criteria, be verified under approved methodologies, and align with government-to-government agreements. Accepted methodologies include Verra standards for forest management (VM0012), sustainable grasslands (VM0032), peatland rewetting (VM0036), Verra’s jurisdictional REDD+ programs, and ART-TREES REDD+ (Version 2.0). Bidders may also propose alternative methodologies for consideration, such as those recognized by the International Civil Aviation Organization’s Carbon Offsetting and Reduction Scheme for International Aviation or the Integrity Council for the Voluntary Carbon Market’s Core Carbon Principles, following tender documents.
Proposals can include a portfolio of up to 10 projects and must specify eligible host countries with bilateral agreements or MOUs with Singapore. While Singapore is in various stages of negotiation with a range of partner countries, legally binding implementation agreements have been finalized only with Ghana and Papua New Guinea, to date. For countries without agreements, bidders must secure confirmation from the host government of its willingness to negotiate. “Clarity on its implementation agreements and processes will be critical for bidders,” a second trader added.
Pricing will be based on Singapore dollars per mtCO2e for each annual delivery tranche, following the tender.
Carbon credits in the voluntary market vary significantly based on methodology, vintage and volume. OPIS last assessed nature-based REDD+ Vintage 2021 Credits at $8/mt, Blue Carbon V21 Credits at $25.71/mt, and Afforestation/Reforestation V21 Credits at $17.23/mt on Jan. 16.
Price signals from early Article 6-aligned deals suggest a clear premium compared to credits traded in the voluntary markets. Switzerland’s Klik Foundation, which manages the country’s decarbonization efforts, paid an average price of CHF 27/mt ($29.62/mt) for its Article 6.2-aligned credits in 2023, as OPIS reported.
Singapore’s first tender highlights its ambition to position itself as a hub for carbon markets while setting standards for nature-based solutions (NBS), a segment under scrutiny in recent years, sources indicated.
“We are encouraged by early market activity, such as Singapore’s RFP, as it signals progress in advancing Article 6,” said Bjorn Fonden, International Policy Advisor at IETA, adding that Article 6 is fully ready for implementation following COP29.
“Supply remains constrained, largely due to the complexities of establishing national frameworks and aligning ITMO exports with NDC priorities in host countries. We believe that these early demand signals from buyers can help boost market confidence and enable the unlocking of high-integrity supply,” Fonden added.
Globally, 97 bilateral agreements between 59 countries have been signed under Article 6.2, with 141 pilot projects recorded to date, most under Japan’s Joint Crediting Mechanism, according to the UN Environment Program. Only five projects, including Thailand’s Bangkok E-Bus Program and Ghana’s Transformative Cookstove Activity, have received authorization so far, underscoring the nascent stage of Article 6 implementation.
$1 = S$1.367
$1 = CHF 0.910
Reporting by Melissa Goh, mgoh@opisnet.com
Editing by Mei-Hwen Wong, mwong@opisnet.com
© 2025 Oil Price Information Service, LLC. All rights reserved.