Singapore and Ghana open applications for carbon credit projects

Singapore and Ghana have started authorising carbon credit projects under a new bilateral agreement, which allows Singaporean companies to offset part of their carbon tax obligations by purchasing carbon credits from projects in Ghana. Signed earlier this year, the agreement facilitates the creation and bilateral trade of carbon credits, aligning with Article 6 of the Paris Agreement, which outlines frameworks for countries to voluntarily collaborate on climate goals.

Singapore currently imposes a carbon tax of S$25 (US$19) per tonne of carbon dioxide-equivalent, with projections indicating an increase to between S$50 (US$38) and S$80 (US$61) per tonne of carbon by 2030. Companies can offset up to 5% of their emissions by purchasing carbon credits, provided the projects meet Singapore's standards. 

As of this month, interested parties can now submit applications for carbon credit projects in Ghana. Applications will be reviewed on a rolling basis by both the Singaporean and Ghanaian governments.

The types of projects eligible for carbon credits include:

• Clean water supply: Projects could focus on providing rural communities with water purification technologies, such as UV-based disinfection systems. By offering an alternative to traditional firewood-based water boiling, these technologies could reduce emissions from firewood burning and help curb deforestation. Carbon credits would be issued based on the emissions avoided.
  
  
• Efficient and clean cookstoves: Another concept involves introducing efficient cookstoves powered by renewable energy, like biogas or solar, in regions where households rely on firewood for cooking and heating. These cookstoves would lower emissions and decrease deforestation. 
  
  
• Green mobility: Projects replacing fossil-fuel-powered vehicles with electric vehicles (EVs) could also qualify, as EVs have the potential to lower emissions through higher efficiency and use of green energy. 
  

To qualify for carbon credits, however, projects must meet specific eligibility criteria. Recognised carbon credit programmes include the Gold Standard for the Global Goals (GS4GG) and Verra’s Verified Carbon Standard (VCS). Certified emissions reductions or removals cannot be counted more than once across reporting systems. They must also demonstrate additionality by exceeding any emissions reductions required by host country regulations and go beyond what would happen in a conservative, business-as-usual scenario. Furthermore, these emissions reductions or removals must be permanent; if there is a risk of reversal, the project must include measures to monitor, mitigate, and compensate for any material reversals that could occur.

In July, Singapore's Ministry of Trade and Industry (MTI) led a carbon credits business mission to Ghana, with a delegation of 22 Singapore-based companies spanning project developers, traders, and financiers. Among the attendees was GenZero, a decarbonisation investment platform owned by Temasek, which last year announced plans to invest in a project in Ghana to generate carbon credits. GenZero is working with AJA Climate Solutions – a Singaporean firm that manages nature-based climate mitigation projects – to restore an estimated 100,000ha of degraded and deforested land in Ghana’s Eastern Region. The first phase of the project prioritises the regeneration of deforested cocoa lands and the rewilding of off-reserve forests. The subsequent phase, slated for 2027, will concentrate on reviving native tree species within the degraded forests of the Kwahu Afram Plains.

Last year, carbon credits certifier Verra faced scrutiny after allegations surfaced that many of its rainforest offset credits lacked true carbon reduction impact. Singapore later announced that it would accept forest conservation carbon credits but specified that these must address deforestation on a jurisdictional scale rather than merely on a project level. This approach aims to mitigate the risk of deforestation merely being relocated from monitored to unmonitored areas. The Singapore-Ghana initiative notably does not recognise agriculture, forestry, and other land use methodologies from both Verra’s VCS and GS4GG, although there are some exceptions.

Kenya-based company Burn is also looking to issue credits to Singaporean buyers through its two clean cookstove projects in Ghana, set to begin in early 2025. South Korean renewable energy company EcoLinks has shown interest as well, with plans to distribute 100,000 charcoal-based cookstoves in local communities, reducing the reliance on open-fire cooking. Additionally, Ghana-based electric bike company Wahu Mobility hopes that selling carbon credits to Singapore will provide the necessary funding to support the greening of Ghana’s transport sector.

 

References

 ‘Revealed: more than 90% of rainforest carbon offsets by biggest certifier are worthless, analysis shows’, The Guardian, 18 January 2023

‘GenZero invests in restoration project in Ghana aiming to generate carbon credits with corresponding adjustments’, GenZero, 8 June 2023

‘Singapore will accept forest carbon offsets only from countries with deforestation safeguards’, The Business Times, 09 October 2023

‘Singapore signs Implementation Agreement with Ghana to collaborate on carbon credits under Article 6 of the Paris Agreement’, Ministry of Sustainability and the Environment, Singapore, 27 May 2024

‘Singapore, Ghana sign carbon credit agreement enabling firms to offset part of carbon tax’, The Straits Times, 27 May 2024

‘Singapore and Ghana re-affirm bilateral ties and commitment to carbon credits collaboration’, Ministry of Trade and Industry, Singapore, 08 August 2024

‘Singapore firms eye opportunities in cookstoves, EVs in Ghana trip to source for carbon credits’, The Straits Times, 26 August 2024

‘Singapore and Ghana launch first call for project applications under IA on CC Cooperation’, National Climate Change Secretariat Singapore, 30 September 2024

‘VCS Program Methodologies’, Verra, Accessed 29 October 2024