Singapore’s Ministry of Trade and Industry (MTI) and Colombia’s Ministry of Environment and Sustainable Development have signed a memorandum of understanding (MoU) for collaboration on carbon credits between the two countries.
The MoU was signed on Aug. 2 between Gan Kim Yong, Singapore’s Minister for Trade and Industry, and Carlos Eduardo Correa Escaf, Colombia’s Minister of Environment and Sustainable Development. This is the first MoU that sets the foundations of a carbon credits collaboration between Singapore and a country in Latin America.
The MoU will support and develop joint carbon credits projects that could benefit both countries, MTI said. The projects aim to support the two nations’ climate targets.
“The signing of this MOU underscores the shared commitment of Singapore and Colombia to work together on a framework agreement on carbon credit projects aligned to Article 6 of the Paris Agreement,” Gan said. “We believe that international collaboration, such as this agreement between Singapore and Colombia, is critical to promoting global climate action to achieve the goals of the Paris Agreement.”
Carbon credits are permits that allow the purchasers to emit a certain amount of CO2 or other greenhouse gases (GHG). One carbon credit equals the emission of one ton of CO2 or the corresponding amount of other greenhouse gases.
Large industry polluters are awarded credits that allow them to release emissions to a specific limit, which is reduced periodically. Emitters are also allowed to sell credits they don’t need to other companies.
This creates a double incentive for private businesses to bring down their harmful emissions – they can either purchase extra credits if their emissions exceed the limits, or make a profit by decreasing their emissions and then selling carbon credits.
The carbon credits prices vary based on market and location. The average price in 2019 was $4.33 per ton, while in 2020 it rose to $5.60 before going down to $4.73 in 2022.
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