The Philippines and Singapore have signed a legally binding agreement to establish a framework for cross-border carbon trading, positioning the deal as part of a broader push to expand climate-finance markets across Southeast Asia.
The agreement, signed during ASEAN Climate Week in Manila at the end of April, operates under Article 6.2 of the Paris Agreement, which allows countries to transfer emissions reductions internationally through regulated carbon-credit systems.
Officials from both countries said the pact would create the legal and technical structure needed to develop and trade high-quality carbon credits tied to projects in the Philippines. Singapore-based companies would be permitted to use authorized credits to offset as much as 5% of their taxable emissions.
The arrangement also includes safeguards intended to strengthen market credibility. Singapore said 5% of proceeds from authorized carbon credits would support climate adaptation projects in the Philippines, while 2% of issued credits would be canceled to help ensure a net reduction in global emissions.
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The deal establishes a joint committee and governance mechanisms aligned with the Paris Agreement’s transparency standards. It also introduces approved methodologies and tracking systems for Internationally Transferred Mitigation Outcomes, or ITMOs, the accounting units used in international carbon markets.
Philippine Environment Secretary Juan Miguel Cuna called the accord a “strategic decision” aligned with the country’s development priorities and climate commitments.
Singapore’s Minister for Sustainability and the Environment Grace Fu said the agreement would deepen regional cooperation while directing climate finance toward projects with economic and environmental benefits.
“This Agreement will deepen collaboration between our two countries, channel climate finance towards impactful projects in the Philippines and unlock new opportunities in carbon markets for businesses and local communities,” Fu was quoted as saying by Philippine News Agency (PNA).
Officials said sectors likely to benefit include renewable energy, methane reduction, waste management, climate-smart agriculture and nature-based projects.
This is the first bilateral carbon market agreement for the Philippines, while for Singapore it marked its 11th such deal globally and third within the Association of Southeast Asian Nations (ASEAN).
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