Singapore and Laos have signed an agreement establishing a legally binding framework for developing and transferring carbon credits under Article 6 of the Paris Agreement, opening a new channel for climate finance projects between the two Southeast Asian countries.
Signed virtually on September 4, this is Singapore’s 12th bilateral implementation agreement on carbon credits and its fourth with an ASEAN member state.
The framework is intended to allow project developers to pursue carbon mitigation projects aligned with the Article 6 rulebook. Procedures for project authorization and eligible crediting methodologies will be published later, according to Singapore’s Ministry of Trade and Industry.
Carbon Finance Tied To Lao Development
The agreement covers the international transfer of high-integrity carbon credits that have undergone corresponding adjustments, a mechanism designed to prevent the same emissions reductions from being counted by both the host and buyer countries.
Authorized credits could be used for several purposes, including offsetting up to 5% of a company’s taxable emissions under Singapore’s International Carbon Credits (ICC) framework, subject to eligibility.
They may also be used toward national climate commitments (Nationally Determined Contributions, or NDCs) and international requirements such as the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA).
Relevant: Singapore Expands ASEAN Carbon Market Network With Philippines Deal
The agreement also sets financial and environmental commitments. Singapore will direct 5% of proceeds from authorized credits toward climate adaptation measures in Laos. In addition, 2% of correspondingly adjusted credits will be canceled when first issued, meaning they cannot be traded or counted toward national emissions targets.
Projects approved under the framework are expected to support emissions reductions while contributing to sustainable development, including job creation and reduced environmental pollution in Laos.
“We are proud to show that our region can lead in building carbon markets that deliver real, tangible benefits for our people and for the global effort against climate change,” said Laos’ Agriculture and Environment Minister Linkham Douangsavanh.
Read more: Buyers’ Coalition Launched In Singapore To Unlock Climate Finance Across Asia
