Singapore Singapore publishes new regulations to offset carbon tax by carbon credits

Singapore Climate Change Climate Change
16 November 2023  HIROSE Nao  HIROSE Nao (EnviX, Ltd.)
Singapore publishes new regulations to offset carbon tax by carbon credits

The following three regulations related to the Carbon Pricing Act were promulgated in Singapore on October 6, 2023. All of the regulations will take effect on January 1, 2024(*). In Singapore, under the Carbon Pricing (Amendment) Act 2022 promulgated on March 7, 2023, in addition to the “fixed-price carbon credit” (FPCC), eligible international carbon credits (ICC) that meet the prescribed criteria will be available for carbon tax payments. The three regulations specify the criteria for eligible international carbon credits, its application and its surrender.

 

(*) Article 8 of the Carbon Pricing (Registration and General Matters) (Amendment) Regulations 2023 shall be deemed to have come into force on December 31, 2021. This Article 8 changes part of the name of the cited law (Evidence Act 1893) and is not a provision related to the carbon pricing regulations.

 

Addition of “International Carbon Credit (ICC)” application

The Carbon Pricing (Carbon Tax and Carbon Credit Registry) (Amendment) Regulations, 2023 amends the “Carbon Pricing (Carbon Tax and Carbon Credit Registration) Regulations, 2020” and newly adds “Part 4: International Carbon Credits (ICC)”. Part 4 requires ICCs that can be used in Singapore to meet all of the following requirements:

  • the certified GHG emissions reductions or removals must not be counted more than once in contravention of the Paris Agreement adopted on 12 December 2015, and any guidance adopted by the Conference of the parties serving as the meeting of the Parties to that Agreement;
  • the certified GHG emissions reductions or removals must have occurred or must occur between 1 January 2021 and 31 December 2030 (both dates inclusive);
  • the certified GHG emissions reductions or removals must exceed —
    • any GHG emissions reductions or removals required by any law or regulatory requirement of the host country; and
    • any GHG emissions reductions or removals that would otherwise have occurred in a conservative and business‑as‑usual scenario;
  • the certified GHG emissions reductions or removals must have been quantified based on a realistic, defensible, and conservative estimate of the amount of GHG emissions that would have occurred in a business‑as‑usual scenario, assuming the project or programme that generated the certified GHG emissions reductions or removals had not been carried out;
  • the certified GHG emissions reductions or removals must have been calculated in a manner that is conservative and transparent, and must have been measured and verified by an accredited and independent third‑party verification entity before the international carbon credit was issued;
  • subject to paragraph (g), the certified GHG emissions reductions or removals must not be reversible;
  • where there is a risk that the certified GHG emissions reductions or removals may be reversible, there must be measures in place to monitor, mitigate and compensate any material reversal of the certified GHG emissions reductions or removals;
  • the project or programme that generated the certified GHG emissions reductions or removals must not violate —
    • any applicable laws of the host country, whether provincial or national;
    • any applicable regulatory requirements of the host country, whether provincial or national; and
    • any international obligations of the host country;
  • subject to paragraph (j), the carrying on of the project or programme that generated the certified GHG emissions reductions or removals must not have resulted in, or result in, a material increase in GHG emissions at any place other than the site of that project or programme;
  • where there is a risk that the carrying on of the project or programme that generated the certified GHG emissions reductions or removals may have resulted in or may result in a material increase in GHG emissions at any place other than the site of that project or programme, there must be measures in place to monitor, mitigate and compensate any such material increases in GHG emissions.

 

The definitions of terms in the above requirements are as follows:

  • “certified GHG emissions reductions or removals”, in relation to an international carbon credit, means the GHG emissions reductions or removals that an international carbon credit represents, as certified under the carbon crediting programme under which the international carbon credit is issued;
  • “host country”, in relation to an international carbon credit, means the country or territory in which the certified GHG emissions reductions or removals to which the international carbon credit relates, were generated.”

 

By using a qualified ICC that meets the above requirements, businesses can offset up to 5% of their taxable GHG emissions. Businesses wishing to offset their emissions are required to apply to the National Environment Agency (NEA) through a dedicated system (EDMA: Emissions Data Monitoring and Analysis). If the emission year to be offset is year R, the application period is one year, from July 1 of year R to June 30 of year R+1. Other information or documents designated by the NEA is also required at the time of application.

 

In addition, businesses that use ICCs to offset and then pay carbon tax payments must complete the items below by August 31 of the following year (R+1)

  • To write off the offsetting ICC.
  • To submit evidence through EDMA that the ICC has been written off (the set of evidence of retirement will be the document required by the newly added Article 11(4)).

 

The URL for the EDMA system is as follows:
https://edma.gov.sg/SignIn.aspx

Author / Responsibility

HIROSE Nao

Researcher, Research & Consulting Dept. EnviX Ltd.

Business Performance

In charge of Southeast Asia for managing information on the environmental regulations.

Background

BA, Human Life and Environmental Sciences, Ochanomizu University

HIROSE Nao