Singapore signs agreement with Bhutan for carbon credits cooperation

Singapore and Bhutan have signed an agreement on carbon credits. 

The pact, signed in Singapore recently by Singapore’s Minister for Sustainability and the Environment and Minister-in-charge of Trade Relations, Grace Fu and Bhutan’s Minister of Energy and Natural Resources, Gem Tshering, established a framework for the transfer of carbon credits from Bhutan to Singapore under Article 6 of the Paris Agreement. 

According to a government announcement, Fu expressed the shared vision of both nations for a greener and more sustainable future. 

“Singapore is pleased to partner with Bhutan, a carbon-negative country and a leader in environmental stewardship, to accelerate climate action through this Implementation Agreement,” Minister Fu said. 
 
She added that by working together on high-integrity carbon markets, the two countries “can drive sustainable growth, mobilise climate finance, and reduce global carbon levels”. 

The agreement with Bhutan is Singapore’s third, following agreements with Papua New Guinea and Ghana in December 2023 and May 2024 respectively. 

Singapore has also held substantive negotiations with Paraguay and Vietnam, in addition to 15 signed memorandums of understanding (MOUs) with nations such as Fiji, Colombia and Mongolia. 

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Carbon credits and Article 6   

Carbon credits refer to carbon emissions removed from the atmosphere that are measured in tonnes of carbon dioxide equivalent (tCO2e).  

The credits can be generated through carbon removal projects in reforestation and renewable energy.

Adopted by 196 parties at the UN Climate Change Conference (COP21) in Paris, France, in December 2015, the Paris Agreement is a legally binding international treat on climate change. 

Article 6 sets out how countries can collaborate to reach their climate targets by the voluntary transfer of carbon credits through such agreements. 

According to a World Population Review 2024 report, Bhutan is one of only three countries, alongside Panama and Suriname, that have managed to remove more carbon from the atmosphere than it emits - earning its standing as a carbon-negative country. 

Bhutan’s achievement was made possible by a “deep reverence for nature” and an emphasis placed on environmental conservation, which is at the heart of a national identity, said Bhutan’s Minister Tshering. 

He added: “As a carbon-negative country, we remain steadfast in our commitment to balancing economic progress with environmental integrity.  

“Our Implementation Agreement with Singapore sends a powerful message on the importance of international collaboration on high-integrity carbon markets to address climate change.” 

Singapore’s green plan 

The Singapore Green Plan 2030 serves as the nation’s roadmap in charting its eventual target of net zero emissions by 2050.  

To achieve this, Singapore needs to reduce emissions to around 60,000 tCO2e by 2030, and further reduce emissions to between 45,000-50,000 tCO2e by 2035. 

Data from the International Energy Agency (IEA) reported that Singapore emissions profile in 2022 measured at 58,600 tCO2e. 

The signed agreement between Singapore and Bhutan sets out a legally binding bilateral framework for project developers to develop high-quality carbon credit projects. 

Moreover, the carbon mitigation projects are aimed at promoting sustainable development and delivering tangible benefits to local communities.  

This includes jobs creation, improved access to clean water, enhanced energy security, and reduced environmental pollution.  

For instance, Singapore has committed to “channelling the value equivalent to five per cent share of proceeds from authorised carbon credits towards climate adaptation measures,” such as heat resilience measures and climate-resilient agriculture, in Bhutan. 
 
More information will be published in due course on the process for authorisation and eligible carbon crediting methodologies. 

With its unique role in the global green transition, the small Himalayan kingdom of Bhutan has also gained a unique reputation in their approach for national issues like digitalisation and cryptocurrency by championing their own path, as previously reported by GovInsider.  

“We are pleased that our cooperation will reinforce Bhutan’s long-standing vision of sustainable development – one that conserves our forests, supports our communities, and ensures our planet continues to thrive for generations to come,” Minister Tshering said.