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SINGAPORE and Peru’s cooperation on carbon credits has deepened, with the two countries close to finalising a transfer agreement that will allow the city-state to buy carbon credits from the South American nation.

The Ministry of Trade and Industry (MTI) on Thursday (Nov 21) said that both countries have substantively concluded negotiations on the deal, known as an implementation agreement, on the sidelines of COP29, the annual United Nations climate change conference currently taking place in Baku, Azerbaijan.

Once the agreement is inked, Peru will join Papua New Guinea and Ghana – the only two countries that have completed their negotiations so far – in trading carbon credits aligned with Article 6 of the Paris Agreement with Singapore.

This means that corporates here may soon have access to a larger pool of carbon credits which they can buy to offset 5 per cent of their taxable emissions.

Besides Peru, Bhutan, Paraguay and Vietnam have also reached this advanced stage of negotiations.

When signed, the implementation agreement between Peru and Singapore will set out a framework for the generation and international transfer of Article 6-compliant carbon credits.

This means that these credits will come with corresponding adjustments, where the emissions being offset are counted only once by the country that bought the credits, while the country that produced them gives up the right to use the credits to meet its own national climate goals.

This is to avoid the double-counting of underlying emissions reductions or removals when carbon credits are traded.

MTI said that Singapore and Peru’s collaboration is aimed at unlocking additional mitigation activities and scaling impactful climate solutions that could advance both countries’ climate ambitions.

Projects developed under the agreement will prioritise sustainable development and co-benefits to the Peruvian communities and economy, it added.

As rules surrounding the global trading of carbon credits – covered under Article 6.4 of the Paris Agreement – were adopted only on the first day of the COP29 talks, Singapore has been working with individual countries on bilateral carbon credit trading agreements over the last few years.

The progress with Peru is the second bilateral carbon credit collaboration that Singapore has made advances in at COP29.

The first was on Tuesday, when the city-state signed a memorandum of understanding with Zambia. It will pave the way for both countries to eventually settle on an implementation agreement.

Singapore’s Minister for Sustainability and the Environment Grace Fu on Thursday said she was looking forward to the private sector utilising the agreement with Peru – once it is signed – to bring about concrete environmental outcomes.

Peru’s Deputy Minister of Strategic Development of Natural Resources Raquel Soto said that finalising the agreement with Singapore would bring significant benefits for the South American country.

“Through this agreement, we can access international carbon markets to channel investments into high-quality mitigation projects that support our environmental and economic goals,” she added.