Singapore buys carbon credits from Ghana, Paraguay and Peru

Singapore, Sep 16 (PTI) Singapore will spend SGD76.4 million to buy more than two million tonnes of nature-based carbon credits from four projects in Ghana, Paraguay and Peru, a media report said.

This is the first time the commercially vibrant city state is sourcing carbon credits from nature-based projects, said the National Climate Change Secretariat (NCCS) and the Ministry of Trade and Industry (MTI).

This is significant as it marks the first tranche of carbon credits that the city state has secured, according to a report by The Straits Times reported on Tuesday.

The projects aim to preserve Peruvian forests and prevent deforestation, reforest degraded pastureland in Ghana and sequester carbon in soil in the grasslands of Paraguay through sustainable management practices, said NCCS and MTI.

The 2.175 million tonnes of carbon credits are equivalent to offsetting close to 4 per cent of Singapore’s greenhouse gas emissions in 2022.

One carbon credit represents one tonne of carbon dioxide that is either removed from the atmosphere, such as through restoration efforts, or prevented from being released, such as when a forest is saved from the axe, according to the daily report.

The sale of carbon credits from such projects provides a financial incentive to keep natural habitat standing, instead of cutting it down for conversion for other purposes.

In establishing these purchase contracts, Singapore contributes to ensuring these habitats persist into the future, said the report.

In Peru, for example, two of the projects involve protecting forested areas from logging, and the emissions that are prevented from being released will be monetised as carbon credits.

The Kowen Antami Redd+ Project aims to protect the Yanachaga Chemillen National Park and the San Matias-San Carlos Protection Forest. Redd+ refers to reducing emissions from deforestation and forest degradation.

“Protection of these two areas has been challenging due to the expansion of both commercial and small-scale agriculture, construction of new roads, and wildfires in and around the project area, resulting in extensive deforestation,” said MTI and NCCS.

The second project, called Together for Forests Redd+, aims to reduce deforestation in three provinces within the Madre de Dios region of Peru, which comprise forestry land and smallholder forests.

Three firms, including Temasek-backed investment firm GenZero, won the bid to sell the credits to Singapore to help the country meet its 2030 climate targets.

The other two awardees are commodities trader Mercuria Asia Resources and US-headquartered carbon project developer Boomitra, government procurement portal GeBiz showed. Mercuria will be supplying the credits from the two Peruvian projects.

The call for proposals closed in February, and the plan is for the nature-based credits to offset Singapore’s emissions from 2026 to 2030.

Singapore had earlier estimated that it would use high-quality carbon credits to offset about 2.51 million tonnes of emissions a year over this decade.

For example, in 2030, the country’s total greenhouse gas emissions are expected to be 62.51 million tonnes, and will be brought down to 60 million tonnes with the use of carbon credits.

Under the Paris Agreement – an international treaty adopted by 195 parties to limit global warming – countries can buy carbon credits generated in other jurisdictions to meet domestic climate targets to reduce emissions.

For Singapore to use credits to offset its national emissions, the credits must be purchased from countries it has such agreements with.

Ghana, Peru and Paraguay are three of nine countries that Singapore has inked carbon trading agreements with. The other countries are Papua New Guinea, Bhutan, Chile, Rwanda, Thailand, and most recently Vietnam in a deal sealed on Tuesday.

The carbon project in Paraguay – overseen by Boomitra – involves putting in place sustainable practices in ranches across the Pampas grasslands in Paraguay to increase the amount of carbon the soil can hold.

The fourth project is one that aims to restore the Kwahu tropical forest landscape in Ghana, to be overseen by GenZero.

Ghana’s tropical forests had declined to less than 2 million ha due to extensive logging and devastation by bushfires to expand cocoa farms. Farmers were also urged to remove native trees from their farms to increase production.

To reverse the damage to the land and biodiversity, the 40-year project in Ghana’s Kwahu region aims to restore 51,000 ha of degraded land by replanting native trees and employing agroforestry and regenerative planting.

MTI and NCCS said the projects were selected based on the quality of the proposal, the tenderers’ track record and price competitiveness. PTI GS RD