Public consultation on draft Voluntary Carbon Market Guidance

29 July 2025

On 20 June 2025, the National Climate Change Secretariat (“NCCS”), the Ministry of Trade and Industry (“MTI”), and Enterprise Singapore (“EnterpriseSG”) jointly released for public consultation draft guidance on the voluntarily use of carbon credits in a company’s credible decarbonisation plan. The consultation closed on 20 July 2025.

Background

A carbon credit is a certificate representing the reduction or removal of greenhouse gas emissions. Carbon markets, which facilitate the buying and selling of carbon credits, are a critical enabler for the global transition to net zero. They help to (i) channel capital to decarbonisation projects that would have otherwise not occurred, especially in emerging markets and developing economies; and (ii) provide companies with a complementary tool to meet their decarbonisation targets in the face of hard-to-abate emissions.

Entities may purchase carbon credits for compliance or voluntary purposes. Carbon credits used by companies to meet their voluntary climate commitments are traded on the voluntary carbon market (“VCM”).

Industry feedback

The Government explains that the growth of carbon markets has been constrained by a few factors. One of the main challenges in the VCM is the lack of standardisation, leading to confusion around various industry-led standards. This has undermined market confidence and companies concerned about reputational risks are holding back from the VCM. The Government has received feedback on the need for guidance on the VCM, including how companies can use carbon credits as part of a credible decarbonisation plan and how to determine a high-quality carbon credit.

Draft guidance

The draft guidance proposed by NCCS, MTI, and EnterpriseSG:

  • aligns to approaches that governments have agreed to adopt as buyers of carbon credits under Article 6 of the Paris Agreement, where relevant;
  • emphasises that carbon credits should have high environmental integrity;
  • encourages companies to prioritise all feasible abatement efforts before considering the use of credits to address remaining emissions; and
  • clarifies that corresponding adjustments do not apply to credits purchased by companies looking to meet their voluntary climate commitments as these credits are not counted towards Nationally Determined Contributions.

Reference materials

The following materials are available on the MTI website www.mti.gov.sg: