The Philippines and Singapore Formalize Carbon Credits Collaboration

The Philippines and Singapore have entered into an Implementation Agreement on Carbon Credits Collaboration, establishing the Philippines’ first bilateral framework for carbon credit transactions under Article 6 of the Paris Agreement during the ASEAN Climate Week in Manila. The Agreement was signed by Singapore’s Minister for Sustainability and the Environment and Minister-in-charge of Trade Relations, Grace Fu, and the Philippines’ Department of Environment and Natural Resources Secretary, Juan Miguel T. Cuna. 

The Agreement utilizes in particular Article 6.2 of the Paris Agreement, governing Internationally Transferred Mitigation Outcomes (ITMOs), which allows countries to trade emissions reductions through bilateral agreements. Under this mechanism, a host country transfers the ITMOs to a buyer country or entity in exchange for financial support. 

The core purpose of the Agreement establishes a legally binding framework for the generation and transfer of carbon credits from carbon mitigation projects. Project developers can leverage this framework to develop high-quality carbon credit projects that are aligned with the Article 6 rulebook. The collaboration will advance both countries’ climate goals by directing financing toward carbon mitigation projects that support sustainable development, strengthen energy security, and create employment opportunities.

Although information on the process for authorization for carbon credits projects and eligible carbon crediting methodologies have yet to be published, the Agreement already sets out key financial and environmental commitments. Notably, Singapore has committed to allocate a 5% share of proceeds from authorized carbon credits to climate adaptation initiatives in the Philippines. In addition, 2% of authorized credits will be cancelled upon first issuance to ensure a net reduction in global greenhouse gas emissions and prevent those credits from being sold or counted toward any country’s emissions targets.

The full press release by Singapore’s Ministry of Trade and Industry can be found here.