Regulatory Sandboxes for Small-Scale Carbon Offsetting Projects

6 Mr Saktiandi Supaat asked the Minister for Sustainability and the Environment (a) whether the Government is considering or implementing regulatory sandboxes for small-scale carbon offsetting projects to identify and resolve the gaps including those around verification standards and the interface with the mainstream financial system; and (b) whether she can provide an update on the efforts to develop Singapore into a hub for carbon trading.

The Minister for Sustainability and the Environment (Ms Grace Fu Hai Yien): Since 2021, the Government has been implementing regulatory sandboxes for carbon credit projects to support the development of regulatory processes and infrastructure that are integral to carbon markets and the broader green finance ecosystem. We conduct such sandboxes in collaboration with like-minded countries and/or private sector partners in accordance with Article 6 of the Paris Agreement on international carbon credits.

Singapore is catalysing the development of credible carbon markets. Singapore actively co-facilitated Article 6 negotiations at COP26 and COP27, and participates in platforms such as the Voluntary Carbon Markets Integrity Initiative to drive the harmonisation of rules and standards. We supported the World Bank and the International Emissions Trading Association to anchor the Climate Action Data Trust in Singapore, which connects registries to promote transparency and market confidence.

We are actively fostering international partnerships and have signed memoranda of understanding (MOUs) with more than 10 countries to facilitate access to high quality international carbon credits, or ICC. Concurrently, we are working on the establishment of an ICC registry and consulting various stakeholders on environmental integrity criteria and whitelist of ICC that carbon tax-liable companies may use to offset up to 5% of their carbon tax liability.

Taken together, we are building our reputation as a trusted carbon services and trading hub, with over 100 ecosytem players now based in Singapore and are working with industry to enable further growth.

Mdm Deputy Speaker: Mr Saktiandi Supaat.

Mr Saktiandi Supaat (Bishan-Toa Payoh): Mdm Deputy Speaker, I would like to thank Minister for her detailed response. I have two supplementary questions.

One is with regards to the efforts to develop Singapore into a hub for carbon trading. As the Minister mentioned, there has been a multi-Ministry and Statutory Board effort, including efforts in terms of trading activity enhancements. For example, the Inland Revenue Authority of Singapore (IRAS) is working to create transfer pricing considerations for relevant carbon credits. They have announced on 23 November that the issuance transfer and sale of carbon credits including the digitised form is to be treated as neither used for GST purposes. That is one example.

May I ask the Minister whether there will be other efforts, going forward, to ensure Statutory Boards work together, like for example, the IRAS case, to enhance carbon trading within Singapore?

The second question is, can we get the Minister's elaboration on the possibility of jobs creation in terms of carbon trading? We are not the only country that wants to build up carbon trading to be a hub in the region. I think other countries, our neighbouring countries, would also want to build this up. So, how fast we can push these carbon trading efforts going forward?

Ms Grace Fu Hai Yien: I thank the Member Saktiandi for his supplementary questions. I would like to look at each one of them in turn.

First of all, it is about our determination to be a hub for carbon trading. We see carbon trading as part of the carbon services sector and also a part of the wider green economy growth that is very much part of our economic objectives. So, I cannot go into the specific situation that he has mentioned about what IRAS is doing, because that obviously is not within my Ministry's work, but I can assure him that we are working across many agencies and Ministries to develop the green economy, carbon services in general.

And similarly, when it comes to job creation, I am sure that we are also looking forward to more jobs for our people, but specifically, with regards to carbon trading, I would encourage him to ask the Parliamentary Question of our economic agencies.

Mdm Deputy Speaker: Assoc Prof Jamus Lim, apologies for skipping your Parliamentary Question No 5 earlier.

Assoc Prof Jamus Jerome Lim (Sengkang): No worries, Mdm Deputy Speaker. Question No 5, please.