On 19 August 2025, Singapore and Thailand signed a bilateral Implementation Agreement (IA) under Article 6 of the Paris Agreement at the 9th Singapore Regional Business Forum in Bangkok.
The signing was officiated by Dr Tan See Leng, Singapore’s Minister for Manpower and Minister-in-charge of Energy and Science & Technology, together with Chalermchai Sri-on, Thailand’s Minister of Natural Resources and Environment.
This marks Singapore’s first Article 6 IA with an ASEAN country and its eighth overall, following partnerships with Papua New Guinea, Ghana, Bhutan, Peru, Chile, Rwanda, and Paraguay.
The deal creates a clear pathway for high-integrity, correspondingly adjusted credits between the two economies and sets a higher bar for ASEAN carbon markets.
Further Reading: Reducing Scope 2 Emissions in APAC: Strategic Insights on Renewable Energy Certificates (RECs)
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What the Agreement Covers
The IA establishes a legally binding framework for the generation, transfer, and use of carbon credits known as Internationally Transferred Mitigation Outcomes (ITMOs). These credits are authorised under the Paris Agreement and must follow strict safeguards to ensure quality and transparency.
Under the agreement, both countries will apply corresponding adjustments to their national greenhouse gas inventories, preventing any risk of double-counting.
Credits can be used in several ways: to offset up to 5% of taxable emissions under Singapore’s International Carbon Credits (ICC) framework, to contribute towards Nationally Determined Contributions (NDCs), or to meet obligations under the CORSIA aviation scheme.
Singapore will also channel the value equivalent of 5% of authorised credits into climate adaptation in Thailand, such as sustainable forestry, flood resilience, and water resource management.
For each issuance to a project, 2% of authorised credits will be cancelled to deliver a net reduction in global emissions.
Why 2% of Credits Are Cancelled
Under the IA, 2% of authorised credits are cancelled at first issuance. These units are permanently removed from circulation and cannot be used for offsetting. The intent aligns with Article 6’s “Overall Mitigation in Global Emissions” principle: crediting shouldn’t just enable one-for-one claims; it should also guarantee a net global reduction.
(For Singapore–Thailand, the fixed rate is 2%.) (Source: MTI Press Release).
The purpose is to go beyond one-to-one offsetting. While most credits allow one party to meet its target by funding reductions elsewhere, OMGE ensures that there is always a guaranteed additional reduction in global emissions.
This mechanism has several implications:
- Guarantees a net emissions reduction
- Strengthens the overall ambition of the Paris Agreement
- By limiting supply, it can also drive higher carbon credit prices that encourage more ambitious climate action.
Why This Matters for ASEAN
The agreement carries significance far beyond Singapore and Thailand. It represents the first ASEAN-based Article 6 partnership, signalling real momentum for regional climate cooperation.
For Thailand, it unlocks access to new funding sources that can support renewable energy, forestry, low-carbon transport, and waste management initiatives.
For Singapore, it reinforces its ambition to be a carbon services hub, connecting international capital with credible projects across the region.
Crucially, this deal proves that ASEAN countries can generate high-integrity carbon credits aligned with international standards. In his keynote at the 9th Singapore Regional Business Forum, Dr Tan See Leng stressed that:
“ASEAN must seize the opportunity to become a global growth centre for the green economy, and high-integrity carbon markets are central to this vision.”
The Singapore–Thailand agreement demonstrates a replicable model for neighbours such as Vietnam, Indonesia, and Malaysia, showing how regional cooperation can mobilise climate finance, raise credit integrity, and advance sustainable development
Source: LinkedIn (Tan See Leng)
Dr Tan See Leng described the IA as “a testament to our strong bilateral ties and collective resolve to implement the Paris Agreement in practical and impactful ways” (Source: MTI Press Release). He expressed confidence that it would serve as a “pathfinder for the region.”
Chalermchai Sri-on highlighted that Thailand’s cooperation with Singapore is both “a significant step for our two nations” and “a clear signal that ASEAN can drive high-quality, internationally aligned greenhouse gas mitigation” (Source: MTI Press Release).
These remarks from both ministers underscore the dual importance of the agreement: strengthening bilateral ties while providing ASEAN with a model for credible, high-integrity carbon market collaboration.
Strategic Implications for Corporates
For multinational companies, this IA signals the emergence of a more structured and credible carbon market in ASEAN. Unlike voluntary offsets, Article 6 ITMOs carry government authorisation and corresponding adjustments, reducing reputational risks and increasing their value for compliance purposes.
ITMOs can also be applied towards domestic carbon tax obligations in Singapore and used in international frameworks such as CORSIA (the Carbon Offsetting and Reduction Scheme for International Aviation).
For corporates, this provides greater confidence in the integrity of credits and the assurance that they are aligned with international rules.
It also creates an opportunity to support projects with clear socio-economic co-benefits, while offering a practical instrument to complement renewable energy procurement and advance ambitious climate targets.
Key Priorities for Corporates Across ASEAN
The Singapore–Thailand Article 6 Implementation Agreement marks a turning point for ASEAN’s role in global carbon markets. This agreement is more than a diplomatic milestone; it is a signal that ASEAN carbon markets are accelerating.
Priorities for corporates now:
- Integrating Article 6-compliant credits into corporate decarbonisation roadmaps alongside RECs, PPAs, and VPPAs.
- Leveraging opportunities to procure high-quality, government-authorised credits that deliver both compliance and sustainability value.
- Anticipating the expansion of Article 6 frameworks across ASEAN, widening credible projects pipeline for corporate buyers.
Your Partner to Navigate the New Carbon Landscape
For corporates across ASEAN, this is an opportunity that requires expert navigation. As a trusted Carbon Market Expert, Saxon supports organisations in leveraging Article 6 carbon credits together with instruments such as RECs, PPAs, and VPPAs.
Our strategic advisory ensures that every step from compliance alignment to credit procurement and integration into broader decarbonisation strategies is executed with credibility.
With deep regional knowledge and a proven track record, Saxon helps corporates turn ambitious climate commitments into measurable, high-integrity outcomes.
Aireen Tan
Marketing
Aireen bridges sustainability strategy with commercial outcomes. Her work focuses on climate transition planning, renewable energy (PPAs/VPPAs), environmental commodities (RECs and carbon credits), and carbon project development—supporting companies across APAC in navigating complex decarbonization decisions. She is driven by a mission to translate technical climate solutions into business value, contributing toward a world striving for carbon neutrality, climate stability, and global sustainability.
