Countries around the world are looking to tackle emissions reductions and offsets. Some use mandatory carbon markets while others rely on voluntary offsets and credits. What’s interesting is the growing trend of multinational carbon agreements. By adhering to standardized metrics, countries are forming carbon credit agreements where offsets in one country can be traded with another. The newest agreement in this space is between Vietnam and Singapore. Energynews writes:
“Vietnam’s government has approved, through a governmental resolution, the implementation agreement signed with Singapore under Article 6 of the Paris Agreement. The approval paves the way for bilateral carbon credit exchange between the two countries. Article 6 sets out two pathways for countries to transfer internationally recognized emissions reductions between one another: a direct bilateral route governed by Article 6.2, and a multilateral mechanism overseen by the United Nations under Article 6.4.”
The EU and Canada were planning a similar agreement back in 2023 before Canada scaled back its climate ambitions. In the case of Vietnam and Singapore, the carbon credit agreement opens up opportunities. Singapore is a city-state and doesn’t have many opportunities to generate credits. Vietnam can now export credits to Singapore to meet that demand. As emissions reduction schemes grow, we could see partnerships like this forming new international markets for carbon credits. However, carbon credits are notoriously unreliable, so for these markets to have any impact, credits must undergo deep and thorough vetting.
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