The deal marks Singapore’s 10th carbon credit pact, paving new pathways for sustainable finance and cross-border emission reduction.

Singapore has signed a landmark carbon credit transfer agreement with Mongolia — its tenth such deal since 2023 — strengthening both nations’ commitment to building a low-carbon future. The agreement allows Singapore and its carbon tax-liable firms to purchase verified carbon credits from Mongolia to offset part of their greenhouse gas emissions, under strict international standards to ensure environmental integrity.

A Milestone in Green Diplomacy

The carbon trading pact was signed on October 6, 2025, by Singapore’s Minister for Sustainability and the Environment Grace Fu and Mongolia’s Minister of Environment and Climate Change Batbaatar Bat, alongside Deputy Prime Minister Gan Kim Yong and Mongolian First Deputy Prime Minister Uchral Nyam-Osor. The agreement coincided with the 55th anniversary of diplomatic relations between the two nations, symbolizing a new chapter in green cooperation.

Grace Fu described the partnership as “a reflection of our shared ambition to build a sustainable, low-carbon future,” while Batbaatar Bat called it “a new model of international cooperation benefiting both people and the planet.”

Advancing the Paris Agreement

The framework, known as an Implementation Agreement, is legally binding and aligned with Article 6 of the Paris Agreement — the global treaty governing carbon credit transfers between nations. It ensures that both Singapore and Mongolia follow the principle of “corresponding adjustments”, preventing double-counting of emission reductions.

Under this system, Mongolia must add the volume of sold carbon credits back to its national emissions inventory, ensuring transparency and global accountability. Each carbon credit represents one tonne of carbon dioxide reduced or removed from the atmosphere through certified mitigation projects.

Sustainable Benefits for Local Communities

According to Singapore’s Ministry of Trade and Industry (MTI), the collaboration will direct climate finance to carbon mitigation projects in Mongolia that promote sustainable development. These projects are expected to deliver real benefits — from job creation and cleaner water access to enhanced energy security and reduced environmental pollution.

Singapore has also committed to channel 5% of proceeds from carbon credit purchases into climate adaptation initiatives in Mongolia, helping communities cope with the impacts of a changing climate.

Ensuring Global Emission Reductions

A unique clause in the agreement mandates that 2% of all carbon credits authorized under this partnership be cancelled at first issuance — meaning they cannot be traded or used toward emission targets. This ensures that part of every transaction directly contributes to net global emission reductions, beyond mere offsets.

Such mechanisms strengthen the environmental integrity of international carbon markets and signal Singapore’s intent to lead by example in transparent, high-quality carbon trading.

Singapore’s Expanding Carbon Network

Mongolia joins Bhutan, Chile, Ghana, Papua New Guinea, Peru, Paraguay, Rwanda, Thailand, and Vietnam on Singapore’s growing list of carbon credit partners. These agreements collectively reinforce the Republic’s strategy to use high-quality international carbon credits to offset around 2.5 million tonnes of emissions annually from 2021 to 2030.

Through these partnerships, Singapore is positioning itself as a global hub for credible carbon trading — one that connects environmental responsibility with economic opportunity.

The Singapore–Mongolia carbon credit pact demonstrates how small nations can lead in shaping global climate action through innovation and collaboration. By pairing sustainable finance with environmental integrity, both countries are setting a precedent for Asia’s emerging carbon market — one that links growth with genuine emissions reductions for a greener planet.

Sources: The Business Times (2025) , Straits Times (2025)

Keywords: Singapore Carbon Credit, Mongolia Climate Deal, Grace Fu, Gan Kim Yong, Article 6, Carbon Trading