Singapore Article 6 carbon credit tender attracts $19-$41/mtCO2e price offers

Singapore's request for proposal, or RFP, to procure high-quality, Article 6-aligned, nature-based carbon credits, received offers from 17 suppliers with prices in the $19-$41/mtCO2e range, according to multiple market participants.

Two of the lowest offers were from Malaysia-based carbon project developer Carbon Trace at $19/mtCO2e and from ITMO Ltd., an affiliate of the Coalition for Rainforest Nations, at $20/mtCO2e, for 1 million units each, market sources said.

The highest offer was from Singapore-based Carbon Solution Services at $41/mtCO2e for 500,000 units, followed by China's state-owned PetroChina at $33/mtCO2e for the same volume, sources said. These offers had a total value of $21 million and $16 million respectively.

The offer with the highest total value was from commodity trader Trafigura at $223 million, for an undisclosed unit price and quantity of carbon credits, said the sources, some of whom participated in the tender process. Details of some offers were not immediately available.

The remaining suppliers were a mix of energy and commodity traders like Shell and Mercuria, renewable energy companies like ReNew, and project developers, consultancies, and asset management companies in the carbon space, according to market sources.

However, the offer price will not be the sole determining factor in winning this tender.

Comments from the Singapore government were unavailable at the time of publication.

When selecting suppliers, price competitiveness will only account for 35% of the government's evaluation matrix, according to the RFP issued by Strategy Group of the Singapore Prime Minister's Office that also oversees the National Climate Change Secretariat (NCCS).

The quality of the projects offered determines 35% of the supplier's competitiveness, followed by 20% based on the company's capability and experience in carbon trading, and the remaining 10% on resources and ability to ensure smooth project implementation, such as engaging with host countries to secure the committed carbon credit supplies.

At least one Singapore-based trader said that project quality is a critical criteria, such as Carbon Solution Services' carbon credits, part of which will come from the Kwahu landscape restoration project in Ghana, funded by Temasek's decarbonization investment platform GenZero since 2023.

Price discovery

Singapore's RFP is among the first of its kind in the industry open to public bidding and provides an early price signal for the nascent Article 6 market.

The RFP was launched in September 2024 calling for contracts over a period of five years that can deliver Article 6-aligned nature-based carbon credits generated no earlier than Jan. 1, 2021, and no later than Dec. 31, 2030. The last tranche of credits shall be delivered no later than Feb. 15, 2031.

It did not specify the total procurement volume but said all suppliers should offer at least 500,000 mtCO2e of carbon credits. The RFP closed on Feb. 14, and the government is expected to decide on the winners in the coming weeks.

Besides price signals, the RFP also offered a structured view of Singapore in terms of how a buyer country assesses what Article 6 projects are considered most competitive and how to handle the uncertainties and risks in this nascent market.

Singapore is open to partnering a range of suitable host countries and will select them from the ones named by suppliers based on ambition of climate targets, robustness of climate policies and measurement, reporting and verification (MRV) capabilities, etc, the RFP said.

The RFP also allowed suppliers to name host countries that do not have government-to-government agreements with Singapore provided the supplier engages the host country's government in agreeing to negotiate an agreement within a reasonable timeframe, the RFP said.

A second Singapore-based trader who did not participate in the RFP said the security deposit of 5% of the total contract price was a challenge for some companies. The trader also said some offers may be off-spec and might be disqualified.

The RFP said the potential supplier "is strongly encouraged to involve Singapore-based companies or research institutions to test-bed cost-effective measurement, reporting and verification (MRV) methodologies of the NBS carbon credit project(s) as part of the project."

Should there be any shortfall in the quantity of carbon credits delivered under contract, damages shall be computed at a rate pegged to the published prevailing Singapore carbon tax, which is expected to reach S$45 per mtCO2e by 2027, the RFP said.

Based on the RFP, the Singapore government will use the procured carbon credits to meet its Nationally Determined Contributions, or NDCs, for 2030. The city-state has committed to reduce emissions to around 60 million mtCO2e in 2030, and to achieve net zero emissions by 2050.