New initiatives to support development of high-integrity carbon markets launched

27 November 2025

On 28 October 2025, the Monetary Authority of Singapore (“MAS”), the National Climate Change Secretariat (“NCCS”), the Ministry of Trade and Industry (“MTI”), and Enterprise Singapore (“EnterpriseSG”) jointly announced initiatives which will support the development of high-integrity carbon markets. These include (i) the publication of the Guidance on Role of Carbon Credits in Corporate Decarbonisation (“VCM Guidance”), a voluntary carbon market guidance on how companies can use carbon credits as part of their decarbonisation plans; (ii) ongoing discussions with leading corporates in Asia to set up an industry-led buyers’ coalition to aggregate demand for high-quality carbon credits; and (iii) the introduction of a new Financial Sector Carbon Market Development Grant to support financial institutions’ participation in carbon markets.

Background

Carbon markets are a critical enabler for the global transition to net zero. However, their growth has faced constraints owing to weak demand, a limited supply of high-integrity projects, and underdeveloped market infrastructure. To address these gaps, Singapore has introduced measures to catalyse demand for high-quality carbon credits, grow the pipeline of credible projects, and strengthen market infrastructure and capabilities across the carbon market value chain. These initiatives include the launch of the Carbon Project Development Grant at COP29, and active collaboration with international partners through Singapore’s partnerships under Article 6 of the Paris Agreement and the Coalition to Grow Carbon Markets.

VCM Guidance and buyers’ coalition

NCCS, MTI, and EnterpriseSG jointly published the VCM Guidance to guide companies in using carbon credits, and disclosing such use, as part of a credible decarbonisation plan. The VCM Guidance was developed in partnership with the Singapore Sustainable Finance Association, industry partners, academics, and international organisations. It will be regularly reviewed and updated to keep pace with the latest developments.

To demonstrate application of the key principles outlined in the VCM Guidance, EnterpriseSG is engaging leading corporates in Asia to establish an industry-led buyers’ coalition to align and channel demand towards high-integrity carbon credits regionally and globally. Further details will be announced in 2026.

Financial Sector Carbon Market Development Grant

Financial institutions play a key enabling role in the carbon market value chain, from structuring transactions and financing projects, to underwriting risk mitigation solutions, and trading credits. Apart from concerns over market integrity and demand, financial institutions may also face high upfront costs in developing needed expertise, and managing the complexity and risks of early transactions.

To address these challenges, MAS will introduce a Financial Sector Carbon Market Development Grant to help alleviate near-term cost barriers faced by financial institutions and build the foundation for their sustained involvement in carbon markets.

MAS will set aside S$15 million from the Financial Sector Development Fund over three years till 2028 for the following:

  • Building carbon market capabilities: Supporting the establishment or expansion of financial institutions teams engaged in carbon-project financing, trading, insurance, and related services; and
  • Catalysing innovative financing solutions and platforms: Defraying upfront costs associated with transaction structuring, financing, risk management, and trading of carbon credits, including for due diligence, verification, and carbon credit insurance premiums.

Applications for the grant opened on 1 November 2025.

Reference materials

The following materials are available on the MAS website www.mas.gov.sg and the MTI website www.mti.gov.sg: