Singapore and Mongolia: A Bilateral Carbon Market Waiting for Supply

By Li Da in Tokyo

From October 30, Singapore and Mongolia officially opened their carbon-credit project application channel.

On one side is Mongolia, which passed its first Climate Change Law in July and has only just begun building the legal framework for a domestic carbon market. On the other is Singapore, entering with stronger capabilities in project development, financing and commercialization.

Singaporean officials have described the logic of the partnership in straightforward terms: Mongolia has natural resources, land and renewable-energy potential, while Singapore brings finance, professional services, technology and access to global markets.

One side provides resources. The other provides capital and expertise.

On paper, it looks like an ideal match.

But at the two ends of this newly opened channel stand two parties with very different concerns: a buyer urgently looking for supply, and a seller that is still preparing its inventory.

The Buyer Is in a Hurry

Singapore’s demand is relatively rigid.

Its carbon tax has risen to S$45 per tonne in 2026, while the government is targeting a range of S$50 to S$80 by 2030.

Under current rules, companies can use eligible international carbon credits to offset up to 5% of taxable emissions.

Five percent may not sound large, but eligible credits remain in short supply.

In May, the Singapore government allowed companies to carry forward unused international carbon-credit allowances from 2025 into 2026.

The official explanation was direct: carbon-credit projects typically take several years before they begin generating credits, meaning supply takes time to build.

Singapore therefore enters the Mongolia agreement as a buyer whose carbon-tax bill is rising while the supply of eligible offsets remains limited.

Across the table is a seller whose market has only just opened.

The Seller Is Only Getting Started

Mongolia’s level of preparedness can best be described as early-stage.

Its first Climate Change Law, adopted on July 3, introduced systematic legal provisions covering the carbon market, MRV — monitoring, reporting and verification — and climate finance.

A UNDP blog described the situation plainly: Mongolia’s carbon-credit registry is still under construction, while the pipeline of investable projects remains thin.

Mongolia has already signed bilateral agreements with Singapore and Switzerland, but its domestic carbon-registry operating procedures were only approved in 2024, and the project-registration system is still being built.

The list of methodologies approved by Singapore for Mongolian projects is also revealing.

Under the Gold Standard, eligible areas include soil organic carbon, methane reductions from rice cultivation, livestock feed additives and clean cookstoves.

These methodologies point primarily toward Mongolia’s agriculture, livestock and land resources rather than industrial projects.

That means project development is likely to be slow and monitoring-intensive.

Even if a herders’ cooperative signs an agreement on sustainable pasture management, there is still a long process between that agreement and the creation of internationally certified, tradable carbon credits.

The project must first pass through measurement, reporting, verification and certification.

The Real Test of the Bilateral Model

The Singapore-Mongolia Implementation Agreement is the sixth IA under which Singapore has opened applications, following Ghana, Bhutan, Peru, Rwanda and Thailand.

At a bilateral business forum on October 8, more than 80 companies and over 120 representatives took part. Business associations signed an MOU and more than 20 B2B meetings were held.

But these activities are about establishing connections.

There is still a considerable distance between making contact and signing viable carbon-credit projects.

Singapore has signed around 10 to 11 Implementation Agreements, but the more important question is how many have already begun generating actual credits.

According to an official statement in May, Bhutan, Ghana, Peru, Rwanda and Thailand had already opened project applications, but the government again emphasized that carbon-credit projects usually require several years before credits can be issued.

Mongolia has now joined them as the sixth market with an open application channel.

This is the real test of the bilateral model.

Its advantage is clarity: governments negotiate the rules directly, eligible projects can be identified, and developers know which methodologies will be accepted.

Its disadvantage is that every country must negotiate its own agreement and establish its own registry and operating procedures.

Compared with the broader ambition of building a unified international market under Article 6 of the Paris Agreement, this country-by-country model is unlikely to move quickly.

The channel may be open.

But projects do not appear automatically.

Whether Singapore can obtain enough carbon credits from Mongolia to help meet its future carbon-tax obligations will depend less on how quickly the two governments sign agreements than on when the first rigorously measured, verified and certified emissions-reduction projects on the Mongolian steppe can actually begin generating credits.