Asia’s Carbon Future: Understanding Japan and Singapore’s New Carbon Credit Frameworks

In mid-2025, Japan and Singapore introduced updated frameworks designed to guide the responsible use of carbon credits within Asia’s evolving climate policy landscape. These efforts are expected to influence how voluntary carbon markets (VCMs) function across the region, pushing for better standards, transparency, and cooperation.

Singapore's Push for Credible Climate Action

Singapore has released new draft guidelines to help businesses adopt carbon credits in a responsible and structured way. The underlying principle of these guidelines is clear: carbon offsets should supplement—not substitute—real emissions reductions.

The guidance outlines specific requirements for carbon credits to be considered credible and usable:

• Real Impact and Additionality: Credits must support projects that deliver measurable emissions reductions beyond what would have occurred naturally or under current policies.

• Long-Term Validity and Independent Review: Projects must offer sustained climate benefits and be audited by third parties.

• No Double Counting: Systems must be in place to ensure each credit is used only once and not claimed by multiple parties.

Singapore also encourages full transparency from businesses, recommending that they disclose information such as credit sources, project types, and quality ratings. These steps support the nation’s goal of reaching net-zero emissions by 2050 and positioning itself as a leading player in the global carbon trading landscape.

Japan's Bilateral Approach Through the JCM

Japan’s strategy is centered around the Joint Crediting Mechanism (JCM)—a collaborative platform launched over a decade ago to support emission reduction projects in partnership with developing countries. Through the JCM, Japan works with nations like Indonesia and Vietnam to implement climate projects that produce verifiable emissions reductions.

Unlike commercial carbon markets, the JCM focuses on mutual benefit: participating countries share the emission reductions, and Japan is allowed to count a portion of the results toward its own national climate commitments. These reductions are measured against a pre-defined “business-as-usual” scenario using methodologies approved by both sides. Importantly, JCM credits are not sold internationally but serve as contributions to climate targets under the Paris Agreement.

Impact on Asia’s Carbon Market Development

Together, Singapore and Japan are shaping a more reliable and efficient carbon credit ecosystem in Asia. Their frameworks prioritize trust, traceability, and environmental credibility—qualities that are vital to scaling up carbon finance and attracting private investment.

Other Asian nations are closely watching these developments. As countries develop their own carbon strategies, many may adopt similar approaches to ensure that carbon credits actually deliver climate results and are aligned with international standards.

Conclusion: A Path Toward Stronger Regional Cooperation

The recent actions by Japan and Singapore reflect a growing recognition that carbon markets, if designed well, can play a key role in climate action. Their efforts are helping to build a more unified and credible carbon framework in Asia—one that not only drives emissions down but also supports broader economic and environmental goals across the region.

These frameworks may not be the final step, but they certainly lay the foundation for a more accountable and impactful carbon market future in Asia.

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