A refinery on Jurong Island in Singapore. Starting this year, firms in Singapore are subject to a carbon tax, set at S$25 per tonne of carbon dioxide-equivalent.

(May 28): Companies in Singapore can tap a larger pool of carbon credits to offset up to 5% of their taxable emissions after the city-state signed a bilateral agreement with Ghana.

Ghana is the second country after Papua New Guinea to strike a partnership with Singapore on carbon credits cooperation, according to a statement from the Prime Minister’s Office.

Starting this year, firms in Singapore are subject to a carbon tax, set at S$25 (RM87.12) per tonne of carbon dioxide-equivalent. Access to carbon credits generated abroad will help firms in the city-state offset taxable emissions and meet their climate goals.

The agreement is aligned with Article 6 of the Paris accord, which sets out a market-based mechanism that regulates and adds transparency to the global transfer of carbon credits.

Under the partnership, developers of eligible projects must contribute 5% of their share of proceeds from authorised carbon credits toward climate adaption in Ghana.

Separately, Ghana also signed a carbon credit transfer agreement with Sweden, according to state-owned Ghana News Agency.