Singapore Opens Its Market to Carbon Credits Generated in Paraguay

By Manuel Arias & Álvaro Rojas, BKM | Berkemeyer

On May 23, 2025, Paraguay signed an Implementation Agreement with Singapore under the framework of Article 6.2 of the Paris Agreement, establishing a bilateral legal framework that enables mitigation projects in Paraguay to generate and export correspondingly adjusted carbon credits (known as ITMOs, or Internationally Transferred Mitigation Outcomes) to Singapore.

Article 6.2 of the Paris Agreement allows Parties to the Agreement to cooperate through bilateral arrangements that facilitate the transfer of carbon credits between them. These credits must undergo a corresponding adjustment, meaning that if Paraguay exports a carbon credit to Singapore, it must exclude that credit from its own Nationally Determined Contributions (NDCs). This mechanism prevents double counting, thereby ensuring the environmental integrity and credibility of such transactions. Domestically, this international agreement is complemented in Paraguay by Law No. 7190/23 and Decree No. 3369/25, which complete the necessary legal infrastructure for the country’s carbon credit market to thrive.

Under the agreement with Singapore, private Paraguayan carbon credit project developers will be able to sell their ITMO-certified credits to buyers in Singapore, provided they receive government authorization through MADES (Ministry of Environment and Sustainable Development) and their credits are recognized as ITMOs. Singaporean buyers may use these credits to comply with domestic regulatory obligations, international commitments, or for voluntary offset purposes. In essence, the agreement opens the Singaporean market to carbon credits generated in Paraguay, granting access to a demanding and high-value market—thus enhancing the value and financial viability of carbon mitigation projects in Paraguay.

With this agreement, Paraguay joins a select group of only seven countries—among them Chile and Peru in the Americas—that are recognized by Singapore as trusted issuers of high-integrity carbon credits. This recognition has immediate implications for the private sector, which now has the opportunity to position itself as a global supplier of carbon credits.

BKM advises both local and international clients in the development of carbon credit projects in Paraguay, providing end-to-end support to project developers, landowners, financiers, investors, and buyers. The firm is prepared to explore pathways for private projects to meet the requirements to participate in the ITMO market.