The governments of Rwanda and Singapore have signed a landmark agreement to implement a carbon market mechanism that will regulate how carbon emissions are traded—particularly through forests, reforestation, and other carbon-absorbing activities. The agreement was signed by Rwanda’s Minister of Environment, Dr. Valentine Uwamariya, and Singapore’s Minister for Sustainability and the Environment, Grace Fu Hai Yien.
This bilateral cooperation aligns with the global framework of the Paris Agreement, which encourages countries to reduce greenhouse gas emissions by incentivizing sustainable environmental practices. Through carbon markets, countries that emit less CO₂ (carbon dioxide) can sell their unused carbon credits to higher-emitting countries, such as those with large-scale industrial operations.
What is a Carbon Market?
A carbon market is a global trading system in which countries, organizations, or individuals can buy and sell carbon credits—permits that represent the right to emit a certain amount of carbon dioxide. The goal is to encourage emission reductions by putting a financial value on the ability to pollute.
Under this system, countries receive allowances to emit a certain level of CO₂. If they emit less than their quota, they can sell the remaining credits to other countries or companies that exceed their limits. Carbon markets were first introduced under the Kyoto Protocol and include mechanisms like the Clean Development Mechanism (CDM), International Emissions Trading, and Joint Implementation. These frameworks are governed by the UN Framework Convention on Climate Change (UNFCCC), alongside voluntary markets that allow non-state actors to participate.
Rwanda’s Role in the Carbon Market
Although Rwanda has a low carbon footprint, the country is positioning itself as a key player in carbon trading by investing in green projects that align with its vision for a climate-resilient, low-carbon economy by 2050.
Rwanda utilizes two main mechanisms: the Clean Development Mechanism (CDM) and the Voluntary Carbon Market (VCM). Most of the carbon credits Rwanda generates come from projects focused on clean cooking technologies—especially energy-efficient stoves—which account for approximately 87% of the country’s traded carbon units.
By December 2020, Rwanda had sold over 2.25 million carbon units, with 724,320 credits issued through CDM projects and 1,525,680 through VCM initiatives. These numbers highlight Rwanda’s growing capacity to attract green investments and contribute to global emission reduction goals.
The newly signed agreement with Singapore marks another milestone in Rwanda’s environmental diplomacy and climate finance strategy. It is expected to unlock further opportunities for green growth, sustainable development, and cross-border cooperation in environmental governance.
