Welcome address by Ms Grace Fu, Minister for Sustainability and the Environment, at the International Emissions Trading Association Asia Climate Summit, on 7 December 2022
Mr Dirk Forrister, President and CEO of the International Emissions Trading Association, or IETA
Ladies and gentlemen,
1 Good morning, and a warm welcome to Singapore. Thank you for inviting me to speak at the Asia Climate Summit.
2 This summit is held shortly after COP27 in Egypt. In fact, Singapore’s pavilion was practically neighbours with the IETA pavilion, and we certainly benefitted from the cross-fertilisation of ideas from our respective panel discussions.
3 Many people have asked about my thoughts on COP27. The meeting in Egypt was held under very challenging circumstances as countries grappled with difficult economic and geopolitical developments.
a. Nonetheless, COP27 affirmed Parties’ support for multilateralism in addressing climate change. Despite differences and difficulties, countries came together and made progress on several issues.
b. For instance, the US and China resumed their formal dialogue on climate action, and Russia/Ukraine war did not derail the meeting.
c. An agreement was reached to include “Loss and Damage” as an agenda of the meeting, and to set up a fund for vulnerable countries hit hard by climate disasters. Although the details of the fund will have to be discussed later, the recognition of the impact of climate change on vulnerable countries is an important step.
4 We must continue to step up the pace of climate action.
a. The latest United Nations Environment Programme Emissions Gap Report shows that the world’s carbon emissions targets remain short of the Paris Agreement temperature goal.
b. The report points out that incremental efforts are no longer feasible, and calls for systemic global transformations in key sectors, such as energy supply, industry, buildings, transport, food systems and the financial system.
5 In our drive towards a net zero world, we urgently require further international cooperation on low-carbon technologies and carbon markets, including working together under Article 6 of Paris Agreement.
6 That leads me to speak about today’s theme – “Carbon Markets for Net Zero: An Era of Growth, Convergence, Innovation and Opportunity”. Let me share some of my thoughts on each of these four themes.
7 First, on the theme of growth. Since I started co-facilitating discussions on Article 6 at COP26, carbon markets have grown tremendously.
8 This is driven by growing climate ambitions in countries and companies worldwide. Today, around 140 countries have either proposed or declared net zero targets. This covers 91% of global emissions, up from 70% in May 2021. Over one-third of the world’s largest publicly traded companies have set net zero targets.
9 Singapore has raised our climate ambition.
a. We strengthened our long-term low emissions development strategy (LEDS) with a clear goal to achieve net zero emissions by 2050.
b. We made legislative changes to raise our carbon tax fivefold from S$5 per tonne currently to S$25 per tonne for greenhouse gas emissions in 2024 and 2025, with a view to reach between $50 to $80 per tonne by 2030.
c. We also put in place the policy framework to allow carbon tax-liable facilities to use high-quality international carbon credits to offset up to 5 per cent of taxable emissions from 2024.
10 Such policies, as well as the further progress on Article 6 rules, are important pre-requisites to grow the carbon markets.
a. At Sharm-El Sheikh, Singapore signed Memorandums of Understanding on carbon market cooperation with Peru and Papua New Guinea, in addition to similar partnerships with Ghana, Morocco, Colombia, Indonesia and Vietnam.
b. Carbon markets enable much-needed finance to be channelled to support emissions reduction or removal projects worldwide.
c. They also enable countries such as Singapore, which are alternative energy-constrained, to access other viable decarbonisation pathways to reach net zero, while contributing meaningfully to climate finance and delivering sustainable development benefits worldwide.
11 The next theme – convergence. While the growth in carbon markets has been encouraging, it has led to the proliferation of many new standards. Convergence in standards is needed.
12 There is a lack of consensus on what “high-integrity” carbon markets look like.
a. One reason is because carbon markets, and how they advance net zero, are not intuitive concepts.
b. There remains limited awareness on how carbon credits are generated, verified, traded and used.
c. And there are competing interpretations on environmental integrity principles such as permanence and additionality.
13 Singapore supports the harmonisation of guidance, rules and market infrastructure.
a. We participate actively in various platforms and bodies, including the UNFCCC Article 6 Supervisory Body, the CORSIA Technical Advisory Board and the Voluntary Carbon Markets Integrity Initiative.
b. We also worked with IETA and the World Bank on the Climate Action Data Trust, which will be launched later today. This decentralised metadata infrastructure would help address double-counting, foster transparency and raise confidence in carbon markets.
14 My third point on innovation.
15 Innovations in carbon services can accelerate the development of high-quality carbon projects. Project developers will benefit from more options in accessing carbon sequestration potential, and of different ecosystems and project types.
a. This helps unlock the potential in Southeast Asia, which hosts one-third of the world’s mangroves, and nearly 15 per cent of the tropical forests, whose biodiversity holds an annual economic value of more than US$2 trillion.
b. Research institutes can play a role here. For example, the National University of Singapore’s Centre for Nature-based Climate Solutions has launched the Carbon Integrity SG research programme, which develops methodologies tailored to Southeast Asia’s habitats, while its Carbon Prospecting Dashboard, a free-to-use platform, identifies carbon rich forests and mangroves that require greater protection.
c. Methodologies developed for novel project types, such as jatropha plants, also enable more high-quality carbon credits to be generated. For example, Singapore-based JOil became the world’s first corporate to secure Gold Standard certification for its jatropha plantation on marginal land in Ghana. This certification enables JOil to generate high-quality carbon credits from high yielding, climate resilient strain of jatropha fruits, which are a low-carbon source material for biofuel.
16 Innovations in science and technology can also help in the Monitoring, Reporting, and Verification (MRV) from the inception of a transaction through its project lifecycle.
a. Satellite monitoring and geographical information systems can survey natural ecosystems, to determine permanence and leakage.
b. Innovations adapted from the finance industry will help carbon exchange platforms to process transactions with speed, security, and integrity.
17 Growth, convergence and innovation create new opportunities in the carbon markets.
a. The global net zero transition will see growing demand for carbon services and carbon credits.
18 To realise these opportunities, we need to build capability, here and abroad.
19 Domestically, the carbon services ecosystem is vibrant and growing.
a. We have 70 organisations engaged in carbon services and trading activities.
b. They provide a whole range of services from sustainability advisory and consulting, carbon project development, to financing, trading, and governance.
c. We supported the growth of 13 such firms last year.
d. Universities, professional bodies and trade associations are partnering knowledge partners, supported by Government agencies such as Enterprise Singapore, to raise the level of competencies in sustainability.
20 We are also supporting capability building in the region.
a. Singapore and New Zealand conducted a joint capacity building workshop on Article 6 cooperation for ASEAN member states in September.
b. In October, we launched the Sustainability Action Package, or SAP. The SAP welcomes multi-sectoral knowledge partners to share their expertise with foreign officials, including on carbon markets.
c. At COP27, we joined Japan’s Article 6 Implementation Partnership, to contribute to capability-building together with like-minded parties.
d. These efforts could collectively increase the supply of high-quality credits, and demand for related services.
21 Let me conclude. Confronted with today’s climate emergency, we need to realise growth in climate ambition, common standards, and innovations across and beyond the carbon markets ecosystem.
22 We call upon everyone to embrace the window of opportunity to shape carbon markets that deliver genuine abatement, and a greener future for all.
23 I wish everyone a productive Summit ahead. Thank you.