Speech by Ms Grace Fu, Minister for Sustainability and the Environment, at Ecosperity Week 2023 on 6 June 2023
Pak Luhut Pandjaitan, Coordinating Minister for Maritime and Investment Affairs,
Ms Catherine McKenna, Chair of the UN High-Level Expert Group on Net Zero Commitments of Non-State Entities,
Mr Lim Boon Heng, Chairman of Temasek Holdings,
Ladies and gentlemen,
1 Good morning. Thank you for inviting me to this year’s Ecosperity Week.
2 The latest IPCC report called for the urgent need to reach global net zero carbon emissions by 2050. This is a challenge that Singapore is committed to meeting head-on through our national climate target to achieve net zero emissions by 2050.
3 The IPCC report also highlighted three critical enablers for accelerated climate action. Technology, Finance, and International cooperation.
• Low-carbon technologies can shift development pathways toward sustainability but require accelerated innovation and adoption.
• For finance, while there is sufficient global capital to close investment gaps, there are barriers in redirecting it to climate action.
• Lastly, international cooperation is vital in mobilising and enhancing access to both technology and finance, especially in developing countries, enabling greater global ambition.
Breakthroughs for Net Zero
4 We require breakthroughs in these three areas, and this year’s Ecosperity is aptly themed “Breakthroughs for Net Zero”. Allow me to elaborate on how some breakthroughs in these areas can take shape, and how Singapore is catalysing these breakthroughs.
Accelerating innovation and adoption of low-carbon technologies
5 First, on technology. A Net Zero world will be very different from our world today, in how we power our homes, how we travel, and how we produce the things we need. However, many of these needle-moving decarbonisation technologies are not widely adopted yet. A key prerequisite for wide adoption is commercial viability. While the technology may exist, it may have prohibitive costs of implementation. We must accelerate the development of such technologies to their commercial tipping point, so that we may harness their potential for decarbonisation at scale.
6 Low-carbon hydrogen is a good example. It is a potential alternative to fossil fuels in the maritime and aviation sectors, and offers a solution to decarbonise heavy industries that produce more than 25 per cent of global carbon emissions. Most importantly, it has the potential to unlock global energy trade, through its carrier forms that can be stored and transported over long distances. This will connect regions with abundant low-cost renewable energy with those that have limited renewable energy potential. However, the technology and supply chains are still nascent, and large-scale deployment has not yet been demonstrated. Given Singapore’s limited renewable energy potential, hydrogen can potentially supply up to half of Singapore’s power needs by 2050. We are building capabilities for hydrogen innovation and deployment under our National Hydrogen Strategy, through pathfinder projects and R&D collaborations with industry. Addressing climate change is urgent, and these efforts will allow us to solve technological bottlenecks and develop the regulations necessary through learning-by-doing.
Redirecting finance to climate action
7 Next, finance. A report by McKinsey found that net zero by 2050 would require US$9.2 trillion of climate investments per year globally, but we are coming up short by about one-third, or US$3.5 trillion per year. Public funds alone cannot meet this shortfall, while the risk-return profile of many green projects is not attractive enough for private funds.
8 A breakthrough that can address this issue is the scaling of blended finance. Blended finance is public, multilateral, or philanthropic funding coming in as catalytic capital, to improve the bankability of green projects and encourage private investments. Singapore has been supporting blended finance projects, such as with Clifford Capital. The Singapore Government guarantees Clifford Capital’s borrowings, who in turn provide financing to crowd in private investments for infrastructure projects. We have also injected seed capital into the Asia Climate Solutions Design Grant to fund innovations in blended finance.
9 Another breakthrough in finance is the development of credible carbon markets. Carbon credits are key instruments that channel financing to mitigation projects which would otherwise not be bankable nor implemented. It is a critical enabler to scaling decarbonisation projects around the world. Implementing such projects will not only help in decarbonisation. They can also offer co-benefits to the local community, such as sustainable development, improvements to local livelihoods, adaptation to climate impacts, and biodiversity. For example, carbon credits generated from afforestation projects also provides an adaptation solution to soil erosion under climate change, supports biodiversity, and create economic opportunities for the local community. Singapore is using our carbon tax to tap on the mitigation potential of carbon markets. We will allow companies to use high-quality international carbon credits to offset up to five per cent of their taxable emissions from next year onwards. This could spur local demand in carbon markets, hence supporting the growth of a vibrant international carbon market and channel financing to mitigation projects internationally. Singapore has substantively concluded negotiations with Ghana on an implementation agreement setting out the criteria and processes for carbon credit project development and trading. This will allow carbon credits generated in Ghana to be purchased by carbon tax-liable companies in Singapore. We are working towards similar implementation agreements with other like-minded countries, with whom we have signed memorandums of understanding (MOUs), such as Bhutan, Cambodia, Colombia, Vietnam, and Peru.
International cooperation to enable greater ambition
10 This brings me to international cooperation. Climate change is a global problem that requires a global solution. International partnerships are essential in enabling the breakthroughs I’ve mentioned earlier. The global community must also come together to mobilise technology and finance in developing countries so that we may enable greater ambition while supporting sustainable development.
11 We must find new ways to enhance international cooperation. An example is the Forests and Climate Leaders’ Partnership (FCLP), of which Singapore is a part of. The Partnership will help to implement actions to halt and reverse forest loss and land degradation, and support sustainable development, including the development of high integrity carbon markets for forestry projects. The Partnership aims to develop Country Packages that will pull together investments from public, private, multilateral, and philanthropic institutions to fund country-driven national plans to conserve forest, biodiversity, and improve land-use. Several countries, financial institutions, including HSBC and Citibank, NGOs, such as Conservation International and The Nature Conservancy, have been coming together to share their experiences on the financial instruments that could be deployed under these Country Packages.
12 We are also looking for breakthroughs through regional partnerships. ASEAN countries are collaborating to realise our shared vision of an ASEAN Power Grid. The Power Grid will accelerate the development of renewable energy projects, promote economic growth, and bring greater energy security to the region. Last year, Singapore commenced a pathfinder project to import renewable hydropower from Lao PDR to Singapore, under the Lao PDR-Thailand-Malaysia Singapore Power Integration Project (LTMS-PIP).
13 Lastly, Singapore will continue to support fellow developing countries in their sustainable development journey through the provision of technical assistance and human resource capacity-building. Under the Singapore Cooperation Programme (SCP), close to 150,000 officials from fellow developing countries have participated in capacity-building courses. Last year, we launched the Sustainability Action Package (SAP) under the Programme to give greater focus to the global sustainability agenda. SAP courses will focus on themes such as adaptation and resilience-building strategies, green project management and financing, low-carbon development, and carbon markets. I would like to invite colleagues from the private sector and international organisations to join us as knowledge partners under the SAP, so that fellow developing countries can benefit from your expertise and best practices on tackling sustainability and climate issues.
14 Distinguished guests, even as we advance efforts to combat climate change, we must ensure that inclusive economic and national development goes hand-in-hand. These are core tenets of sustainable development. I invite countries and businesses to partner with Singapore and with each other in accelerating the transition, and achieving the breakthroughs required for Net Zero. You will find in Singapore a welcoming partner to collaborate and unlock new markets and technologies.
15 I thank Temasek for bringing us together and hosting this conference. I hope it will lead to inspirations and partnerships that will catalyse and usher in a new phase of sustainable development under the green economy. Thank you.