Speech By Ms Indranee Rajah, Minister In The Prime Minister’s Office, Second Minister For Finance And National Development, At The Chartered Institute Of Arbitrators, Singapore Branch, Thought Leadership Event At Conrad Centennial Hotel28 Apr 2022
Ladies and Gentlemen
1. Thank you very much for that kind introduction. And it's a great pleasure to see all of you.
The Urgent Need for Climate Action
2. Today’s theme on climate change is both important and timely. Climate change is the existential challenge of our generation, and addressing it will only get more difficult and costly with each year of delay.
3. The impact of climate change is widespread and it is intensifying. If we are to have any hope of tackling it successfully, concerted global action is necessary.
a. There was a renewed sense of urgency and commitment to the climate agenda at last year’s UN Climate Change Conference in Glasgow (COP26). Parties at the Conference were urged to aim for net zero emissions by mid-century, to keep globalwarming within 1.5 degrees Celsius above pre-industrial levels.
b. The reports by the Intergovernmental Panel on Climate Change (IPCC) are sobering:
i. Extreme weather events are occurring more frequently, and their impact is more severe;
ii. All of us will be affected but the most vulnerable groups will be hit the hardest;
iii. And 40% of the world’s population live in areas highly vulnerable to climate change.
4. Significant investments will be needed to support the transition towards a net zero future. The Glasgow Financial Alliance for Net Zero (GFANZ) - a forum for leading financial institutions to accelerate the transition to a net zero economy - estimates that US$125 trillion of capital investment will be required globally to transform economies and achieve net zero emissions by 2050.
Singapore’s Commitment to the Climate Agenda
5. So what about Singapore’s commitment to the climate agenda? Despite being a city-state with limited land and access to renewable energy sources, we are fully committed to support global efforts to address climate change.
a. Last year, we launched the Singapore Green Plan 2030, a nationwide movement to advance sustainable development.
b. This year, at Budget 2022, we announced our intention to raise our ambition to achieve net zero emissions by or around mid-century, in line with the Glasgow Climate Pact. We will consult industry and citizen stakeholder groups before making a formal revision of our 2030 Nationally Determined Contribution (NDC) and Long-Term Low Emissions Development Strategy (LEDS).
6. As a Government, we can set a strong foundation for sustainability efforts. However, this alone is not sufficient. It needs collective action from the people, private and public (3P) sectors. The Green Plan brings everyone on board Singapore’s transition journey towards a more sustainable future. So let me share a few examples of the ambitious targets we have set. We want to:
a. Plant one million trees by 2030. We used to be a garden city. Now our ambition is to be a city in nature. You can sign up for the One Million Trees movement. You can join this initiative as it is for corporates and individuals. For every child that is born in Singapore, you can have a tree planted for your child.
b. Our only viable source of renewable energy currently is solar energy. We intend to increase our solar energy deployment by five-fold by 2030 from 2020 levels, and we are exploring other forms of renewable energy.
c. We intend to import up to 4 gigawatts (GW) of low-carbon electricity by 2035, and develop the use of alternative low-carbon solutions such as carbon capture and low-carbon hydrogen.
d. We want to reduce the waste that is sent to landfills by 30% by 2030.
e. And we will build greener buildings and have HDB Green towns.
f. And we want cleaner-energy vehicles on our roads.
g. These are only a few of the many initiatives in the pipeline. So I would encourage all of you to find out more about the Green Plan, get involved, and be a part of this movement.
7. On the regulatory front, the Government will put in place regulations and policies, to complement the suite of abatement efforts, to progressively decarbonise the economy.
a. We are starting with the right price for carbon. This is essential for a successful green transition. For without getting the price of carbon right, most sustainability efforts will not make economic sense.
b. In Budget 2022, Minister Lawrence Wong announced the revised trajectory levels of Singapore’s carbon tax which will provide a strong price signal for businesses and individuals to internalise the costs of carbon, and take meaningful action to reduce their carbon footprints.
c. We also need more stringent regulatory standards to eliminate environmentally harmful practices, and encourage energy efficiency improvements and emission reduction solutions. We do this by, for example:
i. Imposing minimum energy efficiency and performance standards for industrial equipment and household appliances.
ii. And also by capping vehicle growth at zero for private cars and motorcycles.
iii. And phasing out pollutive internal combustion engine (ICE) vehicles by 2040.
Sustainability is a New Growth Area
8. The next is sustainability as a new growth area. The net zero transition will entail fundamental changes across industry sectors, and change the way that we live and work. Professional services firms have an important role to play in enabling this transition. As more corporates, investors and governments embark on their sustainability journey, they will need help to develop and execute strategies to meet their climate goals. Whether you are a lawyer, consultant, or engineer, you will need to start building up sustainability expertise to better serve your clients. For example:
a. Consultancy firms will be needed to advise organisations on climate risks and opportunities, and on setting net zero targets and devising decarbonisation strategies.
b. Project developers will be needed to design and develop environmentally sustainable, and climate resilient infrastructure.
c. Law firms will be needed to help organisations navigate current and emerging regulatory developments, to advise on green finance, to structure sustainability-related deals and contracts, and downstream, of course, inevitably to help to resolve disputes arising from these.
9. New growth opportunities will also arise from the global movement towards net zero. Under the Green Plan, Singapore will move quickly to build on our competitive edge to capture these opportunities. And let me highlight three emerging growth areas.
Carbon Services and Trading
10. First, carbon services and trading. There is significant headroom for carbon markets in South-East Asia to grow, given the region’s immense potential for nature-based solutions, and its growing demand for carbon services.
11. Carbon credits can complement businesses and governments in their decarbonisation efforts, especially to offset hard-to-abate or residual emissions.
a. Carbon markets require trust and environmental integrity to function well. Environmental integrity to ensure that the carbon credits are of high-quality; corresponding to real, additional, and permanent emission reductions. And transparency in the framework to engender trust.
b. This is why Singapore agreed to co-facilitate discussions on Article 6 of the Paris Agreement, which lays the foundation for robust international carbon markets, and provides clarity on environmental integrity and accounting.
c. Singapore is actively involved in international platforms to promote greater environmental integrity in carbon markets such as the Voluntary Carbon Markets Integrity Initiative (VCMI). We are also working closely with the World Bank and International Emissions Trading Association (IETA) on the Climate Warehouse, which aims to reduce the risk of double counting and to promote transparency of carbon markets.
12. The Government is developing Singapore into a hub for carbon management services, and a regional marketplace for the trading of carbon credits.
a. Singapore-based global carbon exchanges such as Climate Impact X and AirCarbon Exchange provide companies access to high-quality carbon credits.
b. We have a growing carbon services and trading ecosystem. Today, Singapore is home to more than 70 carbon services and trading firms that serve the region and engage in carbon market activities. This is the highest concentration of such services providers in South-East Asia.
c. These companies provide a diverse range of services across the carbon credit value chain including sustainability-related advisory and consultancy, carbon project development, and governance services such as certification, measurement, reporting and verification.
d. Last year, we supported the growth of 13 firms in Singapore, and we will continue to support companies who are keen to be a part of the ecosystem.
13. Second, sustainable infrastructure. Infrastructure is central to climate change mitigation and adaptation efforts. As countries seek to recover better and greener from the pandemic, infrastructure needs to be compatible with a net zero future.
a. Infrastructure is a main contributor of global emissions, and is in turn adversely impacted by climate change.
i. According to a study by the United Nations Office for Project Services, United Nations Environment Programme, and University of Oxford, infrastructure is responsible for 79% of all greenhouse gas emissions.
ii. Climate change has direct physical impact on infrastructure networks. As well as indirect economic impact via disruptions to these infrastructure networks.
b. Sustainable infrastructure is therefore critical for countries to build economic resilience, and reduce the risks of direct losses and indirect costs of disruptions.
c. And these sustainable infrastructure needs are immense.
i. The Asian Development Bank estimates that South-East Asia alone will require US$3.1 trillion in climate resilient infrastructure from 2016 to 2030.
14. Singapore is well placed to support the region’s sustainable infrastructure journey.
a. We have a comprehensive ecosystem of public and private sector partners across the sustainable infrastructure value chain. These players use Singapore as a base to deploy or testbed sustainable infrastructure investments and solutions to meet the different needs of the region.
b. To harness infrastructure opportunities in the region, Infrastructure Asia was set up in 2018 to connect public and private sector partners to develop sustainable infrastructure.
i. The many MOUs between Infrastructure Asia and agencies, like the Philippines’s Public Private Partnership Centre and Indonesia’s PT Sarana Multi Infrastruktur (Persero) (PT SMI), are testament to the strong regional demand to develop bankable sustainable infrastructure.
ii. And especially so in areas like renewables, energy transition, waste and water management and of course, digital infrastructure.
c. Last year, we launched the Asia Sustainable Infrastructure Advisory (ASIA) Panel. The ASIA Panel, comprising international experts on sustainable infrastructure, serves as a platform to:
i. Exchange the latest thinking, best practices and ideas on sustainable infrastructure.
ii. And promote opportunities for the private sector to support Asia’s sustainable infrastructure development.
d. This year’s Asia Infrastructure Forum (AIF) will be jointly held with the World Cities Summit from 31 July to 3 August. This is a global platform to forge new connections, discuss the latest trends and developments on sustainable infrastructure, and contribute ideas on how we can collaborate to build a better future for the region. It will also feature specific project level discussions by regional officials and provide an opportunity for Singapore to co-create good fitting solutions. So I would highly encourage those of you who are interested to sign up. It is also a networking platform, and most importantly, you get to know what is going on in the region and get a sense of the opportunities that are available for the services that you provide.
15. Third, sustainable finance. The net zero transition requires a significant redirection of capital towards sustainable financing. The Monetary Authority of Singapore (MAS) has put together a Green Finance Action Plan to develop Singapore into a sustainable finance hub in Asia.
a. We are the largest sustainable finance market in South-East Asia, accounting for close to 50% of sustainable debt issuances cumulatively.
b. MAS is supporting companies’ access to sustainable financing instruments, and shift towards more sustainable business practices, through its sustainable loan and bond grant schemes.
c. The Government will also do its part to develop a robust sustainable finance market. We announced in Budget 2022 that the public sector will issue up to S$35 billion of green bonds to finance eligible green infrastructure projects.
16. We need consistent, comparable and reliable climate-related data, definitions and disclosures for sustainable finance to work effectively. And to combat greenwashing, which is a very real risk. Singapore is actively working with industry and international partners to put in place key enablers to scale up sustainable finance globally. These efforts include:
a. First, improving the quality, availability, and comparability of climate-related data.
i. Technologies such as Application Programming Interfaces (API), Internet of Things (IoT) devices, and blockchain can be potential game changers to capture data in a more connected, intelligent, and efficient way.
ii. MAS is partnering the industry to develop interoperable data platforms to support the industry’s data needs under the Project GreenPrint initiative. These platforms will aggregate data across multiple sources, and enable the sharing of data in a secured manner.
b. Second, developing globally interoperable taxonomies for green and transition activities.
i. The Green Finance Industry Taskforce (GFIT), convened by MAS, is developing a taxonomy for Singapore-based financial institutions.
ii. We are working with our regional counterparts to develop an ASEAN Taxonomy for Sustainable Finance, which will cater to the different economic contexts of ASEAN members.
iii. Globally, we are supporting the International Platform for Sustainable Finance (IPSF) in developing the Common Ground Taxonomy. This will serve as a common reference point for definitions of green activities across major existing taxonomies.
c. Third, implementing a consistent set of global standards for disclosures and reporting.
i. MAS and the Singapore Exchange (SGX) are setting out roadmaps for mandatory climate-related financial disclosures by financial institutions and listed entities.
ii. This year, MAS will also set out its regulatory expectations on the disclosure standards for retail funds with an ESG investment objective.
iii. In addition, MAS is supporting global efforts to converge on a global baseline sustainability reporting standard through its involvement in the International Organisation of Securities Commissions (IOSCO).
d. Fourth, building a strong sustainable finance talent pipeline across the career spectrum.
i. To support this build-up of knowledge and skills, MAS has anchored green finance centres of excellence in Singapore, including the Singapore Green Finance Centre and the NUS Sustainable and Green Finance Centre. These institutes will conduct Asia-focused research and groom a pipeline of talent across the career spectrum, through undergraduate courses and professional training programmes.
ii. Earlier this year, MAS and the Institute of Banking and Finance (IBF) set out 12 technical skills and competencies in sustainable finance to guide financial institutions and training providers in building up a talent pool with sustainability capabilities.
17. In conclusion, as you can see, Singapore will be making decisive moves to achieve net zero by or around mid-century. We will actively pursue new growth opportunities, and secure a liveable future for ourselves and the generations which are yet to come.
18. To thrive in this future, the professional services sector will need to adapt and be ready for the shift, by building sustainability knowledge and skills and re-thinking your service offerings.
19. There is much ahead for us to do. The Government is committed to walking this journey with all of you, to turn the Green Plan into reality, and to forge a more sustainable future for Singapore and for the world.
20. Thank you all very much, and I wish you a fruitful discussion ahead.