Speech by National Environment Agency Chief Executive Officer Andrew Tan at the Closing Session of Carbon Forum Asia 2010

Mr Henry Derwent
President & Chief Executive Officer, International Emissions Trading Association

Mr Michele Dryer
Vice President Asia Pacific, Koelnmesse

Mr Edwin Khew
Chairman, Sustainable Energy Association of Singapore

Distinguished Guests,

A very good afternoon to all of you.

I would like to express my appreciation to the International Emissions Trading Association for inviting me to address the closing session of Carbon Forum Asia 2010.

The Climate Challenge
It is well recognised that climate change is the most pressing long-term challenge to mankind. Although our understanding of this complex phenomenon is still incomplete, the overall weight of scientific opinion is that the earth is getting warmer, in part due to the natural variations in the earth’s surface temperatures, but more significantly, by mankind’s activities, such as the burning of fossil fuels and deforestation.

International Developments
Although the UN Climate Change Conference in Copenhagen last year achieved much less than was hoped, the Copenhagen Accord did mention the need to pursue various approaches, including opportunities to use markets, to enhance the cost-effectiveness of, and to promote mitigation actions.

What appears to be emerging is the recognition that the private sector cannot be neglected in any new international agreement on climate change. Market mechanisms provide a means for shifting private sector investment into areas that promote emission reductions.

A recent survey by Ernst & Young titled "Action amid uncertainty: the business response to climate change" found that despite challenging economic conditions and regulatory uncertainty, global executives believe that the climate change agenda will significantly impact and drive their business performance and strategy over the next few years. The majority of respondents felt that corporate climate change activities are being driven by evolving customer demands and that equity analysts are now considering climate change related factors in the valuations of their companies.

Regional Developments - Singapore as a Carbon Hub
On the supply side, Asia is poised to be the largest supplier of Certified Emissions Reductions (CERs) to the global carbon market. While China and India remain the world’s largest suppliers of CERs, the rest of Asia, including the ASEAN countries, also has immense potential to explore CDM projects.

Singapore has been gearing itself to participate actively in this dynamic new sector. Given our strategic location, Singapore can play an important role, particularly for companies looking to expand their CDM activities into the region. We have well-established legal, regulatory and financial institutions, a business-friendly environment and modern infrastructure and communications.

For example IE Singapore, through their Global Traders Programme, has encouraged Sweden-based carbon trading company Tricorona to set up business in Singapore. I understand that Tricorona will manage all sales and marketing activities on carbon credits out of Singapore. The establishment of Tricorona's global hub in Singapore attests to Singapore's strong financial infrastructure and trading environment.

Singapore, with its strong commitment to R&D, can also act as a springboard for the technologies needed to implement CDM projects in the region. As stated in the Sustainable Singapore Blueprint, our goal is to establish Singapore as a hub for sustainable development solutions in the next decade and beyond. We seek to achieve this goal in two ways: by developing key capabilities and technologies, especially in resource efficiency and urban planning and design, and by developing Singapore as a knowledge hub and provider of services relating to environmentally sustainable urban development.

Local Developments
In terms of mitigation actions, Singapore has committed itself to a 16 per cent reduction in carbon emissions below Business-As-Usual in 2020, contingent on a legally-binding global agreement and all countries implementing their commitments in good faith. This is a stretch target that will require much effort on our part. An inter-agency effort is underway to promote greater energy efficiency in the industry, buildings, households, transport and power generation sector.

For the business community, NEA has launched the Energy Efficiency National Partnership (EENP)that will pave the way for companies consuming more than the equivalent of 15 GWh of energy per year to report on their energy usage and set voluntary targets. The EENP seeks to help companies build up the necessary capabilities before the mandatory energy management practices come into effect. We will also be reviewing our incentive schemes and exploring long-term energy efficiency financing options to cater to the needs of companies.

As a non-Annex 1 Party to the Kyoto Protocol, Singapore is eligible to host Clean Development Mechanism or CDM projects. In this regard, it is heartening to note that the CDM Executive Board has registered the first Programme of Activities or POA in September 2009, which was an energy efficient light bulb project in Mexico. Programmatic CDM opens the doors to scaling up implementation of dispersed end-use energy efficiency activities, and such activities are especially relevant to the buildings sector in many cities including Singapore.

To date, Singapore has one registered CDM project with another six projects are undergoing validation. In total these projects, assuming those in the pipeline are registered by the CDM Executive Board, will reduce Singapore's annual GHG emissions by about 600 kilotons per year. We are also starting to see interest in programmatic CDM from the buildings sector. NEA, which is Singapore's Designated National Authority for CDM, has recently issued a Letter of Approval for a programmatic CDM project involving the installation of energy efficient chiller systems in buildings. We hope that over time, such projects will be the norm for businesses in Singapore.

Conclusion
Despite the global economic slump in 2009, a report by World Bank showed that carbon markets demonstrated resilience. The total value of the market grew by 6 per cent to US$144 billion. The European Union Emissions Trading Scheme or EU ETS remained the engine of the carbon market by accounting for about 82 per cent of the market share. This is indeed an encouraging sign of the health of carbon markets going forward.

This session marks the successful conclusion of the 4th Carbon Forum Asia conference, which Singapore has hosted since 2007. The carbon market in Asia is still in its infancy and future development will rest on the efforts of industry players like you in this audience. NEA is pleased to have been a supporting agency for this conference, which has provided a platform for industry players to interact and explore opportunities to further develop Asia’s carbon market.

I hope that you have had a productive conference and a pleasant stay in Singapore. On this note, we look forward to welcoming Carbon Forum Asia back to Singapore next year.

Thank you very much.