Speech by Singapore's Ambassador for Climate Action at The Sustainability Dialogue

Advances in Blended Finance and Low-Carbon Technologies

Good afternoon, ladies and gentlemen.

Let me start by stating the obvious – the global momentum behind climate action has seen better days.

• The news coming out of the US has not been good for the planet. Federal policies have taken a dramatic turn against renewable energy and clean technology.

• More than the policies, it is the rhetoric against climate science that has been especially unfortunate. It has created a mood of green hushing among businesses as they avoid drawing attention for being seen as too “green” or “climate friendly”.

• Some other countries are using the US as an excuse to review their own climate commitments and policies.

• Global trade frictions and heightened geopolitical risks have added to the list of excuses for slowing down climate action.

But nature is more powerful than politics or economics – and will eventually prevail.

• Climate change is already happening – and accelerating.

• When climate change starts to exact an unacceptable cost in lives and livelihoods, climate action will pick up pace – both mitigation and adaptation.

• It is too late to stop climate change but not too late to stop its most catastrophic consequences.

• We are heading towards a world that is both carbon-constrained and climate-impaired.

• For those countries and companies which have delayed climate action, it will be a disorderly transition.

The United Kingdom and Singapore are staying the course on climate action: not because it is easy but because it is necessary.

• So that we can be competitive in a carbon-constrained world and resilient in a climate-impaired world.

• Which is why the UK and Singapore are among the 13 countries that have met the deadline for setting national emissions reduction targets for 2035 under the UNFCCC.

Effective climate action requires effective collaboration: here too, the UK and Singapore are setting the pace.

• The UK-Singapore Green Economy Framework aims to support growth and create jobs in green sectors while encouraging the decarbonisation of economic activities through exchanges and knowledge sharing among their businesses.

• The UK and Singapore, together with Kenya, have convened an international Coalition to Grow Carbon Markets, to encourage governments to provide guidance on corporate purchases of carbon credits to help decarbonisation especially in the Global South.

There are six key enablers that we must get right for an effective transition to a greener economy and a more sustainable planet.

• carbon pricing;

• carbon markets;

• blended finance;

• climate technology;

• transition planning; and

• sustainability reporting.

I will focus today on just two of them: blended finance and climate technology, in particular low-carbon technologies.

• These are areas where Singapore has been making some progress.

• They are also areas where we have growing collaboration with the UK – not just to green our own economies but to also facilitate transition outside our borders, especially in Asia.

• Asia accounts for 50% of global emissions and will account for 90% of the world’s future growth in energy demand.

• Without decarbonising Asia, the world will not reach net zero

BLENDED FINANCE

Asia faces a shortfall of at least 800 billion US dollars annually in climate financing.¹

To close the gap, we need blended finance – a combination of public, philanthropic, and private capital.

• Governments, development finance institutions, and philanthropies can provide concessional capital in the form of grants or financing at below-market rates.

• By helping to absorb first-loss risk and improve project bankability, concessional capital can act as a catalyst to attract private commercial capital.

• In fact, a dollar of concessional capital well deployed can potentially crowd in many dollars of commercial capital.

Singapore has been a steadfast champion of blended finance as a climate financing tool.

• Traditionally, blended finance has been done at the project level, with different parties coming together to finance, say an infrastructure project.

• Singapore decided to take a platform approach to blended finance, bringing together different parties and sources of capital in a programme or partnership to invest in a range of projects.

Two years ago, at COP28, Singapore launched a blended finance platform called Financing Asia’s Transition Partnership, or FAST-P, with a target fund size of 5 billion US dollars.

• The plan was to raise 1 billion US dollars in concessional capital to catalyse another 4 billion US dollars in commercial capital.

• The Monetary Authority of Singapore (MAS) set up three programmes under FAST-P for Asia’s transition:

  • the Energy Transition Acceleration Finance, or ETAF, to enable the phase-out or displacement of coal with renewable energy, battery storage, and grid infrastructure;

  • the Green Investment Partnership, or GIP, to invest in renewable energy and storage, electrification of transport, and water and waste management projects;

  • the Industrial Transformation Programme, or ITP, to help companies in hard-to-abate sectors (like cement and steel) to decarbonise and to support technology solutions for decarbonisation (like carbon removals).

Last year, at COP29, the Singapore Government pledged 500 million US dollars of concessional capital to FAST-P, to be matched by other sources of concessional capital.

• We appointed asset managers for the three programmes:

  • Clifford Capital for ETAF;

  • Pentagreen for GIP; and

  • BlackRock for ITP.

• We stepped up engagements with a wide range of governments, multilateral organisations, philanthropies, banks, and asset managers to solicit concessional and commercial capital for FAST-P.

• Earlier this year, MAS set up a dedicated FAST-P Office to manage the growing span of work.

Yesterday, FAST-P marked a major milestone with the Green Investments Partnership achieving its first close with 510 million US dollars.

• This means that the fund has secured sufficient capital commitments to begin operations and making investments.

GIP’s first close marks several key outcomes for FAST-P.

• First, it is halfway through GIP’s target fund size of 1 billion US dollars.

• Second, it has been made possible by a diverse group of global and regional investors.

• Third, the 51 million US dollars of concessional capital committed by the Singapore Government to GIP has been matched by an equal amount of concessional capital - from governments, philanthropies, and even commercial players.

• Fourth, this base of 102 million US dollars has in turn attracted 408 million US dollars of commercial capital, achieving our target four-to-one ratio of commercial to concessional capital.

GIP’s first close has demonstrated the basic premise of FAST-P: with 51 million US dollars, the Singapore government has crowded in a pool of capital 10 times larger to facilitate Asia’s green transition.

• 510 million US dollars is a lot of money but trivial compared to the scale of financing needed for Asia’ transition.

• We need more governments, multilaterals, and philanthropies to use their resources in a catalytic way - to crowd in multiples of private capital for climate finance.

Singapore is particularly pleased that the United Kingdom has been a strong partner in FAST-P.

• British International Investment (BII) and HSBC Bank have committed a total of 55 million Pounds, or some 74 million US dollars, to GIP’s first close.

• BII has also announced a pledge of up to 70 million Pounds, or about 95 million US dollars, to FAST-P.

In the coming months, GIP will start deploying its funds for green and sustainable infrastructure projects in Asia.

• The pipeline of potential projects includes renewable energy and storage, electric vehicles, and water and waste management.

• Let me mention two projects which GIP will invest into:

  • a bio-energy programme which replaces fossil fuels with agri-waste feedstock, reducing more than 100,000 tonnes of emissions each year; and

  • a renewables portfolio comprising solar, hybrid solar, and battery storage projects, reducing 250,000 tonnes of emissions annually.

Making blended finance work is not a walk in the park. GIP achieved its first close overcoming several challenges.

• First, the different objectives of commercial and concessional capital providers.

  • Commercial investors want adequate risk-adjusted returns. Providers of concessional capital want to maximise the amount of commercial capital they can crowd in and the amount of greenhouse gas emissions they can reduce.

• Second, the different risk appetites of commercial and concessional capital providers.

  • Commercial investors prefer bankable projects with acceptable risks. Concessional capital providers are willing to bear risk but will do so only for projects that would otherwise not be financed by private capital.

• Third, the various stakeholders have different investment approaches, governance structures, and legal processes.

GIP was able to overcome these challenges through active collaboration and strong transparency among its partners – key ingredients for the success of blended finance.

LOW-CARBON TECHNOLOGIES

Next, low-carbon technologies. We need a variety of technologies to drive deep decarbonisation across the economy, especially in hard-to-abate sectors.

• Hard-to-abate sectors account for nearly 40% of global greenhouse gas emissions, making them critical for global efforts to reach net-zero emissions.² These are sectors that have no economically or technologically feasible pathway to net-zero.

• Examples include:

  • Construction – namely steel and cement;

  • Transportation – namely heavy vehicles, aviation, and maritime; and

  • Chemicals – which form the foundation for countless everyday products, including plastics, fertilisers, and textiles.

• These are activities or products that we cannot do without. Simply phasing them out is not a practical solution, we need to progressively reduce the carbon emissions from their production processes.

Two generic ways to decarbonise hard-to-abate sectors are through low-carbon fuels and carbon capture, utilisation and storage, or CCUS.

• Low-carbon fuels have a particularly important role in decarbonising the maritime sector – where both the UK and Singapore are working towards net-zero.

• Likewise, for industrial processes where it is not possible to reduce emissions to zero, we have to find ways to capture the emissions and either utilise or store the captured carbon through CCUS technologies.

Singapore is exploring biofuels and ammonia as low-carbon fuels for the maritime sector. Two specific initiatives:

• The Energy Market Authority and Maritime Port Authority (MPA) are working on an end-to-end low-carbon ammonia solution on Jurong Island.

  • If successful, Singapore will be one of the first countries in the world to directly combust ammonia for power generation and deploy ammonia bunkering for international shipping.

• EnterpriseSG and MPA have published technical guidelines for the safe and efficient use of methanol as an alternative fuel for bunkering operations.

  • They will next publish guidelines on the use of ammonia as a bunkering fuel.

  • These guidelines will help to encourage a higher proportion of low-carbon fuels in the maritime industry.

The UK and Singapore are active partners in driving innovation for maritime decarbonisation.

• Our two countries have set up a taskforce to help decarbonise and digitalise our respective maritime sectors.

  • Through this taskforce, Imperial College London and MPA have signed an MoU to advance innovations in zero-carbon shipping and achieving net-zero port emissions.

• The Global Centre for Maritime Decarbonisation (GCMD) headquartered in Singapore has been conducting pilots and trials with British companies, such as bp and Ashurst.

  • Just last month, GCMD trials using biofuel blends achieved a 24% reduction in greenhouse gas emissions compared to using conventional fuels.

  • It also validated cost-effective methods to directly track the amount of biofuel used throughout supply chains. This is a critical step to creating more trust and transparency in the marine biofuel market.

Singapore has prioritised CCUS technologies for two reasons: our large manufacturing base and continued dependence on fossil fuel energy.

• About one-third of Singapore’s total carbon emissions comes from our oil refining and petrochemicals sector which serves a global market.

• The Economic Development Board (EDB), together with Shell and ExxonMobil, is studying the feasibility of a cross-border carbon capture and storage (or CCS) project.

  • They are engaging petrochemical industry players to evaluate the technical feasibility of aggregating carbon dioxide emissions in Singapore for CCS and to understand the costs of the end-to-end process.

• Singapore does not have suitable geological resources for storing carbon dioxide, so we are exploring cross-border CCS with like-minded partners in the region.

  • Singapore has signed a Letter of Intent with Indonesia and an MoU with Malaysia on CCS. We are working towards legally binding bilateral agreements to enable the cross-border transport and storage of carbon dioxide between our countries.

The UK and Singapore have been partnering on CCUS pilots and testbeds.

• Singapore’s Sembcorp Industries is working with the UK’s Zero Degrees Whitetail on the UK’s first net-zero emissions power station. This will be at Sembcorp Energy UK’s site at Teesside in northeast England.

• It is expected to produce about 300 megawatts of clean, efficient, low-cost electricity, with potential expansion options in the future.

• It is one of the UK’s first two CCUS projects, with all emissions in the air to be captured and converted to pipeline-quality carbon dioxide to be stored offshore.

Let me conclude.

• Amid a general gloom pervading the climate agenda, there are many bright lights of hope and progress. I have cited just two areas where we are seeing advances – blended finance and low-carbon technologies.

• It is also noteworthy that amid the general sense of fragmentation in the world, there are many inspiring instances of partnership and collaboration. The UK and Singapore have been shining examples of mobilising climate action not just for our two countries but beyond our borders. For it is not enough that the UK and Singapore achieve net-zero. The world must do so too. There is a lot more that our two countries can, and must do, together.

¹ Lim, C. (2024). Unlocking climate finance in Asia pacific. International Monetary Fund. Departmental Papers / Policy Papers, 2024(001), 1. doi:10.5089/9798400256752.087. https://www.elibrary.imf.org/view/journals/087/2024/001/article-A001-en.xml.

² “Hard-to-abate” sectors are reducing emissions, here’s how they can accelerate progress towards net zero. World Economic Forum. (2024, December 12). https://www.weforum.org/stories/2024/12/net-zero-hard-to-abate-sectors-decarbonization/.