Speech by DPM Gan Kim Yong at the Committee of Supply Debate 2026

26 FEB 2026

Speech by Deputy Prime Minister and Minister for Trade and Industry Gan Kim Yong, Committee of Supply Debate 2026

Staying the Course in the Low-Carbon Transition

Mr. Chairman, Sir,

Let me thank the Members for your interest in the subject of climate change, which has long-term implications for Singapore’s competitiveness, our energy security, and our resilience. With your permission, I will take clarifications after this speech.

The Reality of Climate Change

Let me first begin with the fundamentals.

Whatever the political debates of the day, the physical reality of climate change will continue its course. In fact, its effects are becoming more pronounced, more frequent, and more costly.

  • Globally, last year was among the hottest on record, with rising ocean temperatures and intensifying extreme weather events driving higher economic losses worldwide.

  • These impacts are especially acute in Southeast Asia, one of the world’s most climate-vulnerable regions.

  • As a highly open economy dependent on regional stability and global supply chains, Singapore is directly exposed to these risks.

In short, climate change is no longer a future risk. It is already affecting lives and livelihoods here and now – and the costs of inaction will only continue to rise.

Climate Action Under Political Strain — But Not Driven by Politics Alone

At the same time, we must acknowledge the reality on the ground, especially on the political front.

Global climate action is under strain. Some countries have slowed down the implementation of climate actions and started to review their climate policies.

The recent decision by the United States to withdraw from the Paris Agreement has introduced additional uncertainty into global climate cooperation. At COP30, countries could not reach consensus on the phasing out of fossil fuels. Some multinational companies have also scaled back their sustainability commitments.

These developments do present cause for concern. But we must be clear that while global progress has been uneven, it would be a mistake to conclude that climate action is no longer relevant.

Some developed countries such as the UK and the EU members continue to make sustained emissions cuts towards their 2030 Nationally Determined Contribution targets or NDC targets.

Over 130 countries have set NDC targets for 2035. In total, these targets cover around 80% of global emissions, including the US before it withdrew from the Paris Agreement.

  • China, the world’s largest emitter, has committed for the first time to absolute emissions reductions beyond its peak.

  • Malaysia has done so too.

  • South Korea’s 2035 NDC target range is aligned to a linear pathway to net zero, with room to improve.

Major economies are also continuing to make sustained investments in clean energy and technology.

  •  Clean energy now attracts around two-thirds of global energy investment. In many countries, technologies such as solar and wind are already cheaper than some fossil fuel alternatives.

For many countries and companies, investing in clean technologies is increasingly the rational choice – improving energy security, lowering long-term costs, and creating growth and good jobs.

Overall, while the current global picture is mixed and political momentum is uneven, economics, technology, and nature will eventually drive the global transformation towards a low-carbon future.

Singapore as a Climate Realist

Against this backdrop, Singapore approaches climate change as a climate realist.

We begin with three hard realities.

First, climate change is real, worsening, and will shape the operating environment for our economy and our society.

Second, Singapore contributes only 0.1% of global emissions. While what we do alone cannot solve this global crisis, we must make our contributions as a responsible member of the international community. This spurs others to do likewise, and helps us secure our own long-term competitiveness and resilience in a carbon-constrained world.

Third, Singapore is alternative-energy disadvantaged. Mature and easily deployable decarbonisation options are simply not available to us.

Our transition will therefore be more challenging and will require more lead time.

Therefore, Singapore needs to prepare early for a world that will become increasingly carbon-constrained and climate-impaired. If we delay action, the eventual adjustment will be sharper, more costly and more disruptive for us.

At the same time, we must calibrate our climate actions carefully, taking into consideration global developments, to manage near-term costs and competitiveness for our households and our industries.

Staying the Course

Let me outline now our approach.

Carbon Tax

First, sending the right signal through carbon pricing. As we announced earlier, we have increased the carbon tax to 45 dollars per tonne this year.

As the world decarbonises, businesses and economies that are more emissions-intensive will become less attractive to carbon-conscious investors and consumers. Carbon pricing sends a clear, economy-wide signal that emissions carry a cost, and that cleaner solutions have a value.

  •  Ms Lee Hui Ying and Ms He Ting Ru asked about carbon tax and how the carbon tax can encourage sustainable AI usage and adoption of renewable energy respectively.

  • Carbon tax plays an important role through the right-pricing signal. Power generation companies pass on their carbon tax burden to end users through higher electricity prices. This increase, which is small for households but more significant for energy-intensive companies, leads to two effects:

    • First, this drives end-users such as data centre operators to be more energy efficient, which helps to promote more sustainable adoption of AI.

    • Second, this narrows the difference in cost between cleaner energy alternatives and fossil-fuel based options.

Carbon pricing is gaining traction globally.

  •  Carbon pricing adoption continues to expand, driven in part by measures such as the EU’s Carbon Border Adjustment Mechanism (CBAM), which started this year. The UK will introduce theirs next year.

  • In our region, Thailand introduced a carbon tax last year, Malaysia plans to do so this year, and Japan will make its national emissions trading system mandatory this year.

For Singapore, decarbonisation will be more costly than for many other economies because of our resource constraints and lack of alternatives. This means our carbon tax must be right-priced to spur companies to invest in low-carbon technologies and reduce their emissions.

But pacing also matters. As Mr Mark Lee and Ms Lee Hui Ying have noted, we must manage the near- to medium-term cost impact on our households and businesses, relative to our regional competitors.

We are therefore reviewing the carbon tax trajectory for 2028 and beyond, and will announce future rates in advance. If the global push for climate action slows down significantly, we may need to position ourselves toward the lower end of the previously announced range of 50 to 80 dollars per tonne by 2030.

We will support our households and businesses through this transition.

  • It may be challenging for some companies in emissions-intensive and trade-exposed sectors to decarbonise in the near term. This makes it difficult for them to compete with firms operating in locations with low or no carbon tax. We are engaging these affected companies to support their transition.

  • We will also support households to manage energy costs through additional U-Save rebates as we have announced.

Domestic mitigation

Ms Poh Li San and Mr Azhar Othman asked about progress towards our climate goals. We are making steady progress on various fronts.

For example, we have reached our 2030 solar deployment target of 2 gigawatt-peak ahead of schedule, and will raise our 2030 target to 3 gigawatt-peak, as announced by PM in the Budget speech earlier.

MTI will provide more details on clean energy during its COS.

We have also made good progress in the built environment and land transport.

  • We have greened 66% of our buildings as of last year, up from 61% the year before. We are on track to reach 80% by 2030, reducing emissions while helping businesses to save costs on energy.

  • We are also progressing well towards our goal of having all vehicles run on cleaner energy by 2040. Last year, 85% of newly registered cars were cleaner energy models, up from 82% in 2024. EVs were the top-selling new cars registered last year.

Every effort matters. Together, they form the backbone of our domestic mitigation effort.

Leveraging cross-border solutions

Because our domestic options are limited, cross-border solutions are essential.

Carbon credits are one example.

Carbon credits allow us to decarbonise by financing emissions reductions in overseas sites where there is greater potential for decarbonisation.

  • To date, we have signed 10 Implementation Agreements with countries such as Vietnam, Thailand, and Peru.

  • We have successfully operationalised four of these Agreements so far. Building on this momentum, we will operationalise our fifth Agreement on 31 March with Thailand, with a call for projects under our partnership. This marks our first operationalised Agreement with an ASEAN partner.

  • We are creating clear demand signals for carbon credits.

    • Last September, we announced the award for about 2 million tonnes of high-integrity, nature-based credits from projects in Ghana, Paraguay, and Peru.

    • A second Request for Proposal for both technology and nature-based carbon credits is currently in progress.

Exploring new pathways

Looking ahead, we are exploring novel solutions such as biomethane, low-carbon hydrogen solutions and nuclear in the longer term.

Not all pathways will succeed. But we must continue to study our options and create more options for Singapore.

Supporting businesses and workers through the transition

The climate transition will create new growth opportunities in areas such as green manufacturing, carbon services and trading, and sustainable finance. We will help our enterprises navigate this transition and thrive in this future economy.

We have a suite of support schemes that businesses, particularly SMEs, can tap on. This includes the Enterprise Sustainability Programme and the Enterprise Development Grant.

In addition, we are supporting companies to build capabilities, including in sustainability reporting through schemes such as the Sustainability Reporting Grant, and this helps them remain integrated into global supply chains.

As Mr Mark Lee noted, green procurement is another important enabler for transition. Green procurement stimulates demand and revenue for companies which can operate more sustainably and offer lower-carbon products. Since last year, the Government has set aside up to 5% of tender evaluation criteria for environmental sustainability considerations for large construction and ICT hardware tenders. This provides opportunities for our businesses to build a track record to meet the demands of other buyers and investors who are seeking green goods and services. For example, large companies with significant purchasing power such as Siemens and Schneider Electric have their own green procurement frameworks globally. We will continue to support greener procurement choices in a manner that takes into account  industry readiness and international developments.

Most importantly, as Mr Ng Shi Xuan and Ms Nadia Ahmad Samdin have said, we will support our workers to capture opportunities in this green transition.

  • For example, we are implementing new training programmes in sustainability reporting and in the Energy sector, two priority areas identified by the Green Skills Committee.

To pull together the many strands of work, the Singapore Business Federation has recommended establishing a public-private Carbon Transition Council, to support companies in transition planning and seize green opportunities. We are assessing the proposal and will provide an update in due course.

Exercising Influence Beyond Our Size

Climate change cannot be solved by any single country. It requires collective action. And even as we press on domestically, we are working with international partners to push ahead with global climate action.

Singapore contributes by catalysing flows of finance and shaping credible frameworks.

  • At COP28, we launched the Financing Asia’s Transition Partnership (FAST-P) to bring together public, private, and philanthropic partners to finance Asia’s green transition.

  • Singapore has pledged up to US$500 million to FAST-P, with the aim of crowding in up to US$5 billion of commercial capital.

  • The Green Investments Partnership under FAST-P has achieved its first close with US$510 million in committed capital – 10 times the Government’s initial contribution of US$50 million. This will be deployed to support green and sustainable infrastructure projects.

We are also doing our part to support the development  of high-integrity carbon markets, and rolling out novel types of carbon credits such as energy transition credits to support early coal phase-out in the region.

These efforts reduce regional climate risks, strengthen economic resilience, and reinforce Singapore’s role as a trusted and credible partner.

Adapting to a Climate-Impaired Future

Finally, mitigation alone is not enough.

Even under optimistic scenarios, the world will face increasingly severe climate impacts. We must undertake adaptation as a core pillar of our long-term climate resilience.

We are developing a National Adaptation Plan to strengthen resilience across infrastructure, public health, water, food, and coastal protection. We are ramping up targeted measures, particularly to address heat stress. MSE will elaborate on this.

Conclusion

Mr Chairman, the road ahead will be bumpy.

Global climate action will remain uneven. Technologies will mature at uncertain pace. The cost impact will need to be managed carefully.

But the direction towards a low-carbon future is clear – and we are heartened that the world has made meaningful progress.

  • The annual increase in global carbon emissions is now at 0.3% – one fifth that in the decade before the Paris Agreement was signed – although this is still not enough to keep global warming below one and a half degrees Celsius.

Singapore’s task is not to posture, but to prepare and to act. We are a climate realist.

  •  We will watch developments in global climate action and key technologies that will inform the pace at which we ought to move.

  • And we will do what we must, to secure our survival and prosperity in the low-carbon and climate-impaired world of the future.

  • By decarbonising steadily and adapting decisively, we will ensure that Singapore remains competitive, liveable and resilient for many decades ahead.

Thank you very much.