PM Lawrence Wong at the IPEF Clean Economy Investor Forum (Jun 2024)

My Cabinet colleague, Mr Gan Kim Yong,
Excellencies and Distinguished Guests,
Ladies and Gentlemen

I am very happy to join all of you at this inaugural IPEF Clean Economy Investor Forum. Let me start by extending a very warm welcome to all our overseas guests and visitors. In particular, I want to acknowledge and thank Secretary Raimondo for her personal efforts and commitment in enabling this event to happen and for leading such a large delegation of American business leaders and investors to attend this forum. A very warm welcome also to all our IPEF ministers and representatives from IPEF countries. Welcome to Singapore once again.

Importance of IPEF

For decades, America’s presence in Asia has brought peace and prosperity, and created a stable environment for countries like Singapore to prosper.

That’s why Singapore has long been an advocate for the US to actively engage the region, especially Southeast Asia and we have also consistently acted on this conviction. We were early supporters of IPEF, and we saw it as a way for the US to strengthen economic cooperation in the Indo-Pacific.

ASEAN countries too are keen to deepen ties with America. For they recognise that America continues to play an indispensable role, whether in maintaining the strategic environment, or in supporting economic growth.

Singapore has been leaning forward to support the four pillars of IPEF – Trade; Supply Chains; Clean Economy; and Fair Economy. Good progress has been made on the Supply Chain Agreement which has entered into force; negotiations on the Clean Economy and Fair Economy Agreements were concluded last year, and will be signed today. And we look forward to concluding the remaining agreement on Trade. Trade is understandably a difficult issue with sensitive areas across many countries. But trade is the lifeblood of countries in this region, and we look forward to reaching a substantive agreement that will enhance trade flows amongst all IPEF countries, and improving the lives of our people.

IPEF Pillar III – Clean Economy

We are here today as part of the Pillar on the Clean Economy.

Under the IPEF Clean Economy Agreement, IPEF members have committed to accelerate the development and use of clean energy and climate-friendly technologies; as well as facilitate investments into areas that support the transition to a clean economy, such as clean energy, sustainable infrastructure, and carbon markets.
This Agreement is not just about setting high aspirations. That is no doubt important. But what’s equally, if not more important, is to follow through with concrete projects and initiatives.

This forum is an example of that because it is a key initiative under the Agreement. And Singapore is happy to do our part to organise this forum, and demonstrate our commitment to IPEF not just in words but also in deeds. And by gathering over 300 participants from governments, business and finance sectors, we hope to catalyse more investments, more partnerships, and ultimately more projects in the Indo-Pacific, so that we can translate our ambitions into reality.

Why the Transition to a Clean Economy is Important

Action is urgently needed when it comes to fighting climate change.

Around the world, many countries have earlier announced their net-zero emission targets, most of us by around 2050 or thereabout. But we also recognise that there are growing near-term concerns around energy security and the rising costs of living, especially with the ongoing conflicts in Europe and the Middle East. Some countries have pushed back their emissions reduction plans. But with the growing climate crisis, we really cannot afford slippages in the timeline to get to net zero.

Asia is at the frontline of this. We are responsible for about half of the world’s emissions. This region is the engine of global economic growth. New technological developments, like AI, will require much more energy than we had originally expected. We all know the statistics – ChatGPT consumes 25 times more energy than a Google search. AI as a whole is already consuming more energy than a small country put together, and the trends will only continue to rise. And we can expect demand for energy to increase significantly over time. If we don’t make an effort now towards shifting to clean energy, there will be huge negative consequences down the road.

What can we do? What can IPEF do? Let me suggest three areas we can take up under IPEF to accelerate this transition to a clean economy.

Clean Energy Infrastructure

The first is clean energy infrastructure.

Southeast Asia is blessed with many sources of renewable energy. Thailand and Vietnam have the potential for solar and onshore wind energy; Indonesia and the Philippines can access offshore wind and geothermal. Outside of IPEF, the ASEAN countries of Cambodia and Laos have abundant hydropower. In fact, Laos itself has plans to be the battery of Southeast Asia.

But the region as a whole, has yet to unlock the potential of these green assets. To do so, we will need new energy infrastructure.

In particular, some countries in the region like Singapore are energy importers; others have the ability to produce more energy than they need within their own countries. And that is why we need regional power grids to better match supply with demand, so that countries with the resources can produce and export renewable energy through the grid. This will help the exporters economically and will improve the bankability of renewable energy projects.

The ASEAN power grid is an example of such an initiative. Today, ASEAN already has several bilateral interconnections, and efforts have been made to further link these up. To accelerate this, I am glad that Vietnam, Singapore, and the US are forming a working group on subsea cable development under the IPEF umbrella.

We all know that subsea power cables are critical infrastructure to facilitate cross-border electricity trading. The working group will facilitate knowledge sharing and consensus building on subsea cable issues in the region, and also look into ways to encourage investments into these capital-intensive assets. We welcome other IPEF countries to join us in this effort.

Scaling Up New Technologies

The second area is to scale up green technologies and we are not just talking about new technologies but even looking at existing ones and how we can lower the costs of these green solutions and mainstreaming them.

Again, IPEF has been making some progress on this front:

Countries are cooperating and sharing expertise on areas like green hydrogen, and are exploring cooperation in other areas like sustainable aviation fuels.
IPEF also launched two new financing initiatives – the Climate Fund, and the Catalytic Capital Fund – to invest in areas that will help with the transition to a clean economy.
I believe there is scope to do more, especially in the area of Carbon Capture and Storage, or CCS.

I know that CCS doesn’t always have the best reputation in some environmental circles. But there is growing international recognition that CCS is needed as part of the journey to reach net zero. Afterall, there are hard-to-abate sectors and industries like chemicals, steel and cement. The world needs these industries and we will need time to find cleaner solutions or alternatives to these areas. Meanwhile, we will need CCS to effectively manage and reduce emissions from these sectors.

CCS technology is not new. But we will need to optimise the technology, to bring the costs of implementation down, and make it a viable part of decarbonisation plans. Governments will also need to put legal frameworks in place to encourage the use of CCS. And here too, I am glad there is some positive momentum.
In January this year, Indonesia became the first Southeast Asian country to develop CCS-related legislation. Following this, Singapore has signed a Letter of Intent with Indonesia to collaborate on CCS.

Around the region, other countries are following suit. Malaysia is preparing a legal framework for carbon capture, utilisation, and storage initiatives. Last November, Australia ratified legislative amendments to enable cross-border CCS.
With clearer legal frameworks and legislation in place, we hope we can catalyse the deployment of cross-border CCS projects in the Indo-Pacific.

Financing

The third area of focus is on financing.

Governments in the region and the world are looking to private capital, that means many of you in this room, to help finance many of the clean energy projects. But not all projects are commercially viable or bankable. That is why we need blended finance to help derisk projects.

Blended finance is about partnership and synergy across multiple players. It’s about pooling concessional capital and using that to catalyse and crowd in multiples of private commercial capital, especially for the marginally bankable projects.

Singapore has been talking about this for some time. As a financial centre, we think this is important, and we have been championing this. After a while, we decided that we can’t just talk about this, we have to lead by example too. That is why we are putting together a blended finance platform called Financing Asia’s Transition Partnership, or FAST-P in short. Over the last few months, we have been working closely with multi-lateral development banks and philanthropic organisations to mobilise a base of concessional capital for this FAST-P platform. On the basis of the concessional capital which we are putting together, which the Singapore Government will also contribute to, we are also reaching out to many banks and institutional investors to bring in commercial capital. So far there has been strong momentum, and I’m glad to see several partners gathered here today – the ADB, the World Bank’s IFC, Global Energy Alliance for People and Planet, Allied Climate Partners, and Temasek. We welcome many more to join us in this partnership for Asia’s green transition. Whether you are contributing concessional or commercial capital, please come on board and join FAST-P.

More fundamentally, improving the bankability of renewable energy projects will also require Governments to do something. We can reduce fossil fuel subsidies and price carbon correctly. This can be achieved in several ways – an emissions cap and trading system; putting regulatory limits on greenhouse gas emissions; or a carbon tax. Singapore has been doing our part to price carbon. We introduced a carbon tax, which covers 80% of our total emissions. We’ve raised our carbon tax to S$25 per tonne this year, and we have announced plans to continue raising this to S$50 to S$80 by 2030. By providing a timeline for the price increases, we hope we can enable companies to plan ahead, provide some certainty, and invest in cost-appropriate strategies to reduce emissions.

We recognise this is not easy to do, and countries everywhere will face their own domestic constraints and challenges. But we have to keep on moving in the right direction, ensure there are right signals in the marketplace so as to encourage and promote decarbonisation.

Conclusion

To conclude, the size of the climate challenge is daunting, and time is really not on our side. But fortunately, there are clear pathways to success. If we work together, and pool our collective wisdom and resources, we will be able to address the common challenges of climate change.

Be it climate change or other global challenges, American leadership is critical. The rules-based order and multilateral trading system built by the US has provided the basis for peace, stability, and prosperity around the world for the past seven decades. The system has enabled countries big and small to reject zero-sum competition, and to embrace win-win cooperation, even when there are differences between us.

In this tumultuous period, we must redouble our efforts to strengthen this multilateral system, and steer global developments towards a path that will maximise our chances for continued peace, stability and shared prosperity.

IPEF can play a role in this. It must remain open, inclusive and flexible, and help to strengthen this multilateral system. On our part, Singapore will continue to do whatever we can to support developments on IPEF and work with our partners to bring about more ambitious and concrete outcomes. On that note, I wish all of you a fruitful session and productive conference.

Thank you.