SM Teo Chee Hean at Temasek’s Ecosperity Conference 2022

Accelerating Climate Action through Policy, Private Initiative and R&D

Introduction

It is a pleasure to see many familiar faces in the audience today. I am pleased to join everyone here in person at Ecosperity Week 2022, as well as those of our friends who are coming in virtually.

Climate change belongs to that class of problems, likened to the “boiling frog” – in this case, we are the “frog”. If we do nothing about it today, nothing is likely to happen today or tomorrow, or this year or next. But by the time we feel the effects in a significant way, we’ve already lost a decade or decades of time – time when action could have been taken, time lost forever which we cannot recover. We have already passed that point. We already see the significant effects of climate change everywhere. We have to make up for lost time, and need to take urgent and more decisive action now.

International Response

In the past year, international resolve to reduce greenhouse gas emissions has grown. As part of the COP-26 Glasgow Climate Pact, all Parties should aim to achieve global net zero emissions by mid-century, in order to keep the 1.5-degree goal within reach. There is significant momentum to decarbonise. More than 80 countries have pledged net-zero emissions by 2050, including 11 in Asia.

We also reached a significant milestone at COP-26 last year, with the finalisation of the Paris rulebook. Singapore was happy to contribute to the finalisation of Article 6 on international carbon markets. This would not only facilitate cross-border trading of high integrity carbon credits, but also catalyse new green growth opportunities. Effective, high integrity carbon markets are important for Singapore given our alternative energy disadvantage.

Discussions at COP-26 also saw momentum shift towards increased private sector investment in clean solutions. The Glasgow Financial Alliance for Net Zero, a coalition of 450 financial firms, pledged to make over US$120 trillion of private capital available for investment, to reach global net zero by 2050. This will provide access to private finance for countries with less means to decarbonise.

Singapore’s strategy to accelerate transition to net-zero

Singapore has also signalled our support for the Glasgow Climate Pact by announcing our net-zero target to be achieved by or around mid-century. This provides a clear target for our businesses and individuals to work towards. It is also an invitation for more businesses to partner us here in Singapore, and tap the business opportunities in the growing regional green economy.

Last year, we launched the Singapore Green Plan 2030, a whole-of-nation movement to integrate and implement our plans for sustainable development across our environmental, economic, energy, transport and built environment sectors, and to nurture the next generation as stewards in environmental sustainability.

Later this year, we will update our Long-term Low Emissions Development Strategy or LEDS, which was published in 2020, with our revised plans to achieve Singapore’s net zero goals by 2050.

And before we finalise our plans, we will consult closely with industry and citizen stakeholder groups. We all need to work together and play our part to meet this climate ambition, through three key pathways:
a) Policy;
b) Private initiative; and
c) R&D.

Let me elaborate on each of them.

Policy

First, policy has an important role in setting the framework for and achieving “ecosperity”, which is not just about reducing carbon emissions. Ecosperity is about achieving our Sustainable Development Goals; creating a circular economy in which we eliminate waste and maximise the value of our natural resources; and building sustainable, liveable cities. Governments need to have the right policies that get to the root of the problem, and help create solutions at the system level.

For example, sustainable urban transportation is not just about replacing all internal combustion engine vehicles with electric vehicles. If we did that, we would convert our traffic jams of combustion engine vehicles to traffic jams of electric vehicles. Instead, the more fundamental system solution is to minimise the need for cars, through well-integrated urban planning and a comprehensive public transport system. This is why Singapore invested heavily in public transport; and since 2018, implemented a zero-growth policy for our vehicle population. We aim to be a 45-minute city in 2040 – 9 out of 10 trips between homes and workplaces will take less than 45 minutes on our public transport network, even during peak hours. Today, we are already two-thirds there.

Climate change is the classic example of the “tragedy of the commons”. We need policies to accurately reflect economic benefits and costs to nudge businesses and individuals towards the desired behaviour. For example, a carbon tax can ensure that the negative externalities of carbon emissions are correctly priced and borne by the parties contributing to these emissions. It is also an effective mechanism to spur economy-wide decarbonisation efforts. Singapore was the first South East Asian country to introduce a carbon tax, and we recently set out a clear timeline to raise our broad-based carbon tax to reach between S$50 to S$80/tonne by 2030. We introduced policies to support and encourage businesses to pursue energy efficiency, such as the Resource Efficiency Grant for Energy. We also have the Climate-friendly Household Package to incentivise households to switch to more energy efficient equipment by subsidising their upfront costs. We hope that with the right policies, we can change behaviours into habits and embed environmental sustainability more meaningfully in the national psyche.

Private Initiative

Second, private initiative. Climate change requires all hands on deck, including and especially the private sector. Businesses will be affected not just by the primary effects of climate change, but also by the second and third order effects, disrupting their operating models and supply chains. Growing awareness about the climate crisis has also changed how people define value in business, and what values a company upholds. Climate policies, technological advancements and stakeholder preferences will fundamentally impact what is the sustainable value of a company, and its valuation in the long term.

Companies can no longer solely focus on short term returns from current assets and business lines. Some financial institutions have discovered that is so too. Shareholders, creditors, customers, and even your employees will demand more sustainable practices and plans. To remain competitive in the long term, businesses need to incorporate decarbonisation and climate risks into their strategies. As demand for sustainable practices increase, first movers will capture upsides while laggards may be written off as doing too little, too late. Questions will be asked about your companies’ strategies to avoid stranded assets or legacy lines of production that may be rendered obsolete. The oil and gas industry has already found itself under the spotlight. The Big Five oil giants have responded by pledging to reduce emissions. Shell, ExxonMobil and Chevron, which have major operations in Singapore, have committed to reach net-zero emissions by 2050.

The private sector and private finance have an important role to play in our shift towards the green economy, be it by providing investments to plug the financing gap, or by taking the lead in adopting greener business models. Sustainable private financing and corporate net-zero targets have a powerful mutually reinforcing effect, by drawing capital preferentially towards sustainable projects and new opportunities in the global green economy. This in turn makes it more difficult and expensive for companies to obtain financing if their projects are not green.

I am happy that Temasek has recently launched GenZero, an investment company focused on carbon markets and accelerating decarbonisation solutions. It invests in companies across tech-based solutions, nature-based solutions, and carbon ecosystem enablers, and supports both early-stage and later-stage companies to scale, commercialise and deploy their solutions. This will direct more private capital towards green opportunities and encourage companies to place greater emphasis on delivering sustainable long-term financial returns. And Singapore intends to switch our economy towards a growing green economy.

R&D

Third, R&D. We need to invest in research and develop innovative solutions to tackle the climate crisis. If we use technology right, it can be a valuable tool to help us overcome resource constraints and unlock greener and more sustainable solutions. To do this effectively, we need to adopt an ecosystem approach – the government to create a conducive environment that promotes green opportunities; the private sector to invest in emerging technologies; the scientific and research community to focus on developing innovative solutions; and all sectors working together to cross-fertilise and generate new ideas.

Singapore, more than many other countries, will have to depend on technological innovations which have not been developed yet, or implemented in scale, in order to decarbonise. This is why we are putting a focus on R&D. Singapore has been making critical investments in R&D to build new capabilities to pursue sustainable development. Our Research, Innovation and Enterprise (or RIE) 2025 Plan sets aside around S$25 billion (or US$18.3 billion) for research in strategic domains including Urban Solutions and Sustainability. We think of Singapore as a ‘living lab’, providing space for businesses to testbed and commercialise solutions – deploying autonomous vehicles, or even smart energy grids that can lower energy usage, distribute green energy such as solar power seamlessly across the district and detect abnormal energy consumption.

In particular, we need to continue to explore emerging technologies that could bring about more sustainable solutions for the longer term, such as, Carbon Capture, Utilisation and Storage (CCUS) and green hydrogen. Singapore has also been putting in place the building blocks to support a high integrity carbon credits ecosystem – by developing robust methods for accounting in nascent areas like blue carbon nature-based solutions, and exploring satellite technology for measuring and monitoring. We invite like-minded researchers and investors to use Singapore not just as a testbed, but a launchpad to build regional capabilities. We hope this helps to unlock the potential of the Asia Pacific region and develop mutually beneficial partnerships and solutions for our climate challenge.

Tackling climate change is not just about mitigating carbon emissions, but also adaptation to deal with the consequences of more extreme weather and sea-level rise. Low-lying island states like Singapore are particularly vulnerable to this. We have been conducting research in coastal protection and planning for the real prospect that sea levels will rise by up to 1 metre by 2100. For example, we have raised the minimum land reclamation level in Singapore by an additional metre since 2011, to bring the minimum reclamation level of new land to 2 metres above the highest ever recorded tide in Singapore. We have also divided our coastal areas into hydraulically-distinct segments, to study different options for each area and when to phase in our coastal protection measures. We estimate that this will require around S$100 billion over the next 50 years, until the end of the century. You would have read in today’s newspapers about some of these plans, including Long Island on the East Coast. This is an innovative solution which will help to protect what is the East Coast today, which is relatively low-lying. But instead of building sea walls in a hurry to protect the East Coast, we intend to develop our coastal protection in a way which may well give us a positive return – by reclaiming land offshore in order to have developable land which we can use in land-scarce Singapore, while at the same time providing coastal protection to the vulnerable East Coast. In this way, by planning and looking ahead, we can not just have coastal protection, but produce new land and devise ways to get positive returns from coastal protection rather than just build sea walls.

Conclusion

We have made significant progress over the last few years. In the past, our efforts were focused on the “why” – making the case for the climate and the need for action. But today, we have moved on to talk about the “how”. We see businesses making ambitious plans, and developing greener, cleaner solutions at a rapid pace. As prices of renewables fall and cleaner forms of transport and infrastructure options grow, the path ahead is clearer. Singapore is prepared to play in the frontier of the “how”, and form partnerships involving the public, private and people sectors to create new solutions.

To achieve our objectives, we will require great resolve and commitment to action from all parties. Recent global developments, like the tragedy in Ukraine, and the knock-on effects on the energy market, demonstrate how easy it may be to set us back. What remains certain is that, no matter what happens, we must continue to stay steadfast in our collective ambition to create a better, greener, safer and more secure and sustainable world, and our determination to continuously innovate and find the best pathway to achieve net-zero.

I thank Temasek and all of you for bringing us together as part of Ecosperity Week, and wish all participants fruitful and meaningful discussions. All the very best to all of you. Thank you.