Green finance as a sector is experiencing a rapid growth and, as outlined by Minister for Finance, Mr Lawrence Wong during Singapore’s Budget 2022 presentation, Singapore now accounts for almost half of ASEAN green bond and loan market. Moving forward, Singapore will mobilize SGD 35 billion to unlock green growth opportunities via public infrastructure projects to support the island state’s green transition. The investments are expected to catalyse job creation and growth across the economy with focus on greening hard-to-abate industries and promoting new sectors such as green finance, carbon services and low-carbon technologies.
At Singapore Sustainable Investing & Financing Conference (SSIFC) held on 9 June 2022, as part of Ecosperity Week, Ms Indranee Rajah, Minister in the Prime Minister's Office, Second Minister for Finance and National Development, announced the publication of the Singapore Green Bond Framework, which lays the foundation for the issuance of green bonds by the Singapore Government to support Singapore’s decarbonisation efforts and evolving green finance market.
These green bond issuances will serve as reference for the corporate green bond market, deepen market liquidity for green bonds, and attract green issuers, capital, and investors to develop a net zero strategy. The private sector within green finance is going to have an important role in the green transition, and the need of innovation and new solutions is in high demand.
To help catalyse green financing in the region and accelerate the adoption of new technologies, the focus is to have more green innovation supported by capital and cross section investment. The government also plans to increase the carbon taxation fivefold by 2024. The associated revenue will further support deployment of low-carbon technologies.
During SSIFC’s opening address, CEO Larry Fink from Blackrock Investment Institution, outlined three main levers expected to accelerate green transition through private sector involvement:
Decarbonisation will be the key to economic growth.
Collective action, cross functional investments, and partnerships are needed to move the needle.
Mobilizing capital and long-term investment will help reach the goal of net zero in 2050.
Cross sector partnerships and investments will help “translate ambition into actions”, and bring us closer to unlock the path to zero emission. As an example, the car industry is currently in the midst of a green transition with high consumer demand for green solutions and rapid deployment of new technologies.
Private Capital and Carbon Credits will play a key role in the green transition
Notably, several keynotes and panel discussions during SSIF 2022 emphasised the need for mobilizing private capital and accelerating the development of carbon markets.
In his keynote “Aligning Private Finance to Net Zero”, Mark Carney, Co-Chair, Glasgow Financial Alliance for Net Zero and Vice Chair, Brookfield Asset Management, stated that there is a need of an extra trillion US dollars a year in emerging and developing countries to reach the Net Zero by 2050. A need which can only be met by mobilizing private capital.
In the panel discussion “Setting Carbon Markets Up for Success”, insights were shared on how carbon markets can be scaled to meet the expected 100 fold increase in future demands for carbon credits by 2050, representing a market valued at more than 768.3 billion SGD:
Public-private partnerships are a key lever to accelerate innovation, ensure integrity, and ultimately achieve the necessary scale.
On one hand, governments should support the carbon credit market with transparency and shared global regulations.
On the other hand, companies should support the green transition by supporting emission reduction projects and strategies that turn climate action into long-term business opportunities securing the path to zero emission.
Contact the Royal Danish Embassy in Singapore for more information about business opportunities and how Denmark seeks to inspire green transition in Southeast Asia:
Commercial Advisor at the Royal Danish Embassy in Singapore