S'pore sets up office to grow market for green investments

Singapore is seeking to grow the market for green investments, with a new office set up to accelerate sustainable financing.

As it moves towards a low-carbon future - with climate change being an existential issue for a low-lying city-state - Singapore yesterday announced a new initiative in the area of green bonds.

The Green Bonds Programme Office - which comes under the Ministry of Finance (MOF) - will work with statutory boards and develop a framework for green bond programmes. It will also engage the industry and manage investor relations, said Finance Minister Lawrence Wong yesterday.

The Government will lay out the framework and rules for sustainable financing and test them with its own issuance, he said.

The National Environment Agency in August became the first statutory board to establish a $3 billion multicurrency, medium-term note and green bond framework.

Proceeds from the notes issued will be used to finance sustainable infrastructure development projects such as Tuas Nexus - Singapore's first integrated water and solid waste treatment facility.

"The choices we all make in finance and investments matter. They matter greatly," said Mr Wong. He added that private sector efforts may be needed to close the funding gaps for sustainable infrastructure. The idea is to give corporates access to financing as they invest in green projects.

Singapore plans to build up expertise to support green finance.

For example, new capabilities are needed to quantify the environmental benefits and costs of projects, and estimate how environmental costs can translate into future default risks.

But financing is just one part of the green equation. The wide-ranging Singapore Green Plan 2030, unveiled in February, cuts across all sectors of society, ranging from infrastructural development to research and innovation.

Mr Wong added yesterday that MOF is reviewing the level and trajectory of Singapore's carbon tax, and will give an update on it in next year's Budget. "The right carbon price is critical in ensuring that the costs of carbon are properly internalised, and helps bring about a reduction in emissions," he said.

Speaking at the inaugural Singapore Sustainable Investing and Financing Conference, Mr Wong also said that Singapore plans to scale up the carbon credits market.

Organisations which find it hard to eliminate or reduce emissions can use such credits to offset them.

"The market for such voluntary carbon credits is huge. It's also important because carbon credits can help direct private financing to climate action projects that would otherwise not get off the ground," said Mr Wong.

He added: "Asia will need a voluntary carbon market that is large, transparent, verifiable and environmentally robust. We will do our utmost to support the development of such a market in Singapore."

Mr Wong likened tackling the climate emergency to fighting the Covid-19 pandemic: "Climate change doesn't happen as quickly as the spread of the virus but... the window to avoid catastrophic outcomes is closing.

"We must now come together to flatten the curve of greenhouse gas emissions to avert the climate pandemic."

He added in a fireside chat that everyone needs to take climate change seriously, but the response cannot stop at the individual level.

"We need systems-level solutions and that requires governments to act by setting policies, including carbon taxes and regulations," he said in the chat moderated by Temasek's deputy chief financial officer, Ms Png Chin Yee.

"Finally, businesses have an important part to play because it is in their own interest... If they do not start making the shift early enough, they may be caught in investments and assets that are of higher risk and become stranded."