Temasek raises internal carbon price to US$50 this year

The group calculates and includes the cost of carbon emissions from its investments in its decision making. ST PHOTO: KUA CHEE SIONG

SINGAPORE - State investment company Temasek will raise its internal carbon price as it moves gradually to reduce the net carbon emissions of its portfolio.

Its internal carbon price per tonne of carbon dioxide emitted will be lifted to US$50 (S$70) this year from US$42.

“We expect to increase this price progressively to US$100 by the end of the decade,” Temasek said at its annual review on Tuesday (July 12).

Mr Russell Tham, Temasek’s joint head of enterprise development group and head of strategic development, said the group will have “sustainably-linked incentives for this soon”.

The group has also set up environmental, social, and governance (ESG) frameworks as part of its investment strategy, he said.

Carbon pricing is a mechanism under which a firm calculates the projected cost of greenhouse gas emissions that could arise from its investments. It is a strategy to manage climate-related business risks and prepare for Singapore’s transition to a low-carbon economy.

Temasek aims to reduce the net carbon emissions of its portfolio to half the 2010 levels or about 11 million tonnes of carbon dioxide equivalent by 2030. It also aims for net-zero carbon emissions by 2050.

It said its estimated total portfolio emissions went down moderately for the financial year as at end March this year, while the carbon intensity of its equities portfolio fell from 103 tonnes of carbon dioxide equivalent per $1 million portfolio value to 81 tonnes. 

This decrease is led largely by the impact of Covid-19 on some of the group’s key portfolio companies’ emissions, as well as the time lag in reported emissions data. 
Temasek said a portion of its staff’s long-term incentives will be aligned with the group’s 10-year carbon targets.

To quicken the pace of decarbonisation, the group launched GenZero in June this year as an investment platform company that is dedicated to catalysing solutions across three focus areas - technology-based solutions, nature-based solutions, and carbon ecosystem enablers. 

The state investment fund has also invested in materials science firm Ambercycle, as well as hydrogen-related firm Sydrogen Energy, which is a joint venture with Nanofilm Technologies, in its bid to drive sustainability.

The review also touched on one of four verticals to build the group’s capabilities - blockchain or digital ledger technology. The other three are artificial intelligence, cybersecurity and digital solutions.

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Mr Martin Fichtner, head of Temasek’s west coast and deputy of technology and consumer, said blockchain technology has a long gestation period and “we believe it’s going to touch a lot of different parts of the business”.

It is why the group is focusing broadly on blockchain enabled solutions, platform infrastructure and other digital asset applications including cryptocurrency exchanges, he said. 

“Our exposure to cryptocurrencies is minimal and it’s primarily through venture funds that invest in crypto related projects and companies,” Mr Fichtner said, when asked about the recent crypto market rout.

Among the group’s blockchain-related investments are crypto exchange FTX, which is owned by crypto billionaire Sam Bankman-Fried, as well as cross-border payments platform Patior, that was also set up in partnership with DBS and JP Morgan.

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