The theme of this year’s Energy Week – “A Resilient and Sustainable Energy Future” – could not be more appropriate given the challenges we face today. Energy issues continue to loom large for countries everywhere. The ongoing war in Ukraine has disrupted energy supplies worldwide. But even as we seek to enhance energy security, we must redouble efforts to green our energy sources.

The energy crisis and climate crisis have become a vicious cycle. The world cannot afford to choose between an energy crisis and a climate crisis. To have energy security, we will need to resolve the climate crisis too.

Singapore has long been grappling with both challenges. We chose natural gas as our main energy source early on, as it is the cleanest fossil fuel. Natural gas also met our requirements for energy security, as we are able to diversify our sources of gas supply. Over the years, we have continued to explore additional options like solar energy and electricity imports. Unlike many other countries, we do not have many scalable options when it comes to renewable energy. We do not have the land for large solar or wind farms, or fast-flowing rivers for hydroelectric power.

Nevertheless, we have managed to defy our natural constraints and made progress in reducing our greenhouse gas emissions. We were able to reduce our greenhouse gas emissions by 32 per cent below business-as-usual levels, in 2020. This is double the earlier commitment of 16 per cent below business-as-usual levels which we made in 2009, ahead of the Copenhagen Summit.

We have achieved this by becoming more energy efficient and keeping our emissions per GDP dollar one of the lowest in the world. This has given us the confidence to look ahead and to consider how we can strengthen further our commitment to climate action.

Net-zero strategies

At last year’s UN Climate Change Conference in Glasgow (COP26), countries were urged to get to net-zero emissions by or around the middle of the century.

Singapore has heeded this call. We will enhance our 2030 nationally determined contributions, or NDCs. We had previously committed to peak our emissions in 2030 at 65 million tonnes of CO2 equivalent. We will now aim to peak our emissions earlier, and reduce our emissions to around 60 million tonnes of CO2 equivalent in 2030. These enhanced 2030 targets will put us in good stead to achieve our longer-term goal of getting to net zero by 2050.

The Singapore story has always been about us taking proactive action – to transform our constraints into opportunities, so that we can continue to build a better and more vibrant Singapore for the next generation. Let me share Singapore’s approach towards this net-zero transition.

To achieve net zero by 2050, we will need to encourage businesses and individuals to be more energy efficient, reduce energy consumption and carbon emissions, and adopt green energy alternatives. All this will require fundamental shifts in the behaviour of all households and firms.

There are a variety of policy levers available to governments to drive this change. The carbon tax is one important lever to shape responsible behaviour, as consumers and businesses will then have to internalise the costs of carbon emissions in their consumption and investment decisions.

Earlier this year, I announced in our Budget that Singapore will raise our carbon tax from the current $5 per tonne of CO2 equivalent, to about $50 to $80 by 2030.

The carbon tax in Singapore is applied broadly, covering about 80 per cent of our emissions today. We also have high petrol taxes and we do not subsidise fuel or electricity. Together, all these will help to sharpen the impetus of shifting to cleaner alternatives.

We are mindful that carbon taxes will lead to higher costs for consumers and businesses alike, during a time of high inflation.

We decided that a better approach is not to reduce or hold back the carbon taxes but to provide targeted relief to businesses and consumers so that we have the right price signals for the economy as a whole, and for those who need help, we will extend help.

For businesses, we have enhanced the support schemes to help them become more energy efficient. For households, the effects of carbon tax will be felt primarily through an increase in their electricity bills. So we are helping households, especially the lower- and middle-income groups, with utilities vouchers to cushion the impact, and also with incentives to switch to more energy-efficient appliances.

At the same time, we are investing more in technologies to help decarbonise our economy.

In Singapore, power now accounts for almost 40 per cent of our overall carbon emissions, the vast majority of which is generated from natural gas. Decarbonising the power sector is therefore a key focus of our climate efforts.

We are already one of the most solar-dense cities in the world and we are looking to do more, wherever possible. By 2030, we should have approximately 2 gigawatt-peak of solar energy, which can power up to 350,000 households on a sunny day.

We have been working with regional partners to develop the Asean grid and just this year, we started importing hydroelectric power from Laos under the Laos-Thailand-Malaysia-Singapore Power Integration Project.

But these efforts will not be sufficient. We are looking seriously at other low-carbon alternatives that may be less technologically mature today but show great potential.

Low-carbon hydrogen

We believe that low-carbon hydrogen is an increasingly promising solution. While the technology and supply chains are still nascent, momentum has picked up substantially in recent years. Global investment in low-carbon hydrogen has increased exponentially, backed by policies from countries around the world to accelerate its production and usage.

Given these positive developments, Singapore believes that low-carbon hydrogen has the potential to be the next frontier of our efforts to reduce our emissions.

I am glad to announce the launch of Singapore’s National Hydrogen Strategy. This will provide a road map of how hydrogen can support Singapore’s decarbonisation efforts, and the steps we will be taking to prepare Singapore for a hydrogen future.

As a clean fuel that can be used to generate electricity, low-carbon hydrogen can support our twin objectives of reducing carbon emissions and safeguarding our energy security. If technology continues to advance, we foresee that hydrogen can supply up to half of our power needs by 2050, alongside domestic renewable energy sources and electricity imports.

Low-carbon hydrogen can also decarbonise activities that cannot be easily electrified, in sectors that are critical to Singapore.

In the industrial sector, for example, hydrogen can be used as feedstock in semiconductor plants and petrochemical processes. Besides lowering emissions, it also allows companies to produce sustainable products that could fetch a green premium. Meanwhile, in the aviation and maritime sectors, hydrogen can be used to produce low-carbon fuels.

To unlock the potential of hydrogen, we will organise our efforts around five key thrusts.

First, we will experiment with key hydrogen technologies and carrier pathways to understand how they can be deployed on a large scale in Singapore when they become economically viable. We will focus on those that have the potential to be commercially viable and have multiple applications.

One good example is ammonia, a hydrogen carrier. In recent years, it has emerged both as a possible fuel for power generation, as well as a low-carbon marine fuel. We will therefore kick-start our hydrogen efforts by issuing an expression of interest for a small-scale commercial project utilising low-carbon ammonia for power generation. With this, Singaporeans may start to have access to electricity generated from low-carbon hydrogen from 2027. Through this project, we also hope to catalyse the development of ammonia supply chains for marine bunkering needs.

Second, we will redouble efforts to support hydrogen research and development (R&D) through the Low Carbon Energy Research Project. The project was set up two years ago to support R&D efforts into low-carbon technologies, and a total of $55 million of research funding has been awarded to date. This year, we will set aside an additional $129 million, a significant amount of which will be directed towards projects that can help Singapore import, handle and utilise hydrogen and its carriers safely and at scale.

The Government will play an active role in bringing industry players and the research community together, to improve translation from research towards real-world applications.

Third, we will work with industry and international partners to facilitate global trade in low-carbon hydrogen and the establishment of supporting supply chains. As a net importer of low-carbon hydrogen, it is essential that we have reliable and diversified supplies of hydrogen. To this end, we aim to build a network of partnerships with like-minded countries and international organisations, to facilitate the establishment of these supply chains, even at this nascent stage.

As a hub for aviation, maritime and logistics, we believe that Singapore’s involvement, for example through pilot projects, can help the industry establish guidelines and standards, especially for the transportation, storage and supply of low-carbon ammonia and hydrogen.

Fourth, we will study the land and infrastructure requirements needed to deploy low-carbon hydrogen in the longer term.

Finally, we will ready our industry and workforce for this hydrogen transition and put them in good stead to capture new opportunities. A large global hydrogen economy will bring new activities and jobs across the entire supply chain – some examples include hydrogen project financing, hydrogen trading, carbon verification and certification, as well as logistics solutions in the transportation, storage and distribution of hydrogen.

This National Hydrogen Strategy is a signal of Singapore’s ambition to leverage the potential of hydrogen as a decarbonisation pathway. More importantly, it is a rallying call to our industry and international partners, to join us on this journey.

Scaling up green finance

By some estimates, several trillions of dollars in infrastructure investments will be needed over the next decade in South-east Asia alone to enable the energy transition and to put the entire region on the path to net zero. And while there are many potential climate transition projects in South-east Asia, many of them are unfortunately not bankable today. This has created a funding gap that must be bridged if the region and the world are to meet the climate goals.

We will need closer collaboration between private capital, governments, philanthropy and multilateral development banks to bring together financial resources, technical expertise and capacity building to close the gap and make more projects viable. In particular, catalytic or concessionary capital from philanthropic organisations and multilateral development banks can help to share risks of these projects, and crowd in private capital.

As an international financial centre, we believe that Singapore is well positioned to contribute to these efforts.

A key part of this work will require progress on several fundamental building blocks. We will need better data on projects. We will need more disclosures by companies, especially to address concerns on greenwashing, and we will need clearer definitions on what is considered green, what is considered brown and importantly, what are considered activities that are transitioning from brown to green.

So the three Ds of data, disclosures and definitions form the building blocks, and the Monetary Authority of Singapore has been working with its regional counterparts, and across various international forums, on these key issues.

As we strengthen these building blocks, we will also push for financial innovation and solutions in the sustainability space. For example, we will do more to encourage Asean green bonds and loan issuances, for which Singapore already accounts for a significant part today, and we will develop and scale up blended finance structures.

In short, we will make Singapore a green financial centre – to effectively channel green capital towards the development of transition projects and climate change solutions around the region.

Our exciting green future

The built environment is another area with huge potential – the green transition will be an opportunity for us in Singapore to reimagine what our future city can become.

We have already announced plans to convert our vehicle population to run on cleaner energy by 2040. We are also working on a sustainable industrial area at Jurong Island, and a sustainable tourism area at Sentosa. We will now complement this by turning Jurong Lake District into a world-class sustainable district. We will aim to have all new developments there achieve net-zero emissions by around 2045.

To meet this ambition, we will have to set new frontiers for sustainability practices within the district. In particular, all new developments in the district will be required to be super low-energy or zero-energy buildings. At the district level, it will need a centralised district cooling network. We will also deploy solar on all suitable surfaces within the district, such as on rooftops, building facades and empty plots of land.

Finally, to make it highly liveable, Jurong Lake District will be designed to be car-lite and support green mobility options, such as cycling and electric buses. This is what we will do within one district itself. But the public sector in Singapore as a whole will also do its part – it will aim to achieve net-zero emissions across the public sector by around 2045, slightly earlier than the net-zero target for the country as a whole.

These efforts to reimagine our built environment will not be easy to achieve. But if we can do all this, we can give the next generation in Singapore a highly liveable, exciting and sustainable city to call home.