How Singapore can step up S-E Asia's low-carbon push

It can leverage its strengths in finance and innovation to tap opportunities in region

Mr V.S. Hariharan, co-founder and chief executive of Singapore firm Third Wave Power, which is developing technology that provides rural communities with electricity, such as solar-powered bulbs, as well as software that allows villagers to use solar
Mr V.S. Hariharan, co-founder and chief executive of Singapore firm Third Wave Power, which is developing technology that provides rural communities with electricity, such as solar-powered bulbs, as well as software that allows villagers to use solar energy on a pay-per-use model, said the company works with microfinancing institutions to provide these options for off-grid communities.ST PHOTO: NG SOR LUAN

Climate change, once thought a problem for future generations, is making its mark here and now.

As floods inundate China, and western Canada and the United States fry in a heat wave that scientists say was "virtually impossible" without climate change, the call for companies and governments to do more to slash their emissions is getting louder.

A reduction in Singapore's own emissions is important in showing solidarity but would barely make a dent, as the city state contributes 0.11 per cent to global emissions.

But the country - with its reputation as a financial and innovation hub - can still make an impact in bringing down emissions from South-east Asia.

The International Energy Agency has forecast that energy demand in this region is growing at twice the global average. The burning of fossil fuels for energy is the main driver behind the planetary crisis confronting earth today.

COAL ADDICTION South-east Asia is ravenous for coal, the dirtiest form of fossil fuel, as it pursues economic growth.

In 2019, consultancy Wood Mackenzie found that coal will continue to be the dominant fuel source in power generation for the region, peaking in 2027 before slowing down, due largely to "affordability issues" in the region.

But recent events could chart a new trajectory for the region.

The Covid-19 pandemic has spurred a green revolution, as governments seek to rebuild their economies in a way that will also ward off the looming climate crisis.

The price of renewable energy, from wind, water or the sun, is also coming down - providing economic viability to the political will to green the region's energy sources.

Associate Professor Simon Tay, chair of think-tank Singapore Institute of International Affairs, said: "Decarbonisation and addressing climate concerns must be framed not as cost, but as opportunity, and entrepreneurship will be as important as environmentalism."

There is US$786.5 billion (S$1.06 trillion) in investment opportunities for decarbonising the energy grid in East Asia and the Pacific, according to a January report by the International Finance Corporation (IFC) - the sister organisation to the World Bank, which focuses on the private sector in developing nations.

The region's figure was the highest among the six regions studied, including South Asia, Africa and Latin America.

Mr Vivek Pathak, director and global head for climate business at IFC, said this was because energy demand is high in one of the world's fastest-growing regions, which was ripe for investment as the cost of renewables continues to decline.

Singapore is also investing in research and development into low-carbon technology, such as hydrogen, which can serve as a fuel alternative that produces no planet-warming gas when burned.

"The ability to apply and replicate (such) initiatives is high, and would require cross-regional partnerships, finance and project flows to be successful," said Mr Pathak. "This creates a great opportunity for Singapore to act as a testing hub, while also pioneering the uptake of such innovations in Asean and globally."

Entoria Energy, which invests in and operates renewable energy projects internationally, is among the firms that see Singapore as a good base to capitalise on this regional market.

"Renewable energy is a vast untapped market in South-east Asia," said its group controller Vincent Bakker. "Financiers jumping into fossil fuels, under the false assumption that they are cheaper, risk trillions of dollars of stranded assets."

A BRIGHT GREEN SPARK

Green finance essentially entails investments made in projects with a positive environmental outcome.

But there is nuance to this. For example, natural gas is a fossil fuel, but is considered the cleanest one as it produces less planet-warming gas when burned, compared with coal.

So some financiers may argue that gas-fired plants could still be considered "green" if they are built in place of coal-fired plants.

"Fossil fuels remain the cheapest way to generate electricity in many parts of Asean," said a spokesman for the Monetary Authority of Singapore (MAS).

"The shift to cleaner energy sources will need to be progressive - for example, by switching to relatively less emissions-intensive fuels such as natural gas, which can be a bridge towards a more sustainable energy system."

Earlier this year, an MAS-convened task force issued a proposed set of guidelines - called a taxonomy - to help Singapore-based financial institutions identify green activities.

Of the proposed definitions, a "traffic-light" system was suggested to help classify activities as green, yellow (transition) or red (unsustainable).

The task force recently concluded public consultation on its proposed approach, and will next focus on developing criteria and quantifiable thresholds for green and transition activities, the MAS spokesman said. "Providing clarity to the market is a key enabler to scale up green finance in Asia and globally," she added.

But while financial institutions here step up their lending to support the energy transition in the region, climate activists say these entities must also cut off funding for fossil-based projects.

Said Ms Norly Grace Mercado, Asia regional director for climate activist group 350.org: "If the banks truly value the welfare of communities... they would see that fossil infrastructure often infringes upon the very rights of these communities."

For example, the health of those living near coal plants would be affected by pollution, she said.

"Energy is a necessity for everyone, and the climate justice we demand is a fast and just recovery towards 100 per cent community-led renewable energy for all," she said. "This means no new fossil fuel projects, and consulting the communities on their needs."

PUTTING PEOPLE FIRST

Renewable energy can also provide more energy security for communities. A solar panel hooked up outside a home, for instance, can power bulbs or appliances in a home disconnected from the national grid.

The Bicol region in the Philippines is vulnerable to typhoons, which can knock out power in some areas for months, said Mr Jose Chito Milante, an engineer at the Municipal Planning and Development Office in the town of San Jose in Camarines Sur province.

During those times, people turn to alternatives like diesel generators. "We are trying to invest in solar electricity, at least in our major streets. Solar-powered street lights are very reliable after typhoons," said Mr Milante.

Singapore firm Third Wave Power is developing technology that provides rural communities with electricity, such as solar-powered bulbs, as well as software that allows villagers to use solar energy on a pay-per-use model.

This means that they would not have to pay the hefty upfront costs of installing the solar systems.

Mr V.S. Hariharan, the firm's co-founder and chief executive, said the firm works with microfinancing institutions to provide these options for off-grid communities.

Compared with kerosene generators or candles, solar-powered appliances are affordable with no operating costs, safe from smoke or pollution-related issues, and will allow students and adults to study or work at night to supplement their income, Mr Hariharan said.

He added: "The fact that solar is also good for the climate is a by-product for these situations."

Mr Sandeep Chamling Rai, senior adviser for global climate adaptation policy at environmental group WWF-Singapore, said the climate crisis cannot be resolved by any country alone.

"Innovations that enable citizens to make the right decisions are vital. But there are limitations to what an individual can achieve on her own," he said.

"With several Asean countries at different stages in transitioning to renewable energy due to economic and infrastructure challenges, political collaboration on strategic initiatives has to take place to enable this change to occur."

• This report was written and produced as part of a media skills development programme delivered by Thomson Reuters Foundation. The content is the sole responsibility of the authors and the publisher.

A version of this article appeared in the print edition of The Straits Times on August 02, 2021, with the headline 'How Singapore can step up S-E Asia's low-carbon push'. Subscribe