Speech by Deputy Prime Minister and Coordinating Minister for Economic Policies Heng Swee Keat at Ecosperity Week 2021 on 29 September 2021.
Mr Lim Boon Heng,
Chairman of Temasek Holdings
Ms Ho Ching,
CEO of Temasek Holdings
Mr Dilhan Pillay Sandrasegara,
CEO of Temasek International
Ladies and gentlemen,
Turning Constraints into Opportunities
Since the inaugural Ecosperity Week in 2014, we have seen an acceleration of the climate emergency. The latest report from the Inter-Governmental Panel on Climate Change is a sobering read.
The world is now more than 1℃ warmer than before the industrial revolution. July 2021 was Earth’s hottest month on record.
At this rate, the 1.5℃ global warming threshold could be breached in the next 10 to 20 years.
The impact will be far reaching – from rising sea levels, to more extreme weather patterns, and the destruction of nature and biodiversity.
The report was stark and underscores the need to take swift and decisive action.
COVID-19 – far from derailing the green agenda – has given it fresh momentum.
Countries around the world have remained committed to fulfil the climate pledges made at the historic Paris Agreement.
The leadership of the US and China, the two largest economies in the world, and the EU, will be critical to tackling this global challenge.
Singapore is committed to contribute to the global fight against climate change. Earlier this year, we launched the Singapore Green Plan 2030, our national roadmap towards sustainable development and net-zero emissions.
This momentum for climate action is redefining the global economy. Green investments are increasing at an accelerated pace.
Environmental accountability is becoming a key consideration alongside profitability.
There is now greater consumer awareness and preference for sustainable business practices. We are seeing greater shareholder advocacy for fossil fuel divestment and green investment.
The global media is also putting focus on this issue. World News Day, which took place yesterday, was a commendable effort to showcase the world's best journalism in reporting on the climate crisis and share lessons from around the world.
Many businesses have now responded to climate change by making ESG practices their priority. But the commitment to change has been uneven.
While many consumers are willing to pay more for sustainability, a significant proportion are still not ready to do so.
Some companies have found it difficult to make the shift while remaining viable. A few have resorted to “greenwashing”, which undermines genuine efforts to go green.
What is clear is that carbon will become an increasingly greater constraint for the world. But this does not mean that global growth would be stunted, and human progress impeded. What we can achieve in the decades ahead, depends critically on what we do today.
With our collective will and ingenuity, the world can turn our constraints into opportunities. There is much more we can do to achieve economic growth and improve lives, while protecting nature and its intricate ecosystem.
As we exit the current crisis, we must seek the path of a green recovery.
At its core this is what Ecosperity seeks to achieve – where ecology and prosperity can go together, rather than at each other.
How do we reimagine nature and resources? Let me suggest three ways to do so.
Lower Trade-offs through Science & Technology
First, we can make the trade-offs of going green less stark. Science and technological innovation can lower the barriers to pursuing a green path – making the choices less difficult.
Let me cite two examples.
The first example is urbanisation. As the world heads towards a 10 billion population, we can expect greater urbanisation.
Given that the construction and maintenance of buildings accounts for 40% of global carbon emissions, we must find more sustainable ways to do so.
As part of Singapore’s research on advanced construction, we are exploring the use of low carbon construction materials – such as mass engineered timber, and low-carbon green cements.
The operating carbon footprint is even greater than the embodied carbon in buildings.
As cooling of buildings is a key source of energy consumption in the tropics, we are studying how to reduce the urban heat island effect under the Cooling Singapore project.
This is a complex multi-disciplinary challenge, involving global partners such as MIT, ETH Zurich, and the Technical University of Munich.
The efforts under Cooling Singapore include the use of computer modelling for more climate-responsive urban design and localised heat mitigation strategies.
Concurrently, we are piloting other solutions – for example, we are using cool paints on selected HDB blocks to reduce ambient temperatures by up to 2OC.
These are just a few examples of how through science and technological innovation, we can intensify urbanisation in a more sustainable way.
The second example is in the digital space. Digital is the new frontier for many economies, and we must make the fast-paced growth more sustainable.
For example, the ever-growing demand for data storage and computing power has increased the demand for data centres.
But data centres consume a huge amount of energy, accounting for a quarter of total energy consumed by the digital economy.
Developing more energy efficient data centres is one solution.
Another is to develop greener and more efficient cooling solutions, such as the recently launched Sustainable Tropical Data Centre Testbed.
This effort is led by NUS and NTU, working with industry partners including Facebook and Keppel Data Centres.
If we are to harness the full benefit of digital growth, we must continue to explore innovative and energy-efficient solutions for data centres in the tropics.
These examples show how science and tech can reduce the trade-offs of going green.
Under our Research, Innovation and Enterprise 2025 plans, the Government has committed $25 billion for R&D over the next five years.
Sustainability is a key research domain. Apart from the examples highlighted, we are pursuing other exciting areas – including exploring making carbon capture and low-carbon hydrogen technologies.
The resources committed under RIE2025 are significant, but small relative to global investments in R&D.
We are therefore also working in global partnership with like-minded countries. I am very pleased to see so many ambassadors and High Commissioners here. Thank you for your efforts to bring our countries together to explore new frontiers, including R&D.
It is not just Government that is investing more in R&D. Our companies are doing likewise.
I am glad Temasek companies are stepping up, including through the Surbana Jurong–NTU and SembCorp-NUS corporate labs.
To push the research frontiers, Temasek’s recent efforts include co-funding a hydrogen research centre with NUS and supporting a Fusion Chair Professorship at NTU.
But we can certainly do more together. And I hope that COVID-19 will serve as a clarion call to further strengthen partnerships to achieve a green recovery.
Nature is Part of the Solution
The second way of reimagining our constraints is to take a fresh perspective on nature.
Nature is not, and cannot be, just a passive victim of economic development.
In fact, nature can be an active partner in our pursuit of sustainable development.
In Singapore, nature has made our city more liveable.
Our green spaces are interwoven with our homes, workplaces, and neighbourhood. On our little island, we have around 40,000 species of native flora and fauna.
We are even aiming to grow 30% of our nutritional needs locally by 2030, through urban farming.
During COVID, people have gained a newfound appreciation for green spaces. There is also growing evidence that nature improves mental well-being.
As part of the Singapore Green Plan, we are going further to transform Singapore into a City in Nature. We are creating more green spaces and restoring natural habitats.
We are also integrating nature further into our urban environment by planting a million trees in the next decade. These one million trees will sequester around 78,000 tonnes of CO2.
There is potential for nature to contribute much more in our fight against climate change.
While we must continue with our global effort to reduce carbon emissions, decarbonisation alone would not be sufficient.
We need to also adopt complementary strategies for carbon sequestration, and this is where nature-based solutions can play a big role.
The potential for nature-based solutions in Southeast Asia is tremendous.
In addition to 200 million hectares of terrestrial forests, Southeast-Asia is home to the largest blue carbon stock in the world.
These blue carbon ecosystems – mangrove swamps, seagrass meadows, algae – can sequester large amounts of carbon.
Unlocking the potential of what nature has to offer at scale will require a significant amount of investments.
To catalyse the flow of capital, we must build a carbon marketplace with robust governance standards and an emphasis on trust.
The work required ranges from developing compatible definitions and taxonomies for nature-based solutions, to implementing a consistent set of global standards for disclosures and reporting.
If properly structured, investment in nature can be a new asset class, not different from investment in agriculture and crops.
Singapore is contributing to this effort on several fronts.
To better understand what nature has to offer in our regional context, we have the NUS Centre for Nature-based Climate Solutions, led by Professor Koh Lian Pin.
Temasek recently made a $3 million donation to the Centre to develop a knowledge database and toolkit for blue carbon stocks in the region.
A consortium of companies – including Temasek, Singapore Exchange, DBS Bank and Standard Chartered – have also come together to set up Climate Impact X or CIX.
CIX is an Asia-based global exchange for high-quality carbon credits. This is a promising solution in the fragmented carbon credit markets landscape today, which is characterised by thin liquidity and carbon credits of varying quality.
CIX will be launched in the coming months, and I hope that this new marketplace will catalyse more nature-based and other solutions in the region.
On a related note, I am pleased to see that Singapore is represented on the Taskforce on Scaling Voluntary Carbon Markets – a global initiative to help define the standards for carbon markets.
Lian Pin, Mikkel Larsen from CIX, and Kavita Prakesh Mani from Mandai Nature Fund will be representing us on the Taskforce.
For the proper allocation of economic resources to take into account our carbon constraints, we must properly price the externalities of carbon emissions.
Singapore introduced a carbon tax in 2019. We were the first in Southeast Asia to do so. Since then, the global momentum to fight climate change has accelerated.
So at Budget this year, I announced that the Government is reviewing the trajectory and the level of our carbon tax post-2023.
By setting an appropriate level of carbon tax, we can spur sustainability efforts – including nature-based solutions - while remaining competitive.
What we have today is a good start.
If we can facilitate the flow of capital to promising solutions, including what nature has to offer, Southeast Asia can play an outsized role in climate change.
Consume Less, For More
The third way we can reimagine our constraints is to think about how we can consume less while achieving more.
This is not a paradox. Many associate consuming less with a lower standard of living. This is true only if our consumption is already highly efficient with little wastage.
But this is far from the case today. We can cut back on consumption while still preserving our way of living. In many ways, this is what the circular economy seeks to achieve.
Technologies for more efficient consumption are available and economic use cases can be made. But there are still barriers to deployment.
We need companies to better innovate and develop business models that are beneficial to consumers, low-carbon, and yet profitable.
Let me illustrate with a few examples.
For consumers, one common barrier is the high upfront capital investment involved and the risks associated with maintenance and ownership.
Solar power is a good example. Solar panels can be widely deployed today, on rooftops, building walls, and even as floating panels on our reservoirs.
It is a business viable source of alternative energy today. But the high capex deters many building owners. A newer business model – Solar Power As a Service – makes solar energy more financially accessible at lower-risk.
The service provider buys and installs the solar panels, undertakes the maintenance, and underwrites risks associated with useful life and obsolescence.
The provider has the scale and every incentive to make the system low-carbon and efficient. By controlling the full life cycle of the panels, the provider can also ensure they are sustainably recycled.
For the consumer, it is no different from other subscription services, such as utilities. They pay based on monthly usage plans.
This same model can be applied to other areas – Philips offers lighting as a service, Schneider offers energy as a service, and there are many more.
Another barrier is access to scale, which individual consumers could not ordinarily benefit from. In tropical Singapore, air-conditioning is a good example.
Tengah is the first HDB town to offer centralised cooling.
Centralised cooling is more cost and energy efficient. It enables individual households to benefit from economies of scale, by drawing their cooling from highly efficient chiller plants that are typically found in large buildings.
The added benefits are that households need not pay for upfront infrastructure. They also do not have to deal with the hassle of regular servicing and breakdowns. Not surprisingly, many Tengah residents have already opted for centralised cooling.
Beyond enabling customers to access more environmentally sustainable products, manufacturers are increasingly taking ownership over the recycling of their products.
Rolls Royce, for example, has implemented the global revert programme, where it recovers, recycle and reuse precious metals from used aircraft parts.
Almost half of a used jet engine can be recycled to a sufficient degree of purity that it can be reused to make new engine components.
The global supply of such metals is finite. As we deplete these resources, the cost of these metals will rise. A fully closed loop recycling system not only makes environmental sense, it also makes business sense.
The examples I have highlighted show that with some ingenuity, we can develop new business models that can benefit customers, companies and the planet.
Some of them are right for the plucking and for scaling. Some are slightly ahead of their time, but will benefit from early experimentation. But my call to companies is that much more can be done to both do well and do good.
I appreciate the constraints that individual companies face. On your own, you might not have the resources and talent to bring new business ideas to fruition.
This is where the spirit of partnership comes in – I encourage industries or like-minded companies to come together, including with the Government, to work on new ideas.
Singapore has made a good start on this, building on the strong foundation of collaboration that we have established over the years.
The Alliances for Action is a new mode of ground-up action-oriented partnerships established for such purpose. One Alliance on sustainability led to the formation of the CIX, which I spoke about earlier in my speech.
Through the Sustainability Open Innovation Challenge, we bring together start-ups to address common industry challenges. The 2021 edition is ongoing, and is focused on challenges in the circular economy.
There are also many ground-up efforts. One example is Ayer Ayer, a social enterprise that produces coasters, floor tiles, and even dining tables, from plastics picked up from the beach. Through its outreach, Ayer Ayer seeks to engage communities about our natural environment.
If you have new ideas, do come forward and work with like-minded partners to explore them further, and bring the idea to fruition.
Let me conclude. The world still has some way to go in arriving at concrete plans to achieve our climate goals.
This journey can be much easier if we are able to reimagine our constraints, and turn them into opportunities.
We can do so by making the trade-offs of going green less stark, through science and technological innovations.
We must change the way we view nature – it is not something to be sacrificed, but something to be treasured, and invested in, to achieve our climate goals.
We can consume less, while still achieving more – though new business models in the circular economy.
This way, sustainability and prosperity can go together, rather than at each other, making it easier for companies and individuals to be part of this journey of change.
I trust that Ecosperity Week will lead to many valuable exchanges and inspire each of us to take action, so that we can build a cleaner and more vibrant future for our children and their children. Thank you.
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