Speech by Deputy Prime Minister and Minister for Finance Lawrence Wong at the Singapore International Energy Week on 25 October 2022.
My Parliamentary Colleague Mr Gan Kim Yong,
Excellencies and Distinguished Guests,
Ladies and Gentlemen,
I am delighted to join you at this year's Singapore International Energy Week, especially having gone through two-and-half-years of restrictions due to the pandemic.
This feels like home-coming for me because I was the one who started the first edition of the Energy Week back in 2008 when I was the Chief Executive of the Energy Market Authority.
Since then, the forum has continued to grow and has now become one of the premier energy events in the region.
I understand that we have more than 10,000 energy leaders, professionals, and youths, from over 80 countries joining us this week.
It is great to see everyone today, and I would like to extend a very warm welcome to all our overseas guests! Welcome everyone.
The theme of this year’s Energy Week is “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.
Countries are all racing to build up their energy stockpiles and some have had to turn to fossil fuels ahead of the winter season.
But even as we seek to enhance energy security, we must redouble efforts to green our energy sources.
Climate change is happening at an even faster pace than before, exacerbating the energy crisis. Unusual weather patterns like heatwaves and droughts are throwing energy markets around the world into turmoil.
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, and emits less carbon dioxide than coal or fuel oil.
Natural gas also met our requirements for energy security, as we are able to diversify our sources of gas supply.
In fact, in my previous incarnation, the other responsibility I had was to negotiate our first LNG contracts and build our first LNG terminal to import from suppliers worldwide.
Today, we have built up significant storage capacity, and enhanced the security of power generation in Singapore with long-term LNG supply contracts.
Over the years, we have continued to explore additional options like solar energy and electricity imports, to complement natural gas. But compared to energy security, climate change poses a bigger challenge for Singapore.
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 hydro-electric 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% below business-as-usual levels, in 2020. This is double the earlier commitment of 16% 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 is what we have achieved in 2020. This has also given us the confidence to look ahead and to consider how we can strengthen further our commitment to climate action.
Our Net Zero Ambition
At last year's UN Climate Change Conference in Glasgow, or COP-26, countries were urged to get to net zero emissions by or around the middle of the century.
Singapore has heeded this call. Over the past year, we have reviewed our decarbonisation plans to see if we can do more. We examined several factors including:
Whether firms have viable technological solutions available to green their operations.
Whether there were global carbon mitigation opportunities available to Singapore, to help us to decarbonize.
And whether domestically, we have the necessary policy and regulatory frameworks in place to mobilise households and businesses to shift their behaviour.
We also observed some positive global trends.
There are growing investments in decarbonisation technologies.
There is also a stronger desire for international collaboration in areas like carbon markets, which will provide additional avenues to decarbonize.
All of these developments give us the confidence that Singapore can achieve a net zero future sooner rather than later.
That is why this morning, I am happy to announce that 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.
This five million tonnes improvement is significant. It is equivalent to reducing our current transport emissions by two-thirds.
These enhanced 2030 targets will put us in good stead to achieve our longer-term goal of getting to net zero by 2050.
Net zero by 2050 is really a stretch target for us as we have limited options to deploy renewable energy at scale.
But we will press ahead with this ambitious goal. Even though Singapore accounts for only 0.1% of global emissions, we want to do our part in the global effort to address the global climate crisis, and steward our resources for future generations
We will submit these enhanced targets to the United Nations Framework Convention on Climate Change as Parties to the Paris Agreement meet at COP-27 next month, in line with the Glasgow Climate Pact.
Like all Parties, our ability to fulfil our pledges will depend on the continued international commitment by everyone to the Paris Agreement and their climate pledges. And because we are an alternative energy disadvantaged nation, it will also be contingent on the maturity of decarbonisation technologies and effective international cooperation.
But that does not mean that we will just sit back and hope for the cards to fall in place by themselves. 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.
Strategies for Net Zero
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 (or US$35-55) by 2030.
The carbon tax in Singapore is applied broadly, covering about 80% of our emissions today.
We also have high petrol taxes, as all Singaporeans here can attest to, 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 considered this very carefully. And 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.
This is our general approach to make sure we can accelerate the shift to greener options.
At the same time, we are investing more in technologies to help decarbonize our economy.
These new technologies are especially critical for the power sector. And with the growing electrification of industries and industrial processes, it will become more important to have greener power sources.
In Singapore, power now accounts for almost 40% of our overall carbon emissions, the vast majority of which is generated from natural gas, as I mentioned just now. Decarbonising the power sector is therefore a key focus of our climate efforts.
We are maximising the deployment of indigenous renewable energy resources available to us. 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 2GWp of solar energy, which can power up to 350,000 households on a sunny day.
We are also looking to tap on low-carbon energy beyond our shores. 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.
Even if we were to maximise all available space in Singapore for solar deployment, we will still not be able to generate enough electricity to keep the lights on.
There are also limits to how much low-carbon electricity we can import from the region.
Given all of these constraints, we are looking seriously at other low-carbon alternatives. Alternatives that may be less technologically mature today, but show great potential.
Low Carbon Hydrogen
We have made our assessments, and 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.
And we are now seeing a growing pipeline of production projects worldwide.
Key technologies across the value chain are also being trialed and are expected to become commercially available in the coming years.
In short, the world is now standing at an inflection point in global hydrogen development.
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.
This morning, I am glad to announce the launch of Singapore’s National Hydrogen Strategy.This will provide a roadmap 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.
Hydrogen does not emit carbon dioxide when it is used as a fuel. It can also be imported from diverse source countries.
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 which 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 kickstart 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.
More details will be announced by the Energy Market Authority in the coming months.
Second, we will redouble efforts to support hydrogen research and development through the Low Carbon Energy Research Project, or LCER in short.
The LCER 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. We hope these R&D investments will help drive down costs and accelerate the technical viability and commercial scalability of hydrogen.
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.
One key focus area is to develop frameworks and standards to certify the low-carbon origin of hydrogen imports, such as through Guarantee of Origin certification, that are recognised across different jurisdictions. This will be crucial to providing hydrogen end-users and the international community the assurance that the hydrogen being used is indeed sustainable and can support our climate goals.
Fourth, we will study the land and infrastructure requirements needed to deploy low-carbon hydrogen in the longer-term.
Deploying hydrogen at scale in highly built-up city like Singapore will require careful planning. As it has different properties from natural gas, we will likely need new storage and distribution infrastructure.
It is important that we lay the groundwork early, so that we can be prepared to scale up the necessary infrastructure in future when the time is right.
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.
In Singapore, we have built up a tradition and a culture of having a very close relationship between our tripartite stakeholders, the government, employers and the unions. So we will work with our tripartite partners primarily the employers and unions to develop these new capabilities and skills required to anchor such activities in Singapore.
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.
I want to emphasise that this is by no means a plan cast in stone.
We welcome new ideas and collaboration from all stakeholders to amplify our efforts and help us refine our approach, and we will also continue to adjust our strategy in line with technological and global supply chain developments.
Scaling up Green Finance
Singapore’s plans are shaped by our own unique circumstances and stage of development. All countries likewise will have to find their own paths to a net-zero future. At the same time, what is clear is that no country can decarbonise on its own – as our hydrogen plans show, international cooperation on multiple fronts will be necessary.
One area of particular importance is green financing. Because if we are to make this generational climate transition, we will need to pool our collective resources together.
Our collective decarbonisation initiatives will not come cheap. By some estimates, several trillions of dollars in infrastructure investments will be needed over the next decade in Southeast 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 Southeast Asia, many of them are unfortunately not bankable today. This has created a funding gap which must be bridged if the region and the world is to meet its 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.
And here, 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 green-washing and we will need clearer definitions on what is considered green, what is considered brown and importantly, what is considered activities that are transitioning from brown to green.
So the three D’s of data, disclosures and definitions form the building blocks, and MAS 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
I have spoken today about our path to net zero. It will entail significant economic restructuring and changes to how we live and work in the future. And while this will no doubt be challenging, there are also many exciting possibilities in the future e.g. the growth of new sectors likegreen finance and carbon services, all of which will create new job and opportunities for Singaporeans.
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, and that promises quieter roads and fresher air. 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, which is a new growth area outside of our city centre, into a world-class sustainable district. We will aim to have all new developments there to 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. The buildings will have to be equipped with features such as best-in-class energy efficiency equipment, intelligent energy management systems, as well as rooftop greenery to reduce cooling needs.
At the district level, it will need a centralized district cooling network. We will also deploy solar on all suitable surfaces within the district, such as on rooftops, building façades 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.
As part of this goal, government agencies will increase the energy efficiency of their buildings to lower carbon emissions, and eventually look to power them using renewable energy.
All public sector cars will also run on cleaner energy.
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.
To conclude, this morning, I sketched out our climate ambitions, and the specific steps we will take to realise them in Singapore. As you can see, our net zero path is not an easy one. But we have chosen to boldly commit ourselves to this journey because we believe we have a responsibility to do our part in this global climate transition effort.
We will do our part to accelerate our green transition and achieve net zero, because we want to leave behind a greener and better country for our future generations of Singaporeans. We will also contribute to climate solutions for the region, and work closely with other like-minded countries to advance the green agenda, like the trailblazing Green Economy Agreement we signed with Australia recently.
Each of you sitting here, will have your own set of climate ambitions and plans. But if we are to collectively succeed, and we surely must, all of us will need to work together:
Governments, will need to set common standards and frameworks for international climate cooperation, adopt clear domestic mitigation policies, and make crucial investments where necessary;
Businesses, will need to drive the sustainability agenda in their respective sectors;
All of us, as individuals, will need to make lifestyle adjustments and adopt more sustainable habits.
We have all the right people gathered here at this conference & Ministers from around the region, leaders from across the public and private sector, and representatives from international organisations. hope that over the next few days, you will be able to share experiences, exchange perspectives, and form meaningful partnerships. With that, I wish all of you a fruitful and productive time at this conference. Thank you very much.
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