Singapore seeks leading role in clean energy

Senior Global Correspondent
Singapore's skyline at sunset, dotted by spectacular tall buildings.
Sunset view of Singapore's waterfront skyline, gardens and famous cloud forest greenhouse. Illustration by Nadya Nickels. Photo by lena_serditova via iStock.

SINGAPORE — To help organize and accelerate their energy transitions, the United States has Washington, China has Beijing and the European Union has Brussels.

Southeast Asia, however, doesn’t have a regional capital to play organizer and cheerleader for its clean energy efforts. Singapore aims to step into that role.

Long a finance and trade powerhouse, the tiny island nation already has an outsized influence on Southeast Asia’s economic development. Now, Singapore is trying to leverage those strengths to spur the region’s critical decarbonization effort, which is generally lagging its global counterparts.

Singapore, in a government-led effort, is angling to become a center for carbon trading and cleantech investment, while also encouraging innovation in neighboring countries and beyond, financing renewable energy projects and looking for ways to supplant coal as far-and-away the region’s dominant energy source.

“Singapore is a financial hub, an aviation hub and a maritime hub. All this makes Singapore a suitable carbon services hub. … We can definitely play a strong role,” said Anshari Rahman, director of strategy and development at GenZero, a decarbonization-focused investment company set up by a Singapore government-owned investment company, Temasek Holdings. (Temasek is a partner of Breakthrough Energy, which supports Cipher.)

The nations in the Association of Southeast Asian Nations (ASEAN) market are diverse and loosely organized — from the mostly agricultural Philippines to emerging manufacturing and mining heavyweights Vietnam and Indonesia — making a unified energy transition especially challenging.

“The hardest part is to create an ASEAN market in the same way you have an integrated European Union market, to create that cross border trading between countries,” said Mikkel Larsen, chief executive of Climate Impact X (CIX), a carbon credit trading platform backed by GenZero. “It’s a hairy challenge, but it’s absolutely doable.”

A rich region

Studded with gleaming high-rise towers and ritzy shopping districts, Singapore had a global moment a few years ago as the backdrop for the bestselling novel and 2018 hit movie, “Crazy Rich Asians.” Indeed, it is one of the world’s richest countries, with a thriving multicultural society and impossibly clean streets.

Singapore gained its independence from Malaysia in 1965 and was one of the first Asian economies to take off and achieve global prominence in the 1980s and ‘90s. Slightly larger than the city of Chicago, the city state is separated from the mainland by a narrow strait.

Singapore is also surrounded by some of the world’s fastest growing economies, including several that are critical to the global energy transition. But this growth comes at a cost: the region accounted for about 6.5% of global greenhouse gas emissions from energy use in 2022, up from just 2.8% in 1990. Many countries of Southeast Asia are at once deeply vulnerable to climate change and heavily dependent on fossil fuels.

Bolstering their resilience and breaking that dependence matters to the rest of the world. The region plays a key role in global supply chains, as many multinational companies make products there and, increasingly, are looking to reduce their emissions.

Multi-country power

Singapore is targeting its own energy supply, underwriting renewable energy projects in neighboring countries to supply clean power to Singapore itself. These include the region’s first multi-country clean power project, which brings clean electricity to Singapore from Laos, through Thailand and Malaysia.

It’s the first link in what Singapore hopes will one day be a regional power grid resembling the undersea telecommunications cables that enable global manufacturing supply chains. The city state aims to more than double its solar capacity, and build enough regional interconnections to grow its renewable-energy use from around 4% of generation in 2022 to 40% in 2035.

A bet on carbon markets is the lynchpin of Singapore’s strategy. The finance hub is betting it can use carbon credits, paired with a local carbon tax, to raise the funds for renewable energy projects in the region, as well as help pay the heavy cost of eventually winding down coal plants that supply much of the region’s electricity.

A Path Forward

The Monetary Authority of Singapore, the city state’s central bank, has backed efforts to use carbon credits to ease the phase out of coal generation plants early in Indonesia and the Philippines.

The authority has “tried to take a major role to create an ecosystem,” in the region, said Lawrence Ang, the founder and head of Climate Smart Ventures, a Singapore-based financial advisor that has worked extensively with the authority and other groups working to phase out coal plants early. “They’ve really been more of a catalyst, a first mover.”

Two years ago, Singapore’s Temasek established GenZero with $5 billion Singapore dollars (United States $3.7 billion) to invest in clean energy technology and overseas projects that generate carbon credits, some of which Singapore itself plans to use to meet its own national decarbonization goals.

Temasek also has launched carbon trading platform CIX with several financial institutions. And the Singapore government is funding a data platform, the Climate Action Data Trust, that’s working with the World Bank and other institutions to compile information from carbon credit registries around the world into a single database available publicly online in a computerized blockchain format.

This year, Singapore raised its two-year old carbon tax to S$25 (US$18) per ton of carbon dioxide equivalent and plans to gradually ratchet it up to between S$50 to S$80 per ton by 2030. To extend the impact of the tax regionally, the city state lets local emitters pay 5% of the tax using some voluntary carbon offsets generated outside of Singapore.

Global influence

As the operator of a major airline and one of the world’s busiest shipping ports, Singapore is also capitalizing on its important role in international programs to extend its influence beyond the surrounding region to help decarbonize global airline and maritime transportation.

The Singapore government announced in February that it would require all departing flights from its airport — one of the most active airline hubs in Asia — to use at least 1% sustainable aviation fuel starting from 2026, rising to between 3% to 5% by 2030.

As host to one of the world’s largest container port and maritime refueling hubs, Singapore is also working to decarbonize its extensive port operations, playing a key role in helping the global shipping industry’s plan to reduce greenhouse gas emissions by at least 50% by 2050.

Editor’s note: Temasek is an investor in the ventures program of Breakthrough Energy and partners with its fellows program. Breakthrough Energy also supports Cipher programs.

Editor’s note: The Climate Action Data Trust is funded by the Singapore government. An earlier version of the story said Temasek is funding the trust.