Overview
The net zero transition presents significant opportunities for Singapore, with its export-oriented, innovation-hungry, open economy. Yet it also carries significant challenges. Singapore is managing water and food scarcity, and rising sea levels threaten the low-lying landmass.
At the same time as limiting the negative impacts of climate change, Singapore must meet the high energy demands of its manufacturing sector which accounts for 2.1% of the world's total merchandise trade (approximately US$1.36b in 2022).
So - what does the path look like for Singapore?
Among Singapore’s strengths is its role in global energy markets. Singapore has the potential to leverage its status as a regional trading hub in the renewable energy space. The population-dense nation (among the world’s highest, with 7,688 people per km²) has another key strength: the government’s willingness to meet climate challenges with proactive policies to welcome investment and innovation.
Singapore has had national climate targets for almost 15 years. It exceeded its 2009 pledge to cut emissions by 16% below ‘Business-As-Usual’ levels by 2020: the cuts amounted to 32%.
Singapore has set ambitious energy targets for 2030, including improved energy efficiency, increased solar PV capacity and a 36% reduction in emissions intensity.
Navigate the opportunities and challenges in the net zero transition:
Energy Transition | Carbon Markets | Financing | Transport | Housing and Buildings | Agriculture | International Collaboration
Energy transition
Challenges
Singapore has limited renewable energy capabilities due to resource constraints. Land mass is limited, and average wind speed is lower than that needed to operate wind turbines.
The resulting reliance on imports feeds into its efforts to build a green hydrogen supply chain and invest in urban solar power, storage, energy efficiency and grid effectiveness. However, critical uncertainties remain around battery storage systems and low-carbon energy technologies such as hydrogen. The pace of digital technology advancements in the power sector depends on the affordability of supporting infrastructure.
Efforts are underway to establish the country as a prominent Liquefied Natural Gas (LNG) trading hub in the world despite Singapore not producing any LNG. This would position Singapore as a regional leader in this transitional fuel and give it a platform to similarly act as a hub for clean fuels like green hydrogen. The liberalisation of its gas market and emphasis on transparency have placed it ahead of other Asia-Pacific nations, despite liquidity challenges.
Opportunities
Electricity imports will bring access to cleaner and cost-effective energy sources generated beyond its borders. Singapore is prioritising renewable energy imports and developing a diversified portfolio of import partnerships with a regional grid and trading platform.
Low-carbon hydrogen will help to decarbonise the sector under Singapore’s National Hydrogen Strategy. This includes collaborating with stakeholders to establish a robust hydrogen supply chain and investing in necessary infrastructure.
A hydrogen import terminal will support Singapore’s aim to incorporate hydrogen into its net-zero electricity supply mix by 2050, meeting up to half of the nation’s electricity needs. Singapore plans to build the terminal in the mid-2030s (along with other hydrogen infrastructure) and have it operational by 2040.
Solar deployment and energy storage systems (ESS) will help to manage solar intermittency. Singapore is exploring innovative deployment options and advanced solar photovoltaic technologies.
Urban solar generation forms part of this strategy. Singapore is investing in research into cost-effective and efficient solar power generation in the urban environment, including on public housing and water reservoirs.
Low-carbon supply alternatives, such as carbon capture, utilisation and storage, geothermal, biomethane, nuclear fission small modular reactors and nuclear fusion technologies, are under consideration to allow Singapore to quickly adopt promising technologies when they become viable.
A multi-layered grid is planned, to manage the growth of distributed energy resources (DERs) and enhance grid reliability. This will involve the development of advanced control and communication systems, as well as physical infrastructure enhancements, to oversee and control DERs at both transmission and distribution levels.
The SolarLand 2 (SL2) is the largest ground-mounted utility-scale solar farm in Singapore. Covering 116,000 square meters at Changi Business Park and less than two years’ old, SL2 has over 35,000 solar panels. The project is expected to generate 23.9 GWh electricity and supply enough clean energy to power 3,365 households. A community urban farming initiative will plant suitable crops below the solar arrays, in time.
Carbon markets
Although Singapore is prioritising mitigation, it aims to leverage carbon markets to address residual and hard-to-abate carbon emissions.
Singapore has a mandated carbon tax and a voluntary carbon market. But its carbon exchanges are the stand-out. The initiatives enable the global exchange of carbon credits and will help its pursuit of becoming a carbon services global hub by 2030.
A carbon tax was introduced in 2019. Around 50 industrial facilities were subject to the tax in 2023. To support its net zero target, Singapore will increase the carbon tax with a view to reaching S$50-80/tCO2e by 2030, to strengthen the price signal and impetus for businesses and individuals to reduce their carbon footprint in line with national climate goals. From 2024, high-quality international carbon credits can replace up to 5% of emissions covered by the tax, with the potential for further increases in the future.
The voluntary carbon market holds significant growth potential, with global demand projected to increase significantly by 2030 and 2050.
The development of international carbon markets is backed by Singapore, which is committed to facilitating negotiations and developing local capabilities and services.
Singapore has two international carbon exchanges. The AirCarbon Exchange and Climate Impact X (CIX) are world-leading and support its goal of achieving global hub status.
Singapore’s first international carbon credit exchange, AirCarbon Exchange (ACX), was established in 2019. Since then more than 16MtCO2e have traded and there are more than 200 active trading members across 30+ countries. ACX operates as a voluntary market for carbon credits, using blockchain technology to streamline transactions and ensure efficiency. The exchange offers seven types of tokenized carbon credits. The exchange is expanding its international presence through partnerships, including collaborations to develop carbon credit markets in Indonesia and the UAE.
Another global marketplace for carbon credits, CIX, launched in May 2021. CIX focuses on Natural Climate Solutions projects and uses blockchain, leveraging satellite monitoring, connecting an ecosystem of partners and machine learning to enhance transparency, integrity and quality of carbon credits. A public-private partnership involving DBS Bank, Singapore Exchange, Standard Chartered and Temasek, CIX has three platforms and aims to facilitate larger-scale trading with standardised contracts. Sylvera, a UK-based carbon credit rating agency, provides third-party ratings for CIX.
Financing
Investment in clean energy in emerging and developing economies must grow more than threefold by 2030 to get on track for net zero emissions by 2050. Developing nations may need more than US$1 trillion a year to make significant progress in climate transition.
Singapore will continue to promote consistent, comparable and reliable climate data and disclosures. This is to guide decision making by financial market participants, engage key financial institutions to foster sound environmental risk management practices and deepen climate scenario analysis and stress testing to identify climate-related financial risks. Singapore will also promote innovative and credible green and transition financing solutions and markets to support decarbonisation efforts and climate risk mitigation.
A green and transition taxonomy is critical. Singapore has placed great importance on developing a well-designed taxonomy for the classification of economic activities to provide financial institutions with guidance on how to identify and classify activities that can be considered green or transitioning towards green. The Monetary Authority of Singapore aims to contribute to local and regional taxonomy efforts and global initiatives to improve the compatibility of taxonomy frameworks. The Green Finance Industry Taskforce convened by the Monetary Authority of Singapore has launched three public consultations.
A traffic light classification system adopted by the Green Finance Industry Taskforce differentiates an activity's contribution to climate change mitigation.
Green: activities that contribute substantially to climate change mitigation consistent with a net zero outcome or are on a pathway to net
zero by 2050.
Amber: transition activities, including those transitioning towards green within a certain time frame, or enabling significant emissions reductions
in the short term.
Red: harmful activities not currently compatible with a net zero trajectory.
Disclosure and reporting requirements is also key. The Monetary Authority of Singapore has been working with the Singapore Exchange and other
government agencies to set out a roadmap for key financial institutions and listed companies to make International Sustainability Standards Board
(ISSB)-aligned disclosures on a risk-proportionate basis.
A code of conduct on disclosing how transition risks are factored into data products and ESG ratings is in progress. The Monetary Authority of Singapore is working with the finance industry to co-create the code.
Public and private sector initiatives
GenZero is Temasek Holdings’ investment platform for decarbonisation and climate change mitigation with a net portfolio value of S$403 billion for the financial year ended 31 March 2022. GenZero aims to catalyse decarbonisation solutions with its ability to deploy long-term and flexible capital. It invests in opportunities ranging from early-stage companies and solutions that require patent capital to commercialise and grow, to more mature ones that are ready to scale.
GenZero has three investment focus areas:
- technology-based solutions that deliver deep carbonisation impact through climate-driven technologies
- nature-based solutions that help protect and restore our natural ecosystems to general climate impact while benefitting local communities and biodiversity, and
- carbon ecosystem enablers which refer to companies and solutions that support the development of an effective, efficient and credible carbon ecosystem.
Singapore has committed US$10 million in new funds to invest in low-carbon technology, aiming to support the development and adoption of sustainable solutions. The investment will contribute to Singapore's efforts in decarbonization and advancing its position as a hub for green innovation and clean technologies.
‘We need the scale, resources and ingenuity of the private sector.’ - World Bank president Ajay Banga
The World Bank provided almost US$40bn in climate finance in 2023 – a record high, amounting to 41% of all of its financing. In the five years to 2023, it cut 230m tonnes of carbon emissions annually. One of its arms, the IFC has mobilised US$162b in private sector investments from US$5.6b of
shareholder capital.
Yet it wants to move faster and it wants the private sector to join and take more risks - to look beyond ‘algorithms and expertise’.
In October 2023 the World Bank revealed its new playbook, based on a poverty-free ‘livable planet’ vision. Five of its eight global challenges are linked to net zero efforts: Adaptation and Mitigation; Energy Access; Food and Nutrition Security; Water Security and Access; and Protecting Biodiversity and Nature.
When it comes to good ideas, World Bank president Ajay Banga said they should ‘steal shamelessly – and share seamlessly’ – along with those moving the needle, including the private sector. In 2024 it will release usable data from its Global Emerging Markets Risk Database, to encourage risk taking &
investing. New financial tools to enable US$157b in additional lending capacity over the next decade include a hybrid capital instrument and portfolio guarantee mechanism.
Banga has singled out for focus:
- Sound, transparent voluntary carbon markets: ensuring credit integrity, avoiding greenwashing via validation (showing the value of monetising & protecting natural resources)
- Spending better: repurposing US$6t from the economic costs of fertiliser runoff, unnecessary air pollution & overfishing every year to incentivise sustainable practices
- Working with credit rating agencies: unlocking capital and pricing via a better understanding of the World Bank’s work.
Banga also established a Private Sector Investment Lab comprising 15 world leading CEOs, including from banks and asset managers. The key is making projects bankable, with a focus on scaling transition finance and increasing renewable energy.
- Prudential Chair Shriti Vadera is co-chair, members include:
- Macquarie ‒ Shemara Wikramanayake, CEO
- Standard Chartered Group ‒ Bill Winters, Chief Executive
- Temasek ‒ Dilhan Pillay Sandrasegara, CEO
- HSBC Holdings ‒ Noel Quinn, CEO
- Mitsubishi UFJ Financial Group ‒ Hironori Kamezawa, CEO
- AXA ‒ Thomas Buberl, CEO
- BlackRock ‒ Larry Fink, CEO.
Transport
Singapore is promoting the adoption of electric vehicles (EVs) by expanding charging infrastructure, providing grants and incentives, and supporting research and development in EV technology. The government is also looking at holistic ways to reduce transport emissions, including a ‘car-lite’ vision, implementing a congestion pricing scheme, and policies to manage and reduce private vehicle ownership.
EVs: Strong government support for the switch to electric vehicles, including investing in extensive charging infrastructure development and implementing grants, is aimed at increasing the number of EVs on the roads. Singapore aims to phase out internal combustion engine vehicles by 2040 and is making significant progress in promoting EV adoption and establishing a robust EV ecosystem.
Legislative reforms have also bolstered the support for the switch to electric vehicles in Singapore. The Electric Vehicles Charging Act 2022 of Singapore, passed on 30 November 2022, aims to reduce the carbon emissions of road transport in Singapore by:
- promoting the safe use of EV chargers through the regulation of supply
- expanding the network of accessible charging points through infrastructure development measures, and
- ensuring the safe undertaking of regulated activities, and the reliability of the network of charging points and provision of EV charging services.
Housing and Buildings
Various programs and policies encourage the private sector to adopt sustainable building designs and green technologies, including mandated minimum standards for larger buildings. The ‘green’ transformation of the building sector is also driven by the public sector that is leading by example, including the implementation of creative solar initiatives.
Sustainable Construction in the Private Sector: Incentive schemes and legislative regulations encourage the adoption of sustainable building designs.
First, the ‘sticks’. The Building Control (Environmental Sustainability) Regulations 2008 of Singapore sets minimum environmental sustainability standards for new buildings and existing buildings that undergo major retrofitting. This applies to:
- New buildings with a gross floor area of 2000m² or more, first submitted for planning permission between 15 April 2008 to 30 November 2021
- New buildings with a gross floor area of 5000m² or more, first submitted for planning permission from 1 December 2021 onwards.=
Building developments sold under the Government Land Sales Programme in selected strategic areas are subject to higher Green Mark standards.
Second, the ‘carrots’. The Building & Construction Authority’s Green Mark Incentive Scheme is a local rating system that assesses a building's environmental impact and performance, including energy and water efficiency, indoor environmental quality and lifecycle impacts.
Solar programs: Efforts to increase the use of solar power across the urban environment to achieve 1.5GWp of installed solar capacity by 2025 and 2GWp by 2030 include:
Cool buildings
Innovative cooling systems and net-positive energy performance feature in landmark energy-efficient buildings like the Zero Energy Building (ZEB) at BCA Braddell Campus and the NUS School of Design and Environment 4 (SDE4) building. The ZEB is a key infrastructure for driving Singapore's building energy efficiency, providing a live demonstration platform for test bedding and showcasing innovative technologies to building owners and industry stakeholders.
In public housing, the Housing and Development Board uses smart technologies, like "Smart Fans", to improve energy efficiency.
Incentivising the ‘greening’ of new buildings
Public sector procurement: New public sector buildings and major retrofitting projects must achieve the highest Green Mark Platinum Award. Under the GreenGov.SG initiative, all new and existing buildings (upon major retrofit) are to achieve Green Mark Platinum Super Low Energy Standards or equivalent, where feasible. The Housing & Development Board (HDB) uses recycled aggregates in non-structural concrete and the National Environment Agency is testing treated Incineration Bottom Ash (IBA) as an alternative material in road construction.
Agriculture
Singapore’s relatively small landmass, urban density and water scarcity highlight its vulnerability to climate impacts on food supplies. The government is adopting an opportunity lens, looking to transform the agricultural industry in response to the challenges.
Its ambitious '30 by 30’ goal is to produce 30% of the nation’s nutritional needs by 2030, on 1% of land. Technology and innovation are central to this ambition. Urban farming research (including climate-controlled vertical methods) and water supplies are among key focus areas in the transition to sustainable agriculture.
Previous agricultural revolutions tapped on the domestication of animals, mechanisation, and the use of fertiliser to feed the world’s population. We are now at the cusp of the fourth agricultural revolution. With climate change posing challenges to the production of food, the industry needs to adopt technology to overcome the challenges and produce more, in a sustainable manner.” - Minister for Sustainability and the Environment Grace Fu, Oct 2022
Water supplies: Demand for water is expected to double by 2060 in line with economic growth. Limited land for water collection and storage means Singapore faces water scarcity, despite its abundant rainfall given its position on the equatorial rain belt. The "Four National Taps" is Singapore’s diversified water supply system. It includes local catchment water, imported water, NEWater (reclaimed water) and desalinated water.
Developing Sustainable Urban Farming: The National University of Singapore’s (NUS) Research Centre on Sustainable Urban Farming (SUrF) has researched urban farming practices to improve food security since 2022. The centre grows food plants in controlled environments that cut the dependency on factors like farmland, weather, and water supply.
GroGrace is an urban farm launched by the Urban Farming Partners Singapore. The 650 square metre farm is one of the beneficiaries of the Singapore Food Agency's S$50m Agriculture Productivity Fund. Set across four growing floors, GroGrace is about four times more productive than conventional indoor farms with its ability to produce 70kg of leafy greens per square metre.
The farm is designed to be more energy efficient. One way it does this is through the harvesting of rainwater to facilitate the plants' growing process. The farm will also serve as a training centre for future upscaled facilities that are also utilising patented Dutch horticulture technologies.
International collaboration
Australia & Singapore signed the Initiative on Low Emissions Technology for Maritime and Port Operations in November 2021 – an AU$30m partnership to accelerate the development and deployment of low emissions fuels and technologies, like clean hydrogen, that aim to reduce emissions in maritime and port operations.
Australia & Singapore signed a landmark Green Economy Agreement in late 2022, flagging seven priority areas including trade & investment, carbon markets, clean energy and green & transition finance. This will strengthen ties & support new green growth sectors across the region.
The UK & Singapore agreed on the need to cooperate in sustainable finance as part of an annual financial dialogue in 2023. This includes supporting the development of global sustainability disclosure standards.
France & Singapore signed the France-Singapore Digital and Green Partnership in 2022 and agreed to develop a workplan comprising cooperative projects with clear and tangible outcomes in various sectors, such as smart transport, smart cities and agri-food technologies that harness digital and green technologies.
This publication is intended to provide a high level overview of the net zero transition in Singapore. It is provided for general informational purposes only and should not be construed as legal advice. We are grateful to TSMP Law Corporation for their co-operation on this publication.
