Accounting for Potential Volatility in Global Energy Markets in Singapore’s Energy Transition Strategy
Ministry of Trade and IndustrySpeakers
Summary
This question concerns Mr Edward Chia Bing Hui’s inquiry into how Singapore’s energy transition strategy accounts for global market volatility and maintains decarbonisation goals. Minister for Trade and Industry Gan Kim Yong explained that the Government is diversifying energy sources through four switches, including a second LNG terminal and accelerated solar deployment. He noted that over eight gigawatts of regional electricity imports have received conditional approval and that Singapore Energy Interconnections Pte Ltd will manage subsea cables. To mitigate risks, the Government established the $10 billion Future Energy Fund and utilizes carbon tax revenue to support low-carbon investments. Finally, the Minister highlighted research into hydrogen, geothermal, and nuclear energy to ensure a wearable and sustainable long-term transition.
Transcript
21 Mr Edward Chia Bing Hui asked the Deputy Prime Minister and Minister for Trade and Industry (a) how does Singapore's energy transition strategy account for potential volatility in global energy markets; and (b) what safeguards are in place to ensure medium-term decarbonisation goals remain on track despite short-term price fluctuations.
Mr Gan Kim Yong: Diversification of energy sources is critical for our energy transition efforts in the face of global volatilities and uncertainties. We will continue to decarbonise our power sector across our four switches of natural gas, domestic solar deployment, low-carbon electricity imports and low-carbon alternatives. Within each switch, the Government has also implemented strategies to ensure that we continue to press forward on greening our energy supply.
Today, around 95% of Singapore's electricity generation comes from natural gas. We must ensure secure and diversified natural gas supplies. To this end, we are developing a second liquefied natural gas terminal that will allow us to import gas from more countries and mitigate supply disruption risks.
For solar, we will continue to maximise domestic deployment. We are making good progress towards meeting our target of two gigawatt-peak (GWp) of solar deployment by 2030, having achieved over 1.7 GWp of installed solar capacity as of June 2025. We will continue to find new ways to accelerate and maximise solar deployment. The Solar Energy Research Institute of Singapore had previously estimated that we can deploy about eight GWp of solar if we cover every viable space in Singapore with solar photovoltaic and with technological improvements.
However, maximising solar at eight GWp is only expected to meet up to 10% of Singapore's electricity demand by 2050. To supplement solar, we are pushing forward with our plans to import low-carbon electricity from the region. We are building a portfolio of projects that are diversified across energy types and source countries. To date, the Energy Market Authority has awarded conditional approvals and licences to more than eight gigawatts equivalent of electricity imports projects from Malaysia, Thailand, Indonesia and Australia. Project developers remain interested in supplying low-carbon electricity to Singapore and are working with the relevant authorities abroad to get the necessary approvals.
We are also building our capabilities in other low-carbon energy sources, including hydrogen, advanced geothermal and advanced nuclear. These technologies could become cost-competitive options in the long run.
The Government is prepared to provide support to mitigate the risks of strategic low-carbon energy projects. Such projects often require significant upfront capital. Geopolitical and commercial risks, coupled with energy price volatility, reduces private investment appetite to fund these projects. We established and injected $10 billion into the Future Energy Fund to support strategic low-carbon and energy supply security projects. We also established Singapore Energy Interconnections Pte Ltd to invest, develop, own and operate subsea interconnectors to transmit low-carbon electricity into Singapore.
In addition, we have implemented the carbon tax to ensure the cost of emissions are appropriately priced. Revenue collected from the carbon tax will be channelled to support decarbonisation efforts and help companies invest in low-carbon and energy-efficient solutions.
As we push forward with decarbonisation, we will continue to closely monitor global developments and take into consideration international climate efforts, to ensure that our energy transition trajectory is wearable and sustainable.