Singapore’s Role in Coal-fired and Gas-fired Independent Power Producer Projects in the Region

14 Mr Saktiandi Supaat asked the Minister for the Environment and Water Resources in light of plans for a large number of coal-fired and gas-fired Independent Power Producers in the region (a) how many of these projects is Singapore involved in; and (b) how can Singapore play a leading role in renewable energy financing.

The Senior Minister of State for the Environment and Water Resources (Dr Amy Khor Lean Suan) (for the Minister for the Environment and Water Resources): Investments into power projects in the region, as with other investments, are commercial decisions that businesses and financial institutions make to maximise their long-term risk-adjusted returns, amongst others. Nonetheless, as the financial sector increasingly incorporates Environmental, Social and Governance (ESG) considerations into their business decisions, we are witnessing a re-channelling of funds away from traditional projects to more sustainable ones such as those involving cleaner renewables. For example, in April this year, our three local banks announced their decisions to cease financing of new coal-fired power plants.

My Ministry supports the financial sector in making this transition and works with the Monetary Authority of Singapore (MAS) to promote the broader green financing initiative in Singapore including increasing the financial sector’s awareness of environmental risks and opportunities.

MAS works closely with the industry to provide guidance on managing ESG risks and support climate-related disclosures. The Association of Banks in Singapore (ABS) issued the Guidelines on Responsible Financing in 2015 to support responsible lending by banks, particularly in industries with higher ESG risks, including the energy industry. The Singapore Exchange (SGX) introduced a “comply-or-explain” regime for sustainable reporting for all listed companies, beginning from the financial year ending on or after 31 December 2017.

To spur the use of capital markets instruments and promote the adoption of standards for green investment products, MAS introduced the Green Bond Grant Scheme in 2017. The grant helps to offset the cost of obtaining an external review to ensure that the green bonds are aligned with internationally accepted standards. To date, over S$6 billion of green bonds have been issued in Singapore. The grant scheme has been expanded in February this year to include social and sustainability bonds, and renamed the Sustainable Bond Grant Scheme.

My Ministry will continue to work closely with all stakeholders to build on these efforts and develop Singapore’s competitive edge, not just in renewable energy financing, but across green financing.

Mr Saktiandi Supaat (Bishan-Toa Payoh): Mr Speaker, I would like to thank the Senior Minister of State for the answer. Just a supplementary question following up from her answer. I laud the efforts by the Government to boost the Green Bond Grant Scheme and the Sustainable Bond Grant Scheme, up to the amount of S$6 million. I feel that the biggest problem in ASEAN excluding Singapore is the plan to increase in the coal-fired, gas-fired Independent Power Producers (IPPs). They are going to spew a lot of carbon into the atmosphere and the biggest problem is that reneweables financing, in my view, is still slow in ASEAN.

Can the Senior Minister of State share if Singapore plans to enhance and relocate our investments into, for example, first loss funds in the region or renewable projects in ASEAN, together with other ASEAN countries possibly chipping later on, rather than possibly investing in negative yield type bonds in developed markets? That in some ways could help to massively boost renewable projects in ASEAN and potentially reduce the greenhouse gases in ASEAN going forward.

Dr Amy Khor Lean Suan: I thank the Member for his question. When we talk about financing of power projects, I think we must understand it in the context of the growing energy needs in the region, even as we move towards a low-carbon source of power generation. Investments into power projects, as with all other investments, are commercial decisions that the businesses and financial institutions will have to consider, taking into account, as I had said, maximising the long-term risk adjusted returns as well as other goals that they have.

The Government does not interfere or influence their individual investment decisions. I think it is an important governance principle that we adhere to. But as I had said, the industry is becoming increasingly exposed to the risks and opportunities of the low carbon future. So, financial institutions are also increasingly incorporating the ESG goals in their positions and I think that will lead to a shift of investment towards more sustainable activities. What we can do is for my Ministry to continue to support the financial sector in making this transition, working together with MAS to promote more green financing in Singapore.

As to regards to the specific question about investments, like into a first loss fund or renewable project, it is something the Member could discuss and bring up at various forums for the investors and the financial institutions to consider the feasibility, not just in Singapore but across the region.

Mr Louis Ng Kok Kwang (Nee Soon): Can I ask whether MEWR will be urging GIC to also stop funding coal-power projects?

Dr Amy Khor Lean Suan: I think we have said that, whether it is GIC or Temasek Holdings, they make their decisions on a commercial basis. But they have said that sustainability is one of the factors that they take into account in their decisions. As I have said earlier, the Government does not interfere or influence the decisions that they make on a commercial basis and this is an important principle of governance that we adhere to.