Temasek making it more costly for assets to emit carbon, will work with SIA & SP Group to decarbonise

Temasek has been carbon neutral for three years.

Zi Shan Kow | July 12, 2022, 10:00 PM

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As part of its commitment to the environment, Temasek Holdings has raised its internal carbon price to US$50 (S$70.38), and will progressively increase this to US$100 (S$140.77) by the end of the decade.

This was announced during a Jul. 12 press conference on the group's annual review for the financial year, which ended on Mar. 31, 2022.

Roadmap to net zero

Temasek, which achieved carbon neutrality three years ago, aims to attain net zero carbon emissions by 2050.

Before then, it has set a target to halve the 2010 levels of net carbon emissions from its portfolio by 2030, which is an ambitious two-thirds reduction from 2020 levels.

The company's roadmap to net zero looks something like this:

Image by Temasek.

As seen from the chart, the firm's trajectory towards net zero is not simply a straight line, said Rohit Sipahimalani, Chief Investment Officer at Temasek and Head of Southeast Asia.

This is because Temasek wants to "invest in some sectors or companies which may be carbon emitters today, but are working on a transition to be low-carbon emitters".

While most of Temasek's investments are of low carbon intensity, he explained that the Singapore state-owned company "may invest in a carbon emitter today which will see the emissions go up". However, they still maintain the idea of "reducing it further".

Raising carbon prices

Temasek evaluates the cost of carbon when making its investment decisions.

The firm lifted its internal carbon price, from US$42 (S$59.12) per tonne of carbon dioxide equivalent, to US$50 (S$70.38) this financial year.

It plans to raise this price to US$100 (S$140.77) by 2030.

Temasek added that a portion of its staff’s long term incentives will be aligned with its 10-year carbon targets.

This financial year, Temasek's estimated Total Portfolio Emissions decreased moderately.

The firm attributes this to the impact of Covid-19 on some of its key portfolio companies’ emissions and the time lag in reported emissions data.

Helping businesses decarbonise

"Sustainability is at the core of what we do," said Russell Tham, Joint Head of Enterprise Development Group and Head of Strategic Development at Temasek.

As such, Temasek has been engaging with its portfolio companies such as Sembcorp Industries, SP Group and Singapore Airlines (SIA) to transition their businesses.

In July 2022, Temasek, SIA and the Civil Aviation Authority of Singapore (CAAS) launched the sale of sustainable aviation fuel credits.

By purchasing these credits, consumers can reduce carbon emissions from their air travel and help advance the adoption of these fuels for aviation sustainability.

Climate Impact X (CIX), a global exchange and marketplace for high quality carbon credits that Temasek helped to set up, will be partnering with SIA to introduce a bundled portfolio consisting of sustainable aviation fuel credits and carbon credits.

Investing in climate solutions

The group has also accelerated its efforts to invest in climate-aligned opportunities and enable carbon-negative solutions in the past year.

Temasek's new investments include startups like Fortera, a materials technology company working to manufacture low-carbon cement at scale, and Form Energy, a firm developing a low cost and multi-day duration battery for grid applications.

Temasek also launched GenZero in June 2022, an investment platform company dedicated to accelerating decarbonisation globally through exploring technology-based solutions, nature-based solutions, and carbon ecosystem enablers.

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Top images by Temasek and Unsplash.