S'pore commits up to S$669 million to support decarbonisation in Asia

The annual United Nations climate-focused Conference of the Parties (COP) is taking place in Baku, Azerbaijan this year.

On Nov. 12, the second day of COP29, Minister for Sustainability and the Environment Grace Fu announced that Singapore will be committing a large sum to finance Asia's green transition.

According to a press release by the Monetary Authority of Singapore (MAS) on Nov. 12, the Singapore government has committed up to US$500 million (S$669 million) to FAST-P (Financing Asia’s Transition Partnership), a blended finance initiative to "support Asia's decarbonisation and climate resilience".

FAST-P was first announced in COP28 in 2023 by Senior Minister Teo Chee Hean, and will bring together international public, private and philanthropic partners for these green projects.

Matched dollar-for-dollar

The new pledge of US$500 million will come in the form of concessional funding, which refers to loans and grants provided at below market rate by major financial institutions, according to the World Bank.

It will be matched dollar-for-dollar to concessional capital from other partners, including other governments, multilateral development finance institutions and philanthropies.

"This combined pool of concessional capital will be used to crowd in commercial capital and other sources of finance to support Asia’s green transition, and raise up to US$5 billion to support Asia’s green and transition financing needs," MAS stated.

Describing Singapore as a financial hub, Fu added in a pre-recorded welcome address at COP29 that the country is "doubling [its] efforts to mobilise financing to support the global climate action".

MAS stated that it is "encouraged by the strong support" from multilateral development banks, sovereigns and development financial institutions, and philanthropies, who have partnered with the government on FAST-P.

New EDB grant

The Economic Development Board (EDB) also launched a new grant to support decarbonisation efforts on Nov. 12.

The grant will provide funding for Singapore-based carbon project developers, and finance activities that can generate carbon credits.

High quality carbon credits that are aligned with Article 6 of the Paris Agreement — a rulebook for a global carbon market — are one of the viable decarbonisation pathways for Singapore industries whose emissions are tougher to reduce (i.e. hard-to-abate sectors).

However, these carbon credits are limited, and the lack of financing in the area has been identified as one of the challenges.

The grant thus aims to help resolve this issue by spurring the development of and investment in more carbon projects, including those in the Southeast Asia.

Some examples of these carbon projects are forestry conservation and the restoration of blue carbon, which refers to carbon stored in the ocean and coastal ecosystems like mangroves.

Carbon project developers with past success in developing high-quality carbon credit projects are eligible to apply for the grant.

They will be expected to anchor a carbon project development team in Singapore to undertake the development of early-stage carbon projects.

These projects must meet the criteria under Singapore’s International Carbon Credit (ICC) Framework, as well as be carried out in countries that Singapore has existing carbon credit collaborations with, and that are aligned with Article 6.

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