Keynote Speech by Ms Grace Fu, Minister for Sustainability and the Environment, at the Singapore Venture & Private Capital Association (SVCA) 30th Anniversary Conference on 29 June 2022
Mr Sanjay Gujral, Chairman of the SVCA,
Ladies and Gentlemen,
1 Good morning. Let me first extend my heartfelt congratulations to the SVCA for reaching its 30th anniversary milestone. 30 years ago, in the year 1992, when SVCA was born, what were you doing in life?
2 Now, let’s think about the future. Allow me to paint two scenarios of how our world could look like by the end of the century.
“Humanity’s Folly” and “Humanity’s Awakening”
3 The first scenario is one I would like to call “Humanity’s Folly”, where we stick to our current way of doing things and take no significant steps to curb greenhouse gas emissions.
• The global economy continues to rely heavily on fossil fuels.
• Swathes of forests are cleared to make way for economic developments and food production.
• The challenges of multilateral cooperation on climate change are compounded as the world becomes increasingly fragmented, and countries become more inward-looking to protect their own interests.
4 This leads to global warming of 2.4°C to 3.5°C by the end of the century.
• The impacts of climate change are devastating and hit the poorest and most vulnerable countries the hardest.
• Global food shortage persists as frequent droughts and floods lower crop yields and destroy agricultural land.
• Water scarcity worsens due to contaminated water sources and unpredictable rainfall patterns.
• Our children will not get to see 10 to 15% of plants and animals that existed today. Fishermen in many parts of the world will be unable to find food from the ocean near them.
• Tens of millions of people are displaced as sea-level rise inundates coastal settlements.
• All countries, developed and developing, will spend billions of dollars, and divert more financial resources to harden their defences against rising sea levels, or recover from loss and damages in human lives and properties.
5 This is the kind of world we will create for future generations if we go about our business as usual.
6 Let us consider another scenario – “Humanity’s Awakening” – where we realise and act on the need for a drastic reduction in global emissions, and stay on the path to limit warming to 1.5°C.
• Countries work closely together to accelerate the transition to a low-carbon and climate-resilient world.
• Storms, heatwaves and droughts are still more severe than today, but to a much lesser extent than the first scenario I have just described.
• For example, 14% of the Earth’s population will be exposed to severe heatwaves at least once every five years, but this fraction becomes nearly three times larger under 2°C of warming, or a difference of around 1.7 billion people.
7 While we are unable to reverse climate change, we find ways to minimise irreversible damage and adapt effectively to its impacts. We see a fundamental shift in the sources of energy. Renewables – solar, wind, geo-thermal, will be extensively used. Even where fossil fuels are used – in making chemicals such as plastics – the rapid development and deployment of low-carbon technologies, such as carbon capture, utilisation and storage (CCUS) will mitigate greenhouse gas emissions. An alternative fuel, transported from production to consumption, such as hydrogen, will substitute fossil oil and gas. Engineering-based and nature-based solutions, such as reforestation and wetland restoration, are widely deployed to help sequester carbon and buffer local communities from flood waters and rising heat, and protect homes from storm damage. The world runs on resource-efficient mode – from energy, farming, to manufacturing. The urban landscape is dominated by green buildings that maximise energy efficiency while providing protection from heat waves.
8 This is not a rosy scenario; it will involve a lot of hard work and changes to our habits and jobs. But it is one that secures a more sustainable and liveable future for us. It is a “best case” scenario and we may end up somewhere between the two scenarios, based on current projections.
Good progress to date
9 The world has made some progress towards the “Awakening” scenario after many years of trying.
10 COP-26 in Glasgow last November saw a major move for multilateralism towards the Paris Agreement. It saw a steady stream of net zero targets from Parties, bringing the total count to 74 targets communicated by the close of the summit, as well as from non-state actors such as regions, cities, businesses, and investors. COP-26 also saw the conclusion of the ‘Paris Rulebook’, notably Article 6 of the Paris Agreement on carbon market rules.
11 We also saw many significant ground-up, sector-led initiatives to galvanise global climate action. Climate action is no longer a matter of regulatory compliance or driven top-down by governments.
12 The financial sector provided much of the momentum.
13 Last year, the Glasgow Financial Alliance for Net Zero (GFANZ) was formed. GFANZ comprises more than 450 financial institutions from the global financial sector which have made science-based commitments to reach net zero. It provides a practitioner-led forum for financial institutions to accelerate the mobilisation of green finance and drive forward the transition to a net zero global economy.
14 The Network of Central Banks and Supervisors for Greening the Financial System (NGFS) was established by eight central banks and supervisors, including the Monetary of Authority Singapore (MAS) in 2017. Its membership has since grown significantly to 116 members across the five continents, representing a diverse group of advanced, emerging and developing economies. In the near term, the NGFS is focused on areas such as enhancing supervisory practices on climate risks, assessing the implications of climate change for monetary policy, and designing actionable climate scenarios.
Role of finance in the fight against climate change
15 While these are encouraging strides in the right direction, more needs to be done to keep the 1.5°C goal within reach, the “Awakening” scenario. By 2030, the world needs to reduce our carbon emissions by 45% relative to 2010 levels, to put us on the path to achieve global net zero by or around mid-century. Around US$125 trillion of climate investment is required by 2050 to achieve net zero on a global scale.
16 We will need technology and innovation to deliver needle-moving solutions. Finance will hold the key to unlock this potential.
17 Let me illustrate this with a topic that many Singaporeans hold close to their hearts: food. Food has been under the spotlight lately for the wrong reasons – price escalation, scarcity leading to hunger, malnutrition and deaths. It has also been under the spotlight for the right reasons. Many technologies and innovations are awaiting the right investments to realise their full potential in enhancing climate resilience.
18 One successful example is Temasek Rice – a high yield, hardy, and climate-resistant grain variety developed by Singapore’s Temasek Life Sciences Laboratory. Temasek Rice seedlings do not need to be submerged in water, thus reducing methane emissions. This is significant, as rice growing accounts for 12% of global methane emissions and around 1.5% of total global greenhouse gas emissions. On average, farmers are able to produce nearly four times more rice grains with Temasek Rice compared to normal breeds. This allows farmers to get more out of their existing plots of land while using less water and with lower carbon footprints. Temasek Rice has been grown in Indonesia for commercial sale since 2016.
19 Another example is the adoption of recirculating aquaculture systems for fish farming. Instead of the traditional method of growing fish in cages in the sea, this system allows fish farming at high densities, in indoor tanks with controlled environments. This leads to more efficient land use, better disease control and lower pollution. Such systems also protect fish farming from environmental risks such as algae blooms and oil spills, which devastates traditional fish farms. Researchers are now looking into technologies such as improved fish feed and smart computer vision systems that can monitor fish health and growth rates.
20 Cell-based alternative protein technologies have the potential to drastically reduce global emissions and shore up food resilience, while avoiding deforestation. It can reduce emissions generated in livestock cultivation and feed production. In fact, the transition to alternative proteins has the potential to deliver up to 20% of the emissions mitigation the world needs until 2050 to stay below 1.5°C of warming. Alternative proteins are also much more efficient in terms of land use, with estimates of around half of the land needed. It is feasible to produce alternative proteins in areas where demand for proteins is high but land is scarce, such as in cities. In Singapore, we have created a strong and supportive food safety regulatory environment for alternative protein innovation to flourish. For instance, I recently attended the opening of GOOD Meat’s ground-breaking $61 million R&D and production facility at Bedok Food City. When completed, the facility will be the largest cultured meat facility in Asia, and is set to produce tens of thousands of pounds of lab-grown meat per year.
21 These examples are a mere fraction of the what the agri-food industry is capable of. Imagine what can be achieved with the investments in the right areas, across all sectors.
22 I am delighted to be here this morning for the SVCA Conference 2022 on “Solving Real Life Issues with Private Capital and Technology”. It highlights the important role of global financial flows in channelling much-needed resources to tackle global challenges.
23 At the start of the conference, I have asked you to reminisce on the past, going back 30 years. As the saying goes, it went by in a flash of an eye. I invite you now to look forward 30 years, 2050, and what do you see for yourselves, families, and communities. Ladies and Gentlemen, We have reached an inflexion point in climate action – the actions we take in this critical decade and subsequent ones will determine if will land on “Humanity’s Folly” or “Awakening”. We have reached a critical juncture where every fraction of one degree Celsius matters, and every action we take could tip the balance closer to, or further away from, a sustainable and liveable future. In fact, along the way of decarbonisation, opportunities may come along to pick up assets cheap, and make good returns.
24 I will ask you to decide what kind of planet we will leave for our children. I will ask you to decide if you are a value investor, or an investor with values beyond profits. Because you are not a passive bystander in this journey. As investors, you have the power to move the needle, and the opportunity to make an impact on the climate and the world.
25 Thank you.