Singapore eyes financing mechanisms to hasten decarbonisation

28 Sep 2023 08:58pm
Image for illustrative purposes only. – FILE PIX
Image for illustrative purposes only. – FILE PIX

SINGAPORE - Singapore is looking at possible financing mechanisms to accelerate the phase-out of coal-fired power plants in Asia and support decarbonisation of the hard-to-abate aviation and maritime transport sectors.

According to the Monetary Authority of Singapore (MAS), a discussion related to that was held on Sept 26 by the central bank’s Sustainable Finance Advisory Panel (SFAP).

The SFAP also discussed how private capital could be better mobilised to finance the region’s climate adaptation needs, MAS said in a statement issued here today.

MAS noted that the decarbonisation of the energy, aviation and maritime transport sectors is critical for the region’s transition to net zero.

Three key takeaways were derived from the SFAP discussion. Specifically, a whole-of-ecosystem approach is critical to accelerate coal transition; accelerating the adoption of sustainable aviation and marine fuels is key to the decarbonisation of the aviation and maritime transport sectors; and public-private collaboration is needed to tackle decarbonisation.

MAS said SFAP members emphasised the urgency of a managed phase-out of coal-fired power plants, which must take place alongside the development of clean energy sources in Asia’s energy transition.

A comprehensive approach that provides credibility for early phase-out projects and innovative financing structures, regulatory clarity on financed emissions, and appropriate policy reforms, will be needed to scale coal transition, it said.

On climate adaptation, MAS said the meeting noted that less than 10 per cent of global climate finance is currently being channelled to adaptation efforts, with most of it financed by the public sector.

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"Noting that global warming is already causing more severe droughts, heat waves, and other climate-related disasters, SFAP members discussed possible solutions to scale up private financing for the region’s climate adaptation efforts.

"These include resilience-linked instruments and parametric insurance products which enable early intervention and quick responses to climate catastrophes,” said the central bank.

SFAP members also discussed ways to address the underpricing of physical climate risks, including strengthening the global climate risk data architecture, it added.

The SFAP was established in 2022 to guide MAS on its strategies and initiatives to build a credible and vibrant sustainable finance ecosystem. - BERNAMA