Data, capabilities and pathways: MAS’ plan to support Singapore’s low-carbon transition

THE MONETARY Authority of Singapore (MAS) is responsible for ensuring that a major part of Singapore’s national decarbonisation and hydrogen transition plans can be financed.

And it will do so by setting up three broad enablers: a stronger data disclosure landscape, building up capabilities in low-carbon technologies, as well as transition and sectoral pathways, said the central bank’s chief sustainability officer Gillian Tan on Wednesday (Nov 9). 

“Good data is absolutely foundational to all of this. Without data, investors aren’t going to come in. I think we need to make headway here. Frankly, Asian ESG (environmental, social and governance) data is still patchy,” said Tan, who was speaking at a fireside chat held at the Singapore Pavilion at the 27th United Nations Climate Change Conference. 

On capability building, the Singapore government had said in October, when it announced its enhanced net-zero 2050 targets, that an additional S$129 million will be set aside for low-carbon energy research, with a significant amount directed towards projects that can help Singapore import, handle and utilise hydrogen and its carriers safely and at scale.

Singapore’s central bank has also committed S$100 million over the next five years for sustainable finance capability programmes. 

Figuring out the transition and sectoral pathways that would work for Asia would also shape the real economy towards this decarbonisation strategy. 

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“Holding their hands, doing the capacity building they need to pivot from what’s really brown and dirty to the new future,” she added. 

Going into 2023, Tan also said that MAS would likely focus on transition plans and how financial institutions can shape the sustainable development of the real economy, especially in carbon-intensive sectors like power, oil and gas, chemicals and industrials.

“How can banks, asset managers, asset owners, go there and shape that transition and push that transition? So we want to look at that and see how our financial institutions should look at sectoral pathways to develop,” she said. 

MAS has been pushing for the greater need of transition finance to accelerate the pace of decarbonisation, given that heavy-emitting sectors account for a much bigger share in the global economy than low-carbon sectors. 

And while there is plenty of capital to be deployed into transition finance, a lack of bankable projects has prevented money from flowing. 

Tan said that there needs to be some templating and standardisation on how such projects are structured, as too much time is taken to design these projects in a bespoke fashion. 

Another issue is heightened risks, such as political and currency uncertainties, in emerging markets. Using developmental funding — like the World Bank taking on some currency risk, for example — could be one solution to lower the barriers for private capital participation, she said.

Singapore’s role in the midst of these challenges is to bring different parties together and using the city-state as a test bed for innovative solutions to catalyse impact.

“Singapore and MAS, we know we’ve got our work cut out for us,” she said. “It’s a hugely challenging space, right? And we know that we’re just a small player in the grander scheme of things, but we want to do our part.”