SINGAPORE – Singapore is not obliged to contribute resources to developing countries to help them take climate action, but will do so voluntarily, said Minister for Sustainability and the Environment Grace Fu.

       In an interview ahead of the upcoming UN climate conference COP29, which is shaping up to be a “finance COP”, Ms Fu said the Republic stands by the provisions of the Paris Agreement with regard to financing for developing countries.

       The multilateral treaty clearly states that developed countries have the obligation to contribute to the climate finance pot, she said.

       But as Singapore is classified as a developing country in international negotiations, it is not required by the Paris Agreement to provide financial resources to the least developed and developing nations.

       Parties like Singapore are encouraged to voluntarily contribute to global climate finance, which it has been doing in a few ways, said Ms Fu.

       She pointed to a blended finance initiative Singapore launched in 2023 to raise up to US$5 billion (S$6.6 billion) to address the financing gap in green projects in Asia, such as the early phase-out of coal power plants and the upgrading of electricity grid infrastructure.

       Blended finance refers to using public and philanthropic funding support to make it easier for private funding to come on board. The platform, Financing Asia’s Transition Partnership, involves the Monetary Authority of Singapore, multilateral development banks and philanthropic organisations, among others.

       By signing up, I accept SPH Media's Terms & Conditions and Privacy Policy as amended from time to time.

       With less than a fortnight to go before the annual UN climate summit begins on Nov 11 in Azerbaijan, Ms Fu outlined Singapore’s position on a major global climate finance goal to be brokered at COP29.

       Called the New Collective Quantified Goal (NCQG) on Climate Finance, this target is a successor to the previous goal agreed in 2009, where developed countries committed to channelling US$100 billion a year to developing countries by 2020. The goal was reached only in 2022, two years after the deadline.

       The NCQG amount is to be set from a floor of US$100 billion a year, building on the 2009 agreement.

       According to a report by the Organisation for Economic Cooperation and Development, 69 per cent of public financing from developed countries in 2022 came in the form of loans.

       Many developing countries are deeply in debt, said Ms Fu, adding: “The needs of the developing countries are actually very great, and many of them have difficulties accessing the capital markets, the loans markets, because of their status, because of their risk profile.”

       At COP29, the quantum of the NCQG will be the key political question on the negotiating table. The UN has evaluated that developing countries currently need around US$500 billion of climate finance annually. Estimates from other groups such as the World Resources Institute go up to more than US$1 trillion a year.

       Ms Fu noted that public finance, or funds coming from governments’ budgets and from multilateral development banks, will not be sufficient to fill the NCQG. This means there must be new ways to unlock financing and involve the private sector.

       Through the negotiations, Ms Fu is hoping to see a clearer definition of the NCQG with a proper structure fleshed out.

       “When the structure and definition are clearer, I think more contributors will step forward. And the quantum can be more meaningful,” added Ms Fu, who is also Minister-in-charge of Trade Relations.

       In her view, a figure north of US$100 billion could come from developed countries - as stated in the Paris pact - while voluntary support from other parties and other sources of climate finance could help bring the amount to hundreds of billions or a trillion.

       Carbon markets are also another source of finance, said Ms Fu, pointing to a new class of carbon credits, called transition credits, that Singapore is pioneering to incentivise the early retirement of young coal-fired power plants in South-east Asia. The region has 2,000 coal plants, and this fuel is the largest source of carbon emissions globally.

       Retiring the plants early and replacing them with clean energy sources will help countries in the region decarbonise.

       In mid-August, an agreement was signed by Temasek-owned investment platform GenZero, Keppel and the energy unit of Philippine conglomerate Ayala Corporation, to study the development of a transition credit project in the Philippines.

       The project entails retiring a South Luzon coal plant in 2030 –10 years ahead of schedule.

       As a leading financial hub, Singapore thinks actively about how to have innovative financial products that can bridge financing gaps, she said.

       Observers are also closely watching the US presidential election on Nov 5, which would have an influence on COP29 outcomes.

       Dr Axel Michaelowa, senior founding partner of consultancy Perspectives Climate Group, said: “A Trump presidency would cast a massive chill on international climate policy, given that Trump has clearly stated he plans even to withdraw from the UNFCCC itself, not only the Paris Agreement... (This) would mean no US climate finance would become available.”

       COPs are convened under the UNFCCC, or the United Nations Framework Convention on Climate Change. In 2023, climate finance from the US was estimated at US$9.5 billion.

       In early October, Ms Fu attended pre-COP in Baku which serves to advance climate negotiations ahead of COP29. While the climate finance goal was a priority, there were calls for the completion of negotiations on the Paris Agreement’s Article 6 - which governs carbon trading between countries.

       Ms Fu and New Zealand’s climate change minister, Mr Simon Watts, will be co-facilitating negotiations on Article 6 at the upcoming summit.

       At COP28 in Dubai in 2023, Article 6 negotiations came to a standstill as countries were unable to agree on a number of issues, such as transparency, the nature of carbon credit registries and the revocations of credits.

       Ms Fu said she has started consulting widely with countries on the outstanding issues related to Article 6, to find landing ground.

       At COP29, it is not just what happens at the negotiation rooms that matter, said Ms Fu. She noted how the Singapore Pavilion – marking its third presence at a UN climate summit – will bring together businesses, academic institutions, youth and government agencies in furthering climate action.

       “We are hoping that through our participation... we are able to give confidence to some of the countries that technologies, finance are being discussed and developed, and we hope that will give them confidence to commit to more ambitious (climate targets),” said Ms Fu.