(10 Minutes Read) This article is co-written between SMUSI and Terra-X.
Conference of the Parties’s 28th meeting saw record participation this year.
Key agreements include the ‘Loss & Damage Fund’, oil & gas industry ending flaring practices & reaching net-zero scope 1 & 2 emissions by 2050, and countries pledging to triple renewable energy capacity by 2030.
Singapore’s ambitions achieved mixed results this year – attaining agreements in the carbon credits space but falling short of reaching a global consensus in the voluntary carbon market (VCM) space.
Singapore announced 3 key initiatives: FAST-P, Singapore-Asia Taxonomy & TRACTION.
Introduction
The 28th annual UN Climate meeting – where global efforts on the Paris Agreement’s aim of limiting global warming to 1.5°C above pre-industrial levels were assessed by countries - was held in Dubai, UAE from Nov 30 to Dec 12. This year, Sultan Ahmed al-Jaber, chief executive of the Abu Dhabi National Oil Company became the event’s president-delegate (Take, 2023). The largest summit-till-date saw delegates from all 199 parties from the UN Framework Convention on Climate Change (UNFCCC), with more than 85,000 participants in attendance (UNFCCC, 2023). Student delegates from SMU’s International Trading Institute joined Prof. Winston Chow, Professor at Singapore Management University (SMU), and co-chair of the Intergovernmental Panel on Climate Change (IPCC) at the COP28 summit as part of their industry study mission. Singapore also sent its first-ever batch of youth delegates from the Climate Youth Development Programme.
Key Takeaways
On the first day of the summit, developed nations agreed to a climate change adaptation Loss and Damage fund that would help vulnerable nations cope with the effects and damage from climate change. To date, more than US$700 million has been pledged. Minister for Sustainability & the Environment Ms. Grace Fu announced that while Singapore will not be claiming from the fund, it will make meaningful contributions through sharing of best practices under the Singapore Cooperation Programme.
On the fourth day, about 50 oil and natural gas producers pledged to achieve near-zero methane emissions and end flaring by 2030, and net-zero scope 1 & 2 carbon emissions by 2050. Shell and ExxonMobil, who have refineries in Singapore, were part of the 50 companies that signed the pledge. This agreement marks a step in the right direction as the oil & gas industry contributes over three-quarters of Singapore’s industrial emissions, or about 30% of the island nation’s total emissions (Tan, 2019). To facilitate the end of flaring practices, the World Bank announced a US$250 billion trust fund to assist these companies (Irfan, 2023). In totality, these 50 companies account for 40% of global oil production, and these commitments will be monitored by UN Environment Program’s International Methane Emissions Observatory (IMEO), the Environmental Defense Fund, and the International Energy Agency (IEA).
COP28 also marked a significant occasion for 22 countries as they signify growing support and accelerate nuclear power capacity by 2050 (Trajano, 2023). This included supporting the development of nuclear related technologies such as Small Modular Reactors (SMRs), exploring new forms of reactors, and the continuous usage of current reactors. While Singapore has not made any decisions to deploy nuclear energy to our energy mix, Minister for Trade and Industry Gan Kim Yong noted in a past statement that Singapore has been growing its nuclear capabilities and knowledge around technologies like SMRs (Koh, 2023).
Most importantly, 123 nations, including Singapore have signed a voluntary pledge to triple global renewable capacity to 11,174 gigawatts by 2030 (Fogarty, 2023). This would also mean that an estimated US$10.4 trillion must be channeled to scaling up renewable energy capacity by 2030, and renewable energy will need to account for 91% of global power generation, up from the current 30%. We believe that this pledge is in line with Singapore’s current ambitions to diversify its power generation mix from natural gas.
With Singapore's carbon taxes set to rise from now till 2030, this year marks a positive step in the carbon credits and market space with multiple agreements set between Singapore and other countries (MSE, 2023). One such highlight would be a deal with Papua New Guinea on carbon credits collaboration, where carbon credits from Papua New Guinea will be able to support Singapore’s high emitters to offset up to 5% of their taxable emissions from 2024 (Wong, 2023). Support for VCM reignited with a roundtable featuring delegates from countries such as Singapore, UK, Ghana, and including prominent figures like US Climate Envoy John Kerry and EU Commission President Ursula von der Leyen (Isherwood, 2023). With new frameworks and guidance established, we should see VCM entities like Singapore-based Climate Impact X witnessing higher uptake given greater level of trust and financial integrity.
During COP28, Singapore announced new initiatives:
a. Financing Asia’s Transition Partnership (FAST-P), a blended finance initiative that aims to mobilize up to US$5 billion in capital for green and transition projects. The initial investment set by Singapore will be supplemented by funds from multilateral development banks (MDBs) and development finance institutions like the Asian Development Bank (ADB), as well as other banks and institutional investors. The initiative will target 3 main themes: Energy Transition Acceleration, Green Investments, and Clean Technologies (Fintech News Singapore, 2023).
b. Singapore-Asia Taxonomy. The taxonomy sets out technical benchmarks and criteria for defining ‘green’ and ‘transition’ activities that contribute to climate change mitigation across multiple sectors (Allen & Gledhill, 2023). These guidelines aim to minimize greenwashing, without disrupting the financial flow to climate-friendly transition activities by providing clear and consistent definition on what qualifies as environmentally sustainable.
c. Transition Credits Coalition (TRACTION) aims to study the challenges and explore the early phase-out of coal-fired power plants in Asia through high-integrity carbon credits. This move comes after a working paper published by McKinsey & Co and the Monetary Authority of Singapore (MAS) earlier last year (MAS, 2023). The emissions reduced from retiring a coal-fired power plant early and replacing it with cleaner energy sources will generate these high-integrity carbon credits. MAS also announced its first pilot project in collaboration with ACEN, a Philippines-based energy firm, to explore the viability of retiring a coal plant as early as 2030 (Azizuddin, 2023).
The influx of agreements witnessed at COP28 highlights the need for transparency, accountability, and collaboration in implementing climate policies. Terra-X co-founder Angeline Yap views that during COP28, there is a re-emphasis in the message that sustainability is a key focus currently in present times. Extensive developments have been made in carbon markets, climate policies and regulations, which nations and corporations will have to actively participate in once it is mandatory. In light of this, organizations should start formulating a roadmap on their sustainability journey and keep themselves updated regularly to avoid disruptions in their operations.
(Terra-X is a sustainability consulting firm in Singapore which aims to break barriers towards sustainability. Through SaaS software, consulting services and certifications, Terra-X works with organizations to help them embark on their journey to be sustainable, responsible and future-ready with greater ease.)
This article is co-written by:
Clive Tan, a year 2 SMU undergraduate who co-heads the research division at SMU Sustainable Investment Club. He is currently researching decarbonization solutions at Temasek Holdings.
Jorden Lim, a year 2 SMU undergraduate who is responsible for expanding Terra-X's business developments and aiding in the research and analysis to support consulting projects.
Glossary
Flaring – is a cost-effective practice often adopted by oil and gas producers to burn off methane (and other natural gases), instead of capturing them.
Carbon Credits - permits that allow the asset owner to emit a certain amount of carbon dioxide or other greenhouse gases.
Climate Change Adaptation – according to NASA, refers to adapting to life in a changing climate by reducing our risks from the adverse impacts of climate change.
Climate Change Mitigation – according to NASA, refers to reducing climate change by reducing the flow of heat-trapping gases into the atmosphere.
Voluntary Carbon Market (VCM) – refers to a market where carbon credits can be purchased on a voluntary basis, as opposed to through mandatory carbon regulation or compliance markets.
References
Allen & Gledhill. (2023, December 19). MAS launches world’s first multi-sector transition taxonomy. https://www.allenandgledhill.com/sg/publication/articles/26927/mas-launches-world-s-first-multi-sector-transition-taxonomy
Azizuddin, K. (2023, December 4). Singapore central bank unveils first coal phase-out project to be funded by carbon credits. Responsible Investor. https://www.responsible-investor.com/singapore-central-bank-unveils-first-coal-phase-out-project-to-be-funded-by-carbon-credits/
Fogarty, D. (2023, December 11). Mission possible? COP28 targets tripling of global renewable energy capacity. The Straits Times. https://www.straitstimes.com/world/mission-possible-cop28-targets-tripling-of-global-renewable-energy-capacity
Irfan, U. (2023, December 11). COP28: Oil and gas companies agree to cut methane at UN climate conference. Vox. https://www.vox.com/23996919/cop28-climate-methane-pledge-oil-gas-emissions-agriculture
Irsherwood, A. (2023, December 14). What Happened at COP28 and What it Means for Climate Action. Sylvera. https://www.sylvera.com/blog/what-happened-at-cop28-and-what-it-means-for-climate-action
Koh, W. T. (2023, October 23). No decision on use of nuclear energy yet, Singapore to keep options open. CNA. https://www.channelnewsasia.com/singapore/nuclear-energy-singapore-low-carbon-hydrogen-ammonia-gan-kim-yong-3864951
Monetary Authority of Singapore. (2023, December 4). MAS Launches Coalition and Announces Pilots to Develop Transition Credits for the Early Retirement of Asia’s Coal Plants. https://www.mas.gov.sg/news/media-releases/2023/mas-launches-traction-and-announces-pilots-to-develop-transition-credits
Ministry of Sustainability and the Environment. (2023, December 14). Factsheet on Singapore's participation at COP28. https://www.mse.gov.sg/resource-room/category/2023-12-14-factsheet-singapore-participation-cop28/
NASA. (n.d.). Responding to Climate Change. https://climate.nasa.gov/solutions/adaptation-mitigation/#:~:text=Adaptation%20%E2%80%93%20adapting%20to%20life%20in,events%2C%20or%20food%20insecurity).
Take, S. (2023, December 14). Fossil fuel “transition” in the spotlight: 4 takeaways from COP28. Nikkei Asia. https://asia.nikkei.com/Spotlight/Environment/Climate-Change/COP28/Fossil-fuel-transition-in-the-spotlight-4-takeaways-from-COP28
Tan, A. (2019, October 7). Parliament: About 75% of industrial emissions are from refining and petrochemicals sector. The Straits Times. https://www.straitstimes.com/politics/parliament-about-75-of-industrial-emissions-are-from-refining-and-petrochemicals-sector
Trajano, J. C. I. (2023, December 19). CO23185 | The COP28 Pledge to Accelerate Nuclear Power Capacity. S. Rajaratnam School of International Studies (RSIS), NTU. https://www.rsis.edu.sg/rsis-publication/nts/the-cop28-pledge-to-accelerate-nuclear-power-capacity/#:~:text=If%20the%20pledge%20to%20triple,phasing%20down%20of%20fossil%20fuels.
UNFCCC. (2023). About COP 28. United Nations Climate Change. https://unfccc.int/process-and-meetings/conferences/un-climate-change-conference-united-arab-emirates-nov/dec-2023/about-cop-28#:~:text=Delegations%20from%20all%20199%20Parties,Change%20will%20attend%20the%20conference.
Wong, P. T. (2023, December 8). Singapore scores first carbon credit transfer deal at COP28. The Business Times. https://www.businesstimes.com.sg/esg/singapore-scores-first-carbon-credit-