Mr S Iswaran at the Carbon Forum Asia 2007 Closing Address

SPEECH BY MR S ISWARAN MINISTER OF STATE FOR TRADE AND INDUSTRY at CARBON FORUM ASIA 2007 CLOSING ADDRESS on wed 7 november 2007, AT 1630 HRS, SUNTEC INTERNATIONAL CONFERENCE & EXHIBITION CENTER

Distinguished guests,

Ladies and gentlemen,

Good afternoon.

Climatic Concerns since the 1970s

Paul Ehrlich, in his 1968 book on “The Population Bomb” wrote that we cannot predict the climatic results of “using our atmosphere as a garbage dump.”From the concerns of global cooling some forty years ago, the advancement of climatic science has greatly increased our understanding of the adverse impact of global climate change. There is also heightened public awareness of and discussion on this long-term challenge.

As an island state, Singapore is not spared from the effects of climate change such as warming temperatures and rising sea levels. We are committed to addressing climate change in an environmentally sustainable manner that is compatible with economic growth.

Reducing Global Emissions

There is no “one-size-fits-all” solution, but we can start with energy efficiency, increase efforts to protect carbon sinks, and promote the use of clean energy. Efforts to conserve energy and improve efficiency – which translate into doing more with less – will benefit both the climate and the economy.

But we must also realise that current policies alone are not likely to bring the world towards a sustainable energy future. The World Energy Outlook estimates that almost 1.5 billion people will still be without electricity by 2030. Poverty reduction and meeting basic needs such as electricity will remain key priorities for many developing countries.

The International Energy Agency (IEA) estimates that US$20 trillion of investments will be needed from 2005-2030 to meet the world’s energy demand. Even under the low carbon scenario, conventional fossil fuels such as oil, gas and coal will still contribute more than three quarters of the global energy supply in 2030.

To achieve the required reductions globally, we need transformational energy technologies such as carbon capture and sequestration, and a price for carbon to rationally influence, but not distort, investment decisions, in a manner that does not disrupt economic growth.

Efforts to Mitigate Climate Change

To encourage private sector efforts to mitigate climate change, the Kyoto Protocol has catalysed the birth of a global carbon market. The audience here knows the market trends and potential of this market.We are still in the early days, but as many speakers have pointed out, more efforts are required to reach the stabilisation levels in the IPCC[1] reports.

Governments need to pro-actively intensify research efforts to understand climate change better and to drive the development of transformational technologies. In the deployment of these technologies, clear market signals are required, be it through carbon taxes, emissions trading or emission standards, so that markets can find a suitable price for carbon. For developing countries, the price of carbon for the credits generated under the Clean Development Mechanism, or CDM, will continue to spur private sector interest to undertake emission reduction projects.

The Carbon Market in Asia

Asia is poised to be the largest supplier of CERs to the global carbon market. According to the UN Framework Convention on Climate Change (UNFCCC), more than 50% of registered CDM projects originated from Asia as of October 2007. While China and India remain the world’s largest suppliers of CERs, the rest of Asia also has immense potential to explore CDM projects. Many Southeast Asian projects are in the pipeline, but on a relatively smaller scale. These include biofuel and biogas ventures in Malaysia and Indonesia, hydro-electric projects in Vietnam and wastewater projects from Cambodia. These projects will yield large amounts of CER trades from Asia.

Asia can and must succeed in this endeavour. Current models predict that Asia will contribute 40% - 43% of the total worldwide emissions by 2050, whilst that from OECD countries will drop to half of Asia’s. The focus in the coming years will be on Asia, where efforts to reduce greenhouse gas emissions will play a pivotal role.

What are some of these required efforts?

What would avoiding 1 billion tons of carbon emissions per year entail?Some analyses points to the installation of carbon capture and sequestration capabilities for 1000 power plants. The sheer cost and scale of such an exercise will require many years of work and cross-border collaboration to operationalise.

In lieu of sequestration, an alternative is the construction of 140 1-GW nuclear power plants. This is almost one and a half times the number of existing nuclear plants in the US. But how will the international community deal with the challenges of fuel supply, safety, waste disposal and security?

The scale of the required efforts is an indication of the new opportunities that will arise. And, companies have to innovate, and bring the costs of emission reduction technologies to a level where they can be readily deployed, particularly for the developing countries. Innovations will enable a growth path for Asia that balances economics with the environment and energy security concerns.

Singapore as a Living Laboratory and Growth of the Carbon Services Sector

Singapore is small and our efforts alone will not have a material impact on climate change. However, as responsible global citizens, we are committed to playing our part in the global effort to mitigate climate change. As a compact island, we are effectively a “living laboratory”, where leading technologies can be tested and integrated, before commercialisation and export to the region and beyond. The S$17 m Clean Energy Research and Testbedding Programme or CERT for short, by the Economic Development Board will enable such pilot testing of promising new technologies.

We have built a business environment that is conducive for the private sector to seize opportunities in a carbon-constrained world.There is interest from private enterprises in different parts of the carbon value chain, from carbon advisory to carbon verification and carbon funds, to take advantage of the potential emissions reduction projects in Asia that generate carbon credits. Singapore could play a useful role in hosting such a new carbon services sector for Asia. Many of you have discussed the CDM over the past two days and know that the process is not easy, but necessary for good reasons to ensure projects meet the sustainable development criteria.Programmatic CDM will help to bring more projects into the carbon market, and also lead to potentially more emission reductions. Similarly, the expansion of scope to forestry-related projects will also help preserve carbon sinks in the region.

The carbon market in Asia is still in its infancy and future development will rest on the efforts of industry players like members of this audience. Singapore is pleased to partner IETA and Koelnmesse in hosting this conference for the first time, which provides you a platform to interact and explore opportunities to further develop Asia’s carbon market.

I hope that you have had a productive forum and a pleasant stay in Singapore. And I hope you will be an integral part of the growing carbon services and trading community here in the near future.

Thank you.

[1] IPCC: Inter-Governmental Panel on Climate Change