Written reply to PQs on Development of Green Local Firms and Financial Implications of Net Zero Target on Businesses

Questions

Ms Foo Mee Har: To ask the Minister for Trade and Industry (a) what is the progress of development of green local firms in Singapore; and (b) how much research and development funding has been deployed to support and promote their development.

Ms Foo Mee Har: To ask the Minister for Trade and Industry (a) how the uptake of the Enterprise Sustainability Programme can be further accelerated amongst SMEs to spur green growth and innovation; and (b) what are the key challenges facing SMEs to come on board the green economy.

Mr Yip Hon Weng: To ask the Minister for Trade and Industry in view of the new target to reach net zero greenhouse gas emissions by 2050 and with the revised target to reduce our emissions to around 60 million tonnes of CO2 equivalent in 2030 (a) what will be the financial implications on our businesses; and (b) how will the Government help our businesses to cope with additional financial costs of meeting our long-term national climate change targets.

Written Answer by Minister for Trade and Industry Gan Kim Yong

1. To play our part in global climate action, Singapore has committed to reaching net zero by 2050. The net-zero goal will increasingly become a prerequisite in the expectations of customers and investors. Hence, companies’ commercial interest to decarbonise will also rise. This transition to a low-carbon economy is important to ensure our economy stays competitive and relevant.

2. We understand that the journey to net zero may entail higher business costs that stem from investing in low-carbon equipment, using sustainable supplies and adopting green processes, including making provisions for the carbon tax and re-skilling workers. The Government recognises these challenges and is committed to supporting businesses in their green transition.

3. The Government has announced that the carbon tax will be raised from $5 per tonne of CO₂-equivalent (tCO₂e) to $50-$80/tCO₂e by 2030 to right-price carbon and spur businesses to decarbonise. However, businesses in Emissions-Intensive and Trade-Exposed (EITE) sectors could face greater competition from counterparts in countries with low or no effective carbon prices. To mitigate this impact on near-term competitiveness, we will implement a transition framework for eligible companies in EITE sectors. This is to provide them with a longer runway for their investment and transition towards greener operations.

4. To support businesses in their sustainability journey, we have introduced several schemes including the Resource Efficiency Grant for Emissions and the Energy Efficiency Fund to help them improve their energy efficiency and reduce business costs and emissions as well as improve their competitiveness.

5. Last October, the Government launched the Enterprise Sustainability Programme (ESP) which supports enterprises in building capabilities in sustainability. To date, close to 500 enterprises have participated in ESP sustainability awareness and education programmes, and over 70 sustainability-related projects have been supported. One such project is by a local private bus operator, Yeap Transport. Through the ESP, Yeap Transport developed a sustainability roadmap to adopt cleaner vehicles, reduce their carbon footprint and cater to eco-conscious passengers. We will continue to enhance the ESP and provide more targeted and sector-specific resources for enterprises to go green.

6. As we push on with decarbonisation, we also see exciting new economic opportunities to further strengthen Singapore’s position as an international financial and economic hub.

7. Green finance, which is a key enabler of the green transition, offers potential economic growth opportunities.  To foster green financing and encourage firms to invest in sustainable projects and assets, MAS has introduced the Sustainable Bond Grant Scheme (SBGS) and the Green and Sustainability-Linked Loan Grant Scheme (GSLS). These schemes help defray the additional costs incurred by companies in the conduct of external reviews to be aligned with international principles.

8. Besides green finance, the Government is working closely with companies to develop Singapore as a carbon trading and services hub. This involves partnering with existing firms to expand their carbon services offerings from Singapore and helping new entrants tap Singapore as a regional gateway for carbon services. To date, we have an ecosystem of over 70 organisations in Singapore providing carbon services, including carbon accounting, project development, as well as trade and legal services.

9. Emerging low-carbon technologies, such as hydrogen and carbon capture, utilisation, and storage, can enable decarbonisation while creating economic opportunities. The Government’s Research, Innovation, and Enterprise 2025 (RIE2025) Plan is building on its earlier research and development investments, including sustainability-related areas. More than $1B under RIE2025 has been allocated for sustainability-related initiatives, including $220M for resource circularity and water technologies, and $129M in low-carbon technologies. These initiatives encourage close collaborations between industry and the research community so that solutions developed have commercialisation potential.

10. The Government is strongly committed to supporting and partnering businesses on their sustainability journey. Together, we will also strengthen Singapore’s position as an international financial and economic hub.