from the ground Up

by Jessica Cheam, The Straits Times, August 15 2008

NEA grant to help lower risk and uncertainty for firms in such ventures

A NEW bag of carrots provided by the Government will make it easier for local firms to take on carbon credit projects.
The National Environment Agency (NEA) yesterday announced a $500,000 grant that will fund up to half the consultancy costs of such projects, capped at $100,000.
This fund will help reduce the risk and uncertainty that companies face in such ventures while contributing to Singapore’s ambition to become a carbon trading hub.
Carbon credit projects are regulated by the United Nations under a Clean Development Mechanism (CDM), which is part of the Kyoto Protocol.
Under the global agreement to cut greenhouse gas emissions – regarded by scientists as responsible for global warming – companies from developing countries can convert emission reductions in their business operations into carbon credits.
The application process can cost anything from $50,000 to $200,000 and take up to 12 months.
One credit, or Certified Emissions Reduction, is equivalent to one less tonne of carbon dioxide emitted. This is currently priced around 22 euros (S$46).
“CDM projects are mutually beneficial for companies and the environment,” said NEA chief executive Lee Yuen Hee.
He hoped that the grant will encourage more companies to participate in this “win-win scheme”.
NEA’s new fund comes as Singapore moves to ramp up its carbon trading infrastructure. A new platform – the Singapore Mercantile Exchange – was recently launched. When operational next year, it will allow investors to buy and sell carbon credits.
The Senior Parliamentary Secretary for the Ministry of the Environment and Water Resources, Dr Amy Khor, said that with more local firms taking up CDM projects, local expertise – which is still lacking – can also be built up.
“With more projects located here, international players will also want to set up here,” said Dr Khor, who was speaking at an energy symposium organised by French energy equipment giant Schneider Electric yesterday.
Industry players said that while the NEA grant will help firms, local banks must also come on board to finance such projects.
IUT Global chief executive Edwin Khew, who is a Nominated Member of Parliament, said the grant will help win over companies sitting on the fence about such projects.
“Such applications can be very costly, so this will help in some way. But financing the projects is still an issue. Local banks are not familiar so they shy away from them,” he said.
Such projects are actually quite low- risk and give high returns, he added.
IUT Global is one of four local companies seeking approval for their projects from the UN. The other three are Bee Joo Industries, Power Seraya and Kim Hock Corporation.
Their projects range from waste heat recovery to biomass energy – and will cut Singapore’s annual carbon dioxide emissions by 533 kilotonnes a year.
Based on the current price of 22 euros, the firms stand to earn a total of $235 million over the 10-year period set out by the UN, said the NEA.
Dr Khor added that the grant size may increase in the future, but the agency will monitor its take-up rate before deciding.
Interested companies can go to NEA’s website www.e2singapore.gov.sg or call its hotline 1800-225-5632 for more details.