from the ground Up

[Commentary] by Jessica Cheam

published as “Black marks on green blueprint”, The Straits Times, May 7 2009

Bold action, flexibility needed to turn S’pore into environmental hub

AFTER more than a year in the making, Singapore’s $1 billion blueprint on how to become a greener, more sustainable nation was finally unveiled by an inter-ministerial committee two Mondays ago.
Coincidentally, the Asian Development Bank (ADB) launched a landmark report the same day on the economics of climate change in South-east Asia, highlighting the damage the region will suffer if this goes unaddressed.
In that sense, the launch of Singapore’s blueprint could not have been more timely.
Leaving aside the ongoing economic crisis, climate change is arguably the most important item now on the international agenda.
A landmark global deal on curbing greenhouse gas emissions is expected to be brokered at Copenhagen in December as a successor to the Kyoto Protocol.
The United Nations is also calling on governments across the globe to integrate climate change concerns into their sustainable development policies, and to put their economies on the “low-carbon, high-growth” path with a focus on greening infrastructure.
So in the midst of all this buzz over going green, how does the Singapore blueprint stack up?
It is clear that some of the plan’s more aggressive targets, such as reducing energy intensity (energy consumption per GDP dollar) by 35 per cent from 2005 levels, and certifying 80 per cent of all our buildings Green Mark by 2030, are commendable.
But from a wider perspective, some critics are saying the report lacks punch.
The most obvious gap in the plan is its failure to discuss or make any provisions for curbs on greenhouse gas emissions, the chief culprit behind climate change.
Many other countries, such as those in Europe, have gone much further than Singapore in this regard, putting in place measures like “cap-and-trade” systems where polluting industries have to buy carbon credits for the right to pollute.
True, it would have been silly for Singapore to stick its neck out to take on cuts in carbon emissions even before the Copenhagen negotiations, but critics say strategies for such a possible outcome could have been more clearly articulated.
Another key argument for not going big on curbing carbon emissions is that it could send members of an already ner-
vous business community fleeing to places with lower costs and less regulation.
This is a valid concern, but it is one that will recede over time. This is because many forward-looking companies are already anticipating such regulation and making adjustments to their business models, given the rising importance of climate change in recent years.
In fact, being a location with high environmental standards is increasingly becoming a competitive edge.
A second aspect of the blueprint that critics have jumped on is the size of the Government’s commitment to going green. The entire plan will cost $1 billion to implement over the next five years. In comparison, the Jobs Credit Scheme introduced in the Budget costs $4.5 billion. Even the Marina Coastal Expressway, work on which began one day after the blueprint was launched, costs more than $4 billion.
Seen another way, the plan amounts to a very conservative 0.3 per cent of gross domestic product. In comparison, South Korea and Japan have pledged at least 2 per cent to 3 per cent of GDP, costing tens of billions of dollars, to invest in environmental projects to help stimulate their flagging economies.
Ministers at the launch of the blueprint asserted that $1 billion in absolute terms is a big amount and “not to be sniffed at”. Singapore does not want to simply spend some “headline-grabbing” amount, but to do a proper “bottom-up” assessment of how much needs to be spent to achieve cost-effective results, they said.
But the signal that the number sends, in comparison to others, is that Singapore is going slow and staying cautious.
Finally, the blueprint favours a “light touch” approach, which works largely through voluntary action and incentives instead of punitive disincentives such as taxes or legislation.
Some experts are not so convinced that this type of persuasion works to alter the behaviour of companies and people who generally love their plastic bags and resist the idea of paying for them.
In China, the government has put its foot down and banned the manufacture and distribution of thin plastic bags – “white pollution” littering water bodies, beaches and streets all over the country.
This is why environmental leaders like Nominated MP Edwin Khew have called for more legislation to be introduced, not less, if the blueprint is to be successfully implemented.
To be sure, there has been positive feedback on Singapore’s green blueprint. The blueprint is itself a study in efficiency, careful in identifying problem areas and proposing solutions.
But ultimately, what does such a finely honed approach do for Singapore in terms of impact and international image?
Singapore has ambitions to be an environmental hub in Asia, where cutting-
edge clean energy technologies are developed and manufactured. It also desires to position itself as a carbon trading hub in Asia.
So it needs, in a sense, to walk the talk. While it is well-known for keeping the country “clean and green”, it is also gaining a reputation for being conservative about certain key green policies.
Its insistence on being classified as a “Non-Annex I” country under the Kyoto Protocol has come under pressure in recent times. Non-Annex I nations are typically developing countries and do not have to cut emissions by 5 per cent from their 1990 levels by 2012. This is a target which “Annex I” or developed countries need to adhere to.
Many argue that Singapore is a First World, developed nation and should be more of a leader, especially in emerging Asia, in addressing climate change.
If Singapore truly wants to be a global model for sustainable development, there are some hard decisions it needs to make.
It needs to be bolder, or at least more nimble, as the global conversation on climate change continues. It will need to change its position or even boost its plans in the years to come.
The flexibility of this blueprint, an “evolving document” as its authors call it, will be vital to delivering on its green ambitions.

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It was only after this commentary was published that I realised the headline was changed, unbeknownst to me. I would have preferred the headline I suggested originally, but that’s irrelevant now. I would just like to make clear that I’m fully supportive of the Government’s sustainable blueprint. I received lots of feedback after this commentary, most readers liked it, although some others felt I was perhaps too critical or harsh in my assessment of the blueprint. Someone had to write what the critics were saying. I stand by what I wrote, but would like to add that this blueprint is a great effort for the first step this little country is making in sustainable development. Like I said, the flexibility of this evolving document in the coming years will be key to the future of Singapore’s sustainability.

by Jessica Cheam, The Straits Times, Nov 13 2008
THE global credit crunch has hit the carbon trading industry, with investments in carbon projects slowing down as credit dries up, said World Bank carbon expert Jari Vayrynen yesterday.
But despite the recent financial industry turmoil, the carbon market itself has been “relatively stable”, said chief executive Henry [...]

by Jessica Cheam, The Straits Times, October 28 2008
THE financial crisis should not be an excuse for policy-makers and businesses to delay acting to fight climate change, a carbon markets expert said last week.
In fact, the crisis offers an opportunity for carbon markets to grow in tandem with the consolidated and restructured financial markets worldwide, [...]

by Jessica Cheam, September 30 2008

Rivals are ‘neck and neck’ in race for global trading role, says expert

SINGAPORE and close rival Hong Kong are “neck and neck” to claim the title of Asia’s first carbon trading hub, said an industry expert.
While Singapore was ahead a year ago, Hong Kong is fast catching up and might clinch the title, said Mr Shane Spurway, head of carbon banking at Fortis Bank.
Hong Kong’s location gives it an advantage as it is so close to China, said Mr Spurway. And although Singapore has been more pro-active in setting up carbon trading infrastructure, Hong Kong is rapidly beefing up its own.
Hong Kong announced in June that it had established the legal framework to allow projects that could sell on their reductions in carbon emissions, added Mr Spurway.
Singapore had already put this in place as it ratified the Kyoto Protocol in 2006.
Recently, a new trading platform called the Singapore Mercantile Exchange (SMX) was also announced. This will allow local investors to buy and sell carbon credits for the first time when it is operational next year.
Hong Kong’s growing interest is due to its search for other revenue streams to support its financial industry, said Mr Spurway. But it is difficult to say who will emerge in the lead, he added.
Mr Spurway, who was speaking to The Straits Times last week on a range of carbon issues, also touched on eco-financing in Asia.
These are projects, regulated by the United Nations under a Clean Development Mechanism set up under the Kyoto Protocol, that generate carbon credits. One credit is one less tonne of carbon dioxide emission produced.
The credits are then traded and bought by firms, normally from Europe, which have to comply with reduction targets on greenhouse gas emissions.
Industry leaders such as Mr Edwin Khew, chief executive of waste-recycler IUT Global, have noted that banks – especially local ones – do not have a good understanding of carbon projects.
The result is that good projects cannot get kick-started without seed money.
Mr Spurway acknowledged the problem but said that banks needed to have their “checks in place”. “They need track records and proven balance sheets to grant funding, so as to protect themselves,” he said.
He foresees that “carbon specialists” will emerge to bridge companies’ ideas with financial institutions.
The carbon market also “really needs entrepreneurs and investors to come in”, as there are many good ideas being generated, but these need to be commercialised and brought to market, he said.
Ultimately, the carbon market will go into full swing only when “America joins the party”, he said.
It is likely that whoever wins the upcoming presidential election will set up a cap-and-trade system, like those in Europe, to impose industry targets, he said.
Asia’s role is extremely crucial as it is a major supplier of carbon credits.
Considering that the bulk of emissions until 2030 will be coming from Asia, “it’s even more important to make industries more efficient. And that’s where carbon trading comes in”, he said.

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 [...]

by Jessica Cheam

[this is a raw version of what was published in the ST on July 31]

THE race is on as Singapore and Hong Kong battle to be Asia’s carbon-trading hub, with both having strong claims, said experts.
And the city-state must move fast if it wants to succeed, said carbon market experts yesterday.

Singapore was positioned well, given its close involvement with energy trading and substantial financial markets expertise, said Mr Henry Derwent, the president of the International Emissions Trading Association.
“I think there is huge determination in the government here to grab hold of this rapidly developing market, even before it’s entirely clear what the obligatons of Asian countries will be,” he said.

New World Bank figures show that the global carbon market doubled in 2007 to Euros 47 billion (S$100 billion), with Asia accounting for 80 per cent of the carbon credits trading.

China made up more than half the trade, which also puts Hong Kong in a prime position to become a trading hub, said local carbon services firm Asia Carbon’s group director, Mr Yuvaraj Dinesh Babu.

The Hong Kong Stock Exchange, for example, commissioned a full feasibility study on how they can capitalise on the growing global carbon market, said Mr Dinesh.
“They have gone through the initial learning phase, and in that respect, they’re ahead of Singapore in understanding the overall impact of the carbon market,” he said.

Having said that, Mr Dinesh pointed out that a new local trading platform called the Singapore Mercantile Exchange (SMX) was launched early this month.
This exchange, which will be up and running by early next year, will allow investors in Singapore to buy and sell carbon credits for the first time, including including futures and options contracts on various commodities. “This platform could help Singapore take the lead,” said Mr Dinesh.

Both Mr Derwent and Mr Dinesh were speaking at a press conference yestereday in preparation for the upcoming Carbon Forum Asia 2008 which will be held in Singapore this November.

The two-day trade fair and global forum, hosted for the second time by Singapore, will bring together global companies and policymakers to discuss issues surrounding climate change and carbon trading.

Mr Vinod Kesava’s nickname sums up his dedication to his job. His firm CRX, which helps companies create carbon credits to trade, has already secured contracts worth $6.8m
MR VINOD Kesava has a nickname that says it all.
“My friends call me ‘carbon man’”, he says with a smile. “My life is all about carbon now.”
The epithet sums up the way the fledgling industry of carbon trading – a major weapon in the fight against climate change – has come to dominate Mr Vinod’s life.
His friends might only be joking, but this is a serious business. It takes guts to set up a firm in uncharted territory where success is uncertain.
And the philosophy of Mr Vinod, 33, and his business partner and father Kesava Shotam, 67, is bold: It is better to try and fail than never to have tried at all.