Speech by Senior Minister Teo Chee Hean at the Committee of Supply Debate 2025

28 FEB 2025

Speech by Senior Minister and Coordinating Minister for National Security Teo Chee Hean, Committee of Supply Debate 2025

From Commitment to Action: Staying the Course in the Low-Carbon Transition

Mr Chairman, Sir,

I speak as Chairman of the Inter-Ministerial Committee on Climate Change (IMCCC), which coordinates our climate policy and measures across all sectors. With your permission, I will take clarifications immediately after this speech. I would like to thank our honourable Members - Ms Poh Li San, Ms He Ting Ru, Mr Dennis Tan, Dr Lim Wee Kiak, and Ms Cheryl Chan - for their interest in this subject, which has a very long-term bearing on Singapore’s development and growth.

The Need for Continued Climate Action

Sir, it is a difficult time to talk about climate action.

The Paris Agreement in 2015 marked a breakthrough in global climate action, with countries pledging to keep global warming within 1.5°C. Although there has been unevenness in implementation, we were generally pulling in the same direction as a global community.

However, the US has recently pulled out of the Paris Agreement – for the second time. This has prompted other countries, like Argentina and Indonesia, to question the wisdom of maintaining their climate commitments. Dr Lim has asked how these global developments will affect Singapore’s climate goals.

It is quite natural for countries to ask why they should continue to make these difficult changes when others are not. And whether their efforts will even result in any meaningful change, without the participation of bigger players.

Singapore’s Climate Ambassador, Mr Ravi Menon, gave a speech a week ago at Temasek’s Ecosperity Conversations.1 It provides a succinct and clear assessment of the global state of play on climate change. I recommend that Members read it.

Ambassador Menon pointed out that the main drivers of climate action are politics, economics, and nature. I have touched on the political headwinds, so let us examine the other two.

First, the economics. Green technology has advanced dramatically in the last two decades. Several of these technologies are now mature and mainstream, and make economic sense – they are not just cleaner, but lower cost. The average levelised cost of solar energy globally, for instance, is now 50% lower than that of fossil fuels.2 This explains why two-thirds of global energy investment in 2024 went to clean energy technologies and infrastructure.3

Countries and businesses realise this, which is why, despite political perturbations, there is now much greater momentum for decarbonisation than just a decade ago. Most of the world’s advanced economies have been investing in decarbonisation and steadily reducing emissions. They recognise that the green transition is an increasingly important driver of growth, and therefore crucial, not just to the health of the globe, but also to the prosperity of their people.

This brings us to nature. Climate change is no longer a future threat; it is already here with us. Every country, all of us, can see this – drought, fires, floods, loss of crop yields, more severe storms. The last ten years have been the hottest years ever on record.4 In short, the timeline to respond and adapt is being set - not by us, but by Nature.

Countries and businesses which lag behind will be forced to act eventually. The longer they wait, the sharper and more disruptive a transition they will have to make.

Singapore’s Commitment to Climate Action

This is why Singapore remains fully committed to effective climate action. We want to put ourselves in the best possible position for this long-term challenge – and the opportunities that arise.

Earlier this month, Singapore submitted our 2035 Nationally Determined Contribution (NDC) to the United Nations Framework Convention on Climate Change (UNFCCC). We are among just 13 countries to do so on time, out of a total of 195 countries. We have committed to reducing our emissions to “between 45 to 50 million tonnes of carbon dioxide equivalent in 2035”.

  • Our 2035 NDC is an ambitious commitment. It builds on our previous target to peak and then reduce emissions to 60 million tonnes of CO2 equivalent by 2030. 45 million tonnes keeps us on a straight-line trajectory from 60 million tonnes in 2030 down to net zero by 2050, aligning with the goals of the Paris Agreement. It is heartening that Members from both sides of this house have expressed support for our ambitious climate action plan, and in particular, this downward emissions trajectory, which is going to be a major challenge.

  • Our 2035 NDC also signals our resolve to help our economy stay competitive in a low-carbon world. Having an ambitious target generates demand for new green investments and gives Singapore-based companies an edge in developing new low-carbon solutions. It also allows us to remain attractive to companies that are looking to decarbonise their operations, which is aligned with our national goals.

  • At the same time, as an alternative-energy disadvantaged nation, having a target range reflects the practical reality that our pace of decarbonisation depends heavily on technological developments and international collaboration. This range also recognises that we need some flexibility to manage the impact on our households and businesses, while aligning with the pace of transition in the rest of the world.

Navigating our Decarbonisation Journey

Ms Chan, Dr Lim and Ms Poh asked about progress toward our 2030 NDC, and new measures for our 2035 target.

With your permission, Mr Chairman, may I ask the Clerks to distribute an infographic5 – this summarises where we are now, and our journey to get to net zero by 2050.

Our Progress So Far

We are on track to meet our 2030 NDC. Let me provide two examples of the progress we have made:

  • First, on clean energy. Despite our limited land area, we have pushed hard on solar, which remains our most viable domestic source of renewable energy. I am pleased to announce that at the end of last year, we achieved our goal of 1.5 gigawatt-peak (GWp) of solar deployment by 2025. This is ahead of schedule, and more than triple where we were in 2020. This puts us on track to meet our target of at least 2GWp of solar deployment by 2030. To put this in context, our electrical power consumption today is around 8 GW. Of course, 8 GW is not the same as 8 GWp, but this puts it into context.

  • Second, on land transport. We are working towards all vehicles running on clean energy by 2040. As of this year, we have ceased registration of new diesel cars and taxis. EV charging points have been installed in about half of all HDB carparks - Members would have seen them sprouting up all over in your HDB carparks. A third of all new car registrations today are electric cars. We are also on track to electrify half of our public bus fleet by 2030.

We will redouble our efforts on such measures. MTI, MOT, and MSE will say more about this during their respective Committee of Supply debates.

Beyond these measures, we will need to step up efforts to study and advance a fuller suite of potential decarbonisation solutions - something which several Members asked about.

Carbon Tax: A Key Enabler

One key enabler is our carbon tax, which was raised to $25 a tonne last year. The carbon tax shapes behaviour across our economy, from consumers to businesses. It is a proxy for the cost of emissions. It reflects the cost of emissions to the economy and to the users emitting carbon. This applies across the board, whether it is, for example, industry, AI, or data centres. This puts some inhibition on whether emitters will continue to have high emission levels, by applying a cost to the eventual users of all these services. At the same time, we do not just collect the carbon tax; we plough these tax revenues back into supporting businesses and households so that they can become greener. One example is BCA’s existing buildings incentive scheme for owners to retrofit their buildings to Green Mark energy efficiency standards. We also have other schemes to support households that do not necessarily come from the collection of carbon tax, such as the Climate Vouchers.

Our current trajectory is to progressively increase the carbon tax to $45 per tonne in 2026 and 2027, with a view to reaching $50 to $80 per tonne by 2030. Of course, we will have to watch what happens globally. I am heartened that both sides of this house have expressed support for a broad-based carbon tax, with the Workers Party advocating even higher carbon taxes, even sooner. We take such feedback seriously and look forward to their continued support when we adjust our carbon tax in the future. We will continue to assess where the optimal range is. Our current tax rate is carefully calibrated to give our businesses and households time to adjust, and to account for the maturation of green technologies that will allow us to decarbonise more efficiently.

Advancing Cross-Border Solutions

We will also need to tap on cross-border solutions to overcome the limitations of being a dense and alternative-energy disadvantaged city. Ms Chan asked about our collaborations on electricity imports and carbon credits. We have made steady progress on both.

We recently increased our indicative need for electricity imports from 4 GW to 6 GW by 2035, and have awarded conditional regulatory approvals to potential partners in Indonesia, Vietnam and Cambodia for 5.6GW of low-carbon electricity imports. However, there is no transition without transmission. This is why we have been laying the crucial groundwork for the development of an ASEAN regional power grid, which will facilitate cross-border electricity trading and increase regional energy resilience for countries in ASEAN.

Next, carbon credits. Unlike electricity imports, credits are not limited by proximity, and by physical connections. At COP29 last year, we co-facilitated negotiations that delivered the full operationalisation of Article 6 of the Paris Agreement, where Minister Grace Fu played a major role. We have also signed Implementation Agreements on Article 6 carbon credits with Papua New Guinea and Ghana, and MOUs with more than 15 other countries. Just this morning, we signed a new Implementation Agreement with Bhutan. These win-win agreements will promote the development of carbon mitigation projects in these countries while helping us meet our emissions targets.

Carbon Capture and Storage (CCS) represents another pathway for us; one that is necessary to reduce emissions from hard-to-abate sectors. We are currently working with industry players to study the viability of cross-border Carbon Capture and Storage projects.

Laying the Groundwork for Emerging Low-Carbon Technologies

Achieving our longer-term targets will also require new and innovative solutions. Several of these new technologies are showing promise.

  • We have begun to deploy biofuels, such as Sustainable Aviation Fuel (SAF), which can be produced from food and agricultural waste. From next year, all flights departing Singapore will be required to have a 1% uplift of sustainable fuel, with the goal to raise this to 3 to 5% by 2030, subject to global developments. We are also studying the potential for wider adoption of biofuels in sectors such as electricity generation and transport.

  • We are also building capabilities to deploy hydrogen and ammonia, including through small, pilot-scale projects, as we wait for these fuels to become commercially viable at scale.

  • In the longer term, as the Prime Minister stated in the Budget Speech, we are studying the potential deployment of advanced nuclear energy technologies that, while nascent, could be safer than conventional reactors. We had previously announced our plans to build a pool of around 100 nuclear energy and safety experts. We already now have over 40 such experts whose priority in the coming years is to work with our partners to assess the potential for deploying advanced nuclear energy technologies safely in Singapore.

In this transition to a low-carbon future, we will have to explore multiple, sometimes overlapping pathways so that we can find the right mix for ourselves. This is why we are topping up $5 billion to the Future Energy Fund - to make critical infrastructure investments and support solutions that are the most appropriate for us.

Taken together, the measures I have mentioned constitute a holistic set of decarbonisation efforts. They maximise what is currently possible domestically, technologically and economically, while we work to advance the technologies and partnerships needed for later phases of our decarbonisation journey.

Navigating the Economic Transition

The next question is how to help our businesses transition to the new economy. Ms Poh, Mr Tan, and Ms He asked about costs, opportunities, and the circular economy.

Ms He, in particular, talked about consumption-based emissions (CBE) versus production- based emissions (PBE).

  • I should explain that the world currently operates on a PBE system. This is what the UNFCCC reporting guidelines are based on, and the way that carbon emissions of each country are officially counted, with well-developed methodologies. For CBE, the methodologies are not standardised, not widely applied, and will not be directly applicable to our carbon accounting under the Paris Agreement.

  • Nonetheless, we are encouraging companies to start accounting for these indirect emissions. This is because if the cost of carbon around the world rises, this will also affect companies through their supply chain – so our companies ought to know where their supply chain risks are. For example, we supported the Singapore Business Federation and a consortium of partners to launch the Singapore Emission Factors Registry (SEFR). This helps businesses in Singapore track and report their carbon emissions more accurately, by using a database of emissions factors developed based on Singapore’s context. Prior to this, most Singapore businesses had to rely on emission factors from international sources for their emissions reporting, especially for Scope 3 emissions.

To remain competitive as an economy, we must take steps toward decoupling growth from emissions. This means if we want to grow, we must find a way of growing without the concomitant higher emissions that growth brings. As we move towards a low-carbon future, businesses and economies that remain emissions intensive relative to their competitors will become less attractive. So, while there are costs in decarbonisation now, it is an investment in long term survival and growth for our companies, and also for Singapore’s economy.

Supporting Businesses to Decarbonise

We are helping businesses decarbonise by supporting efforts to improve their energy efficiency. For instance, we have enhanced the Resource Efficiency Grant for manufacturing facilities and data centres, by lowering the minimum qualifying criteria to support more emissions reduction projects. We have also launched schemes to support businesses in sustainability reporting.

In addition, we have been working closely with the private sector to develop sectoral roadmaps to decarbonise each sector, seize new opportunities, and remain competitive in the low-carbon transition.

  • For example, we launched the Singapore Sustainable Air Hub Blueprint last year, and more recently announced the Marine & Offshore Industry Plan. These will guide us as we work together with companies in our key sectors in the years ahead.

  • We also want to become an AI hub. MDDI will say more about how we plan to green our data centres to achieve both economic growth and decarbonisation.

Seizing New Economic Opportunities

The transition also presents new opportunities. As the demand for low-carbon goods and services increases, we can benefit by moving quickly to capture new markets.

  • One opportunity is offshore wind. We have traditional strengths in marine and offshore, particularly in the oil and gas sector. Now, there is a huge new opportunity in offshore wind. The global offshore wind market is expected to grow to US$126 billion per annum by 2030. With the support of EnterpriseSG, Singapore companies in the oil and gas sector are already finding success in pivoting towards providing critical products and services across the offshore wind value chain. Cyan Renewables is a new local company set up in 2022. It has now grown to become one of the largest offshore wind vessel owners globally, supporting clients across Asia Pacific and Europe.

  • There will also be new opportunities in resource efficiency and circularity. For example, we are supporting research to explore the use of captured carbon dioxide to produce building materials. Singapore is also one of the world’s leading producers today of Sustainable Aviation Fuels.

Adapting to Climate Change

While we have a broad suite of plans to get ourselves to net-zero, keeping global warming below 1.5°C will depend on other countries doing their part. We emit 0.1% of the world’s global emissions, but we are affected by 100% of emissions. The transition will not be straightforward, and is likely to be messy and uneven. The reality is that we as a global community will make progress, but may not collectively meet the 1.5°C goal.

As a low-lying island nation, we must therefore prepare for the reality of rising sea levels. We are starting now, and expect this will require something in the order of $100 billion in the coming decades. We are putting aside $5 billion in this Budget to top-up the Coastal and Flood Protection Fund. MSE will say more about adaptations to rising urban heat, disruptions to food supplies, and other impacts, which will be needed too.

Conclusion

Mr Chairman, over our 60 years of independence, we have always placed emphasis on a clean and green environment even as we developed and grew. With climate change, this challenge has now taken on a global dimension. Nature is setting the timeline. Sir, we are neither climate zealots nor climate sceptics; we are climate realists. We cannot be sure what other countries will or will not do. But we will secure Singapore’s future – by doing our part to reduce emissions; by partnering our households and businesses in this transition; by taking steps to protect us from the effects of climate change; so that Singapore remains a sustainable, liveable, and thriving country for all our citizens, ready to grasp the new opportunities in a low-carbon world.

So let us all work together and travel this journey together. Thank you, Sir.

1 “Drivers of Climate Action: Politics, Economics, Nature”. Opening Remarks by Singapore’s Ambassador for Climate Action at Ecosperity Conversations 2025

2 IRENA. Renewable Power Generation Costs in 2023.

3 IEA. Global Hydrogen Review 2023.

4 Global Centre on Adaptation. A Year of Heat and Havoc: Why 2024 Must Be a Wake-Up Call.

5 https://www.nccs.gov.sg/singapores-climate-action/mitigation-efforts/overview