In Singapore’s Budget 2021 announcement on Feb 16 by Deputy Prime Minister and Finance Minister Heng Swee Keat, the topic of climate change was mentioned. “Climate change is a global emergency and has caught on the government to take stronger climate actions,” said Heng in his speech, as he notes that Singapore’s initiative towards a greener nation is a continuous one that started with Lee Kuan Yew.

With that, Heng introduced the Singapore Green Plan 2030 that will focus on Singapore’s journey towards being a greener nation. “Sustainability is journey and not a destination. The work is never done,” said Heng.

$19 billion of public green projects

“Sustainability efforts require capital. Green finances will be an important enabler,” said Heng, who in his speech announced that the government will be issuing green bonds on selected public infrastructure projects.

“The issuance of green bonds by the Government will build on these efforts by deepening market liquidity for green bonds, attracting green issuers, capital, and investors, and anchoring Singapore as a green finance hub,” he added.

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This issuance will then serve as a reference for the SGD corporate green bond market, including the standards and framework applied, and yields achieved.

On top of that, Heng announced that the government will release up to $19 billion of public sector green projects.

“Sustainability must be at the core of our work,” he said.

Sharad Somani, head of infrastructure, advisory, at KPMG Singapore notes that it is important to kick start a strong green bond market in Singapore by setting return benchmarks for corporate infrastructure issuances.

"This will allow us to be able to attract more sustainable institutional investors into these markets, and being non-government linked, opens an alternate source of funding for the corporate sector while encouraging more to structure sustainable and green projects," he said.

HSBC Singapore's director for debt capital markets, Chong Han Goh expects more green financing to come in the near future. "We have already seen a handful of Singapore issuers tapping the sustainable/green market via loans and bonds in the recent past and are very encouraged with the Singapore government taking the lead in green infrastructure financing by issuing green bonds."

"Going forward, we would expect more Singapore companies to look closely at sustainable/green financing via the bond markets. In general, we see continued growth in sustainable/green finance, particularly via the bond markets which have seen strong take up by the global investor community," said Chong.

Jaclyn Ho, local principal and tax advisor for Baker McKenzie Wong & Leow is bullish on the green bonds. "The proposals to further anchor Singapore’s position as a green finance hub will kill two birds with one stone, supporting the recovery of the financial sector, while encouraging the prominence of sustainability and environmental considerations in corporate finance and investing. This push shows that economic development and sustainability goals are not always in opposition."

$30 million charge for EVs

Heng announced that the government will continue its effort to encourage the use of electric vehicles (EVs). In last year’s budget, he announced that Singapore targets to completely phase out petrol vehicles by 2040.

To move towards this goal, Heng this year announced that $30 million will be set aside over the next five years for related initiatives, as EVs are the “most promising clean-energy vehicle technology."

He also said that the government will move towards introducing some 60,000 EV charging points at public carparks and private premises by 2030 -- more ambitious than the previous target of 28,000.

To further encourage the adoption of EVs, the cost differential between electric cars, and petrol and diesel cars will be narrowed.

Additional registration fee floor will be lowered from $5,000 to $0 for electric cars from Jan 2022 to Dec 2023. The road tax will also be adjusted so that mass-market electric cars will be comparable to conventional cars.

At the same time, to discourage the use of petrol cars, Heng announced a hike in petrol duty, with effect on Feb 16. For premium petrol, the duty will be raised by 15 cents per litre and for intermediate petrol, 10 cents per litre.

"Usage-based tax has helped shape consumer behaviour towards a more efficient use of fuel or environmentally friendly alternatives," Heng said.

Satya Ramamurthy, head of infrastructure, government & healthcare, KPMG Singapore welcomes the changes in the tax and duty regimes which will enable Singaporeans make a decisive switch to EV.

"However, the $30 million support for EV-related initiatives over the next five years needs to be significantly enhanced to enable orderly development of charging infrastructure to meet the ambitious 60,000 target by 2030," he said.

Additionally, Andrey Berdichevskiy, director, Deloitte Future of Mobility Solution Centre said that the initiatives to increase the supply of charging stations and reduce taxes for EVs will help to mitigate current barriers of EV adoption in Singapore. According to Deloitte's Global Automotive Consumer Study 2021, some 34% of Singaporeans are concerned about availability of charging infrastructure and 20% concerned about the EV price premium. 

However, Rohan Solapurkar, tax partner and consumer industry tax co-leader, Deloitte Singapore and Deloitte Southeast Asia believes that the petrol duty rates may not be enough to deter Singaporeans from buying petrol cars.

"It remains to be seen if the increase in petrol duty rates with immediate effect and the various EV related initiatives will encourage Singaporeans to make the switch to EVs as the government push towards a much-needed greener Singapore," he said. 

$60 million to help local farmers better harness innovation

To increase the reliability of food supplies, Heng is also allocating $60 million for a new fund called the Agri-Food Cluster Transformation Fund. This fund will replace the existing Agriculture Productivity Fund. It aims to help farmers better harness technology in local food production and help boost yields.

"We must continue to stay open and adaptive, and carefully balance our development objectives with sustainability considerations,” he said.

SEE: A budget for recovery and beyond

GreenGov.SG initiative for public sector

“Our human activities have accelerated changes in our environment. We must work together to safeguard this fragile ecosystem for our future generations, and take climate change seriously,” said Heng, who emphasised that building a green Singapore will require a whole-of-society effort.

Under this initiative, several government agencies, including the Ministry of National Development, Home Team Academy, and Temasek Polytechnic, will start by switching to low global warming potential refrigerant chillers, ahead of the mandatory adoption at the end of 2022.

"This will reduce 24 kilotonnes of carbon dioxide emissions, equivalent to the annual emissions of about 7,400 cars,” said Heng, who noted that the use of such refrigeration and air-conditioning equipment has contributed to more emissions of hydrofluorocarbons (HFCs).

Support will also be given to businesses in Singapore to help them seize new opportunities in the green economy under the Enterprise Sustainability Programme, which will help enterprises use resources more efficiently and develop new green products and solutions.

Already, companies such as elevator and escalator professionals KONE, have jumped on the sustainability band wagon by pledging to reduce greenhouse gas emissions and have carbon-neutral operations globally by 2030.

The company is trying to increase the efficiency of waste management in our operations and to identify and drive internal and external sustainable efficiencies across its value chain ecosystem, said Axel Berkling, executive vice president at KONE Asia Pacific. 

"We are working together with our partners and suppliers in Singapore and the rest of the world to reduce our carbon footprint across operations and to increase the use of sustainable materials," he added.

Meanwhile, carbon taxes will remain at $5 per tonne of greenhouse gas emissions, but is expected to increase to between $10 to $15 by 2030. The carbon tax will be reviewed again after 2023.

Overall, CBRE is positive on the government's more towards a greener nation. 

"The Budget introduced the Singapore Green Plan 2030 which focuses on developing green financing for public infrastructure projects in Singapore," said Desmond Sim, head of research, Southeast Asia.

"This may provide alternative sources of capital and pave the way to transform Singapore into a green finance hub," he added.