S'pore draws global green investors

S'pore draws global green investors

Accession to Kyoto Protocol and country's financial standing proving to be plus factors

(SINGAPORE) International companies looking to fund projects to cut greenhouse gas emissions are coming to Singapore to take advantage of the country's accession to the Kyoto Protocol and its prominence as a financial centre.

"We see substantial potential for the South-east Asia carbon market. It has the largest growth potential after China and is on par with India.'
- EcoSecurities' Agus Sari

Among them are New York-listed energy firm AES Corp and London-listed EcoSecurities, which specialises in sourcing and trading carbon credits.

AES will spend US$10 billion worldwide over the next five to 10 years on projects to harness alternative energy and reduce greenhouse gases. Industry sources say that about US$100 million of this could flow into Singapore.

EcoSecurities, with a global fund of 50 million euros (S$101.2 million), will set up a Singapore office within the next few months, says its South-east Asia regional director Agus Sari.

Singapore's accession to the Kyoto Protocol in March last year means that qualifying projects that cut greenhouse gases like carbon dioxide - by improving energy efficiency or switching to 'clean' alternatives such as solar power - can earn 'carbon credits'.

These credits or Certified Emission Reductions (CERs) can be sold in the international market. CERs from developing countries were worth US$2.4 billion in the first three quarters of 2006, according to the World Bank's State of the Carbon Market report. Asia excluding China and India accounted for 9 per cent of this.



'We see substantial potential for the South-east Asia carbon market. It has the largest growth potential after China and is on par with India,' said Mr Sari, who believes Singapore can be the region's carbon financial centre.

Still, AES and EcoSecurities may be a minority.

Econergy, another London-listed energy firm, says its carbon funds are focused on Latin America. Likewise, GE Energy Financial Services, which in January announced a global partnership with AES to develop carbon-reducing projects, told BT: 'It's too early to say whether we will expand there (in Asia)'.

Some say Singapore's emphasis on being up-to-date with technology means 'easy' projects - those with low costs and high returns in terms of reducing energy use - are already done.

For example, AES's Asia and Middle East regional director Felix Chan says most of the island's power plants already use natural gas, which is less polluting and more efficient than coal or fuel oil. Also, they already run on combined cycle equipment that recovers waste heat.

According to Mr Sari: 'Indonesia, Malaysia, the Philippines and Vietnam have numerous industries that can achieve carbon finance - agriculture, oil & gas, cement manufacturing, and others. Singapore will not have the same size, scale or quantity of projects, because there are fewer conventional sectors to tap.'

Project opportunities for Singapore will be in fuel switching, energy efficiency and, potentially, the electronics sector, he says.

Local consultants reckon more can be done in the areas of power generation and buildings. According to the National Environmental Agency, natural gas accounted for 78 per cent of electricity produced in 2006. But in areas that are 'not so obvious', Singapore 'can and should exploit innovative systems such as tri-generation', it says.

Also known as 'distributed generation', this refers to using local power plants rather than buying power off the electricity grid, says Professor Lee Siew Eang of the Centre for Total Building Performance at the National University of Singapore.

When power generation is localised, excess heat can be used in other ways, such as to warm water, leading to up to 80 per cent energy efficiency, compared with 42 per cent efficiency at Singapore's power plants, he says.

As for buildings, most local structures, especially older ones, have air-conditioning systems that are 'notoriously inefficient when it comes to control', says the Regional Institute for Environmental Technology (RIET). This is because electricity costs are 'still within comfortable limits'.

Still, developers like City Developments and CapitaLand have been proactive in recent years, says Prof Lee.

CapitaLand told BT its studies show newly-built green buildings, compared with conventional ones of the same class, can save at least 10 per cent on energy and water use. All new buildings are designed to minimise heat gain and allow for natural lighting, it said.

Singapore is also 'in an interesting position to become more creative with emission reduction technologies in project sectors that have yet to be fully explored', according to Mr Sari.

The Sustainable Energy Association of Singapore says this could include work by member firm IUT Global, which turns food waste into fertiliser, and by SGX-listed Advanced Holdings, which wants to use algae to photosynthesise waste gas into biofuel.