Honourable Dr. Valentine Uwamariya, Minister of Environment of Rwanda,

Our special guest today, Mr Bill Gates,

Distinguished Guests and friends,

Introduction

Good evening. Before I begin, I would like to share how encouraging it is to see all of you here today; representing so many organisations that come both the public and private sectors, as well as philanthropic sectors across various industries.

This diversity is exactly what we need to continue the quest for sustainability and climate action in the world today; and your presence this evening reflects your commitment and dedication.

Sustainability remains necessary

It is clear that climate action and the pursuit of a better, more sustainable world has and will become increasingly challenging.

As leaders, we must do everything we can to ameliorate the worst effects of climate change. The increasing occurrence of extreme weather events, from wildfires in Los Angeles to snow blizzards in Beijing; not to mention the alarming rate of the melting polar caps, demonstrates that, in fact, we are already at a point of crisis. And I think we all know that.

However, we must all recognise that there are various challenges that threaten to slow the pace of change in the immediate term. Recent geopolitical headwinds, including the escalating trade wars, have been one such key challenge. The emergence of generative AI, and the demands of compute power, and data centres, is another.

The need to cater to grid stability, grid capacity, grid matching systems and energy storage presents its own set of challenges, especially in the context of the energy trilemma. We have seen from the power outages in Spain and Portugal just last week, that managing grid intermittency and its support system reliability is an imperative for the energy transition.

The cost curve of carbon mitigation, let alone adaptation, has been more difficult to abate than we, as a global community, have anticipated.

But this must not stop us from advancing pathways. Even as I speak, the environment continues to degrade at alarming rates. This is the very environment that provides us with natural resources and determines our living standards, conditions and quality of life.

The World Bank estimated that by 2050, climate change could cause damage equivalent to 28% of projected global GDP. Now, that is a staggering US$38 trillion dollars.

If nothing is done, many more of our communities and societies will feel its worsening impact, including reduced natural resources such as food and agriculture, severe health conditions, and potentially higher mortality with increased occurrences of devastating natural disasters. And these substantiate a feedback loop, where we could see even more geopolitical tensions because of resource scarcity. Not to mention the risk of forced migration. And therefore, stress on societies.

Asia’s Outsized Role

Closer to home, Asia today accounts for the world’s biggest populations, and also two out of the three largest carbon emitters in the world. Yet, Asia is also one of the regions most impacted by weather and climate. And Asia continues its pathways to increased industrialisation and higher usage of energy.

To make things worse, there continues to be an investment gap of around US$1.5 trillion in Southeast Asia alone. And that needs to be bridged from now till 2030, a rather tall order, and substantially more until 2050 to meet its net zero targets.

Clearly, much more needs to be done, and at speed. Simply put, the global battle for net zero will either be lost or won in Asia.

Journey to Net Zero

So, what does it take to accelerate Asia’s decarbonisation then?

I believe it is crucial to focus on three areas. First, ensuring the mainstreaming of climate tech; second, identifying viable pathways for transition; and third, channeling appropriate amounts for climate financing.

Mainstreaming climate technology

First, on climate tech. Temasek does invest in climate tech, especially in the areas of food, water, waste, energy, materials, transportation, and built environment. Because they reflect solutions for our portfolio especially for the long term. There are many solutions currently available, and we continue to see new ones being developed. But the cost curves are not coming down fast enough for them to be commercialised at competitive costs, and hence mainstreamed.

We must therefore approach these solutions from a value chain perspective. Whether it means financing the solution upstream at a technology level, using venture capital, growth equity and expansion capital; or further down the spectrum where we address infrastructure gaps. These require different pools of capital from different types of capital providers.  

I give you a few examples of what we have been trying to do at Temasek. We have invested in Breakthrough Energy Ventures founded by Bill Gates, especially in the growth equity fund; and we partnered with them and Entreprise Singapore to establish Breakthrough Energy Fellows – Southeast Asia to support climate tech innovators to develop, commercialise, and scale promising climate solutions. Temasek also invests in companies, as I mentioned, in climate tech. For example, Fortera, a company which produces low-carbon cement, and Stegra, a green steel manufacturer. They provide solutions that target embodied carbon in construction. Given the fact that about 11% of our portfolio is in real estate, it is important for us to invest in solutions for embodied carbon. At the same time, we also invest in the Brookfield Global Transition Fund, which channels capital into large-scale industrial decarbonisation at an infrastructure as well as at enterprise level.

These are just some of the ways that we at Temasek can address the transition through a systems-level approach.

Pathways for transition

Next, let’s talk about pathways for transition. Obviously, an immediate shift from brown to green is almost impossible in today’s context.

Shutting down coal-fired power plants overnight would have implications on jobs, livelihoods, and even stable power supply for communities. Meanwhile, new clean technologies tend to require significant capital, and some have higher cost curves. This makes it hard to adopt and scale instantly. We need to break the transition down to pragmatic and viable steps that would balance the needs of the country while allowing us to pursue a more sustainable future. The focus is on a just transition.

For instance:

• We could look at transitioning coal plants by reducing emissions with the introduction of carbon capture and storage facilities, and over time, perhaps blending with green ammonia, with a goal of phasing the plants out as clean energy scales;
• In addition to new renewable energy capacity, we could also tap on transition fuels such as natural gas, with a focus on addressing methane abatement, and overtime blending them with cleaner alternatives especially green hydrogen, as we move towards low-carbon energy sources. Natural gas actually retains a relevance for baseload, but over time transition into backup output, as we move more towards green energy;
• We could also look at nuclear fission as a clean fuel, especially in Gen IV reactors as we continue developing technologies for the future of nuclear fusion.

All these while accelerating investments into clean energy solutions and building up green grid infrastructure.

Financing the transition

Third, the relevance of climate finance, which is a crucial and  key enabler.

What continues to be the goal is climate finance on a large scale. How do we address and right-size risk-reward appetites across the capital stack? How do we unlock financing across different parts of the energy transition value chain?

It is about practicality, but also innovation and partnerships. We need to be clear-eyed about the challenges different capital providers face in closing this financing gap, and recognising that different players – whether concessional, philanthropic, or commercial capital providers, or whether governments, DFIs, or MDBs, can contribute in a sustainable and meaningful way.

On a more optimistic note, we have been seeing an increasing number of climate financing initiatives in recent years. Let me list a few that we have been involved in:

• The first is a joint venture called Decarbonization Partners which we set up with BlackRock in 2021; which invests in late-stage venture capital and early-stage growth equity companies targeting the scale-up of decarbonisation technologies. In just a span of 3 years, we have 11 companies since our establishment in 2022. The majority of them are based in the US, but we are seeing an increasing pipeline of opportunities in Asia;
• The second is Pentagreen, a joint venture we set up with HSBC, which has structured several innovative deals to catalyse green projects in Southeast Asia, converting marginally bankable projects into bankable opportunities;
• We also work with MDBs, especially the World Bank. Through its Private Sector Investment Lab, it is developing and extending financial solutions and instruments for projects which will allow investors to have the right risk-adjusted returns.  

Beyond just the direct financing of projects, voluntary carbon markets are a crucial financing lever that could unlock more capital flows for climate action. They are necessary for nature-based solutions, and the phasing out of coal-fired power plants. Initiatives such as the Monetary Authority of Singapore’s TRACTION, which relates to transition credits to bridge the gap between phasing out and bringing on new capacity, as well as our subsidiary GenZero’s contributions through their investments, collaborations, and bringing thought leadership, for carbon credits to become more efficient and scalable especially in Asia.

Ultimately, we need realistic but also creative approaches, coupled with viable solutions that we can deploy feasibly.

We talk a lot about blended finance as being a watch phrase or watch word for many of us for the last 7 to 8 years, but it's been difficult to see blended finance being scaled up across the world.

And I wonder sometimes whether the word’s blended finance has been stressed so much that it encompasses many different things. What is actually needed more so, especially in our part of the world in Southeast Asia, is to convert the marginally bankable projects to bankable projects. I think that should be the focus.

Whether that involves concessionary capital or whether it involves corporate finance solutions, we need to bring the best of what we can offer together, so that the reality of transition towards a bigger future can be achieved.

Climate tech is the second thing where we have to think about where we can be more innovative. To scale, we will need new categories of financing for climate tech. You know, venture and growth capital can only take us so far. Because many times the real opportunity for climate tech to be mainstreamed is dependent on the financing of infrastructure. And therefore between the time that we put equity capital, whether it is growth equity capital or expansion capital, and the time that we access project financing from banking sources – we need to plug that gap. And the gap may have to be the form of development financing. Development financing that comes from private debt solutions, which has a cost of capital that can be remunerated perhaps by concessional capital. Without that, we won't be able to mainstream many of these solutions that we would be able to identify, which then puts the stress on the idea of bringing green solutions to what is already grey.

Managed phase out of coal-fired power plants is something that we focus on. Much of Southeast Asia, it has been talked about. But the reality is that coal-fired power plants have an average age of 15 years and less in the region. To phase them out is just very, very costly. We may actually have to use a different term, which is really phase down rather than phase out. But we need to come up with innovative solutions where the phase down of coal-fired power plants is linked to new generation capacity which is green. But we also have to bridge the gap between the cost of phasing down and the returns we get from the green energy solutions that we are transitioning towards. And that is why things like the voluntary carbon credit market will become more relevant as we try to achieve these opportunities that we can see are rising.

Global Collaboration

But the most important thing that is out there is that we need the two superpowers of the world to collaborate this area, the United States and China. This is an area where they have things to bring to bare that is useful to the whole world. And while they may compete in other areas, surely the journey towards a greener world should require them to look at finding solutions that all of us can benefit from.

Conclusion

As I bring this to a close, we need to remember that climate change is agnostic of geographical or geopolitical boundaries; neither is it of industry or sector.

In a world where protectionism rather than interdependency seems to take precedence, we have to be beacons of light to fight for a future that safeguards the generations ahead of us. We need a collective leadership that continues to bring the best out of each of us, and no one can do this alone. We, collectively, can find the solutions that we need. When we come together, the impact we bring isn’t just additive. It is compounding.

As much as been said about the walk back of financial institutions on climate financing, I recently had the opportunity of attending a CEO roundtable in New York in March; and a gathering of CEOs, entrepreneurs, and financiers in Scottsdale Arizona where Bill actually had a fireside chat. I was very encouraged to hear that they were not walking back on their plans to continue to finance the transition. Even the CEOs were very committed to the urgency of climate action, the importance of long-termism, and what it means to have sustainable businesses.

Similarly, at Temasek, sustainability remains important for us to do well, do right, and do good. Succeeding as an investor is not an end in and of itself. It has to be translated into the empowerment of the well-being of our people, portfolio companies, partners – and to the broader community and planet we share as a common home.

This is why Ecosperity will continue to exist, to convene, and mobilise collective action for system-wide momentum and progress. It is our responsibility to do things today with tomorrow clearly in our minds, so that every generation prospers.

So Temasek remains committed to our climate goals. We still have a goal to ensure that by 2030, or to strive by 2030, that our emissions are half of that of 2010. It is not easy because we actually own an airline, and until some of you can come up with a solution where sustainable aviation can be scaled at reasonable costs, it won’t be so easy for us to meet those targets. But we are very, very committed to the targets.

That is why we have an internal carbon pricing of US$65 per tonne of CO₂ equivalent on all our investments that we make. And we are committed to increasing this to $100 by 2030. This requires us therefore to invest in a low carbon future, and to make sure we invest in the solutions that can be commercialised and mainstreamed in the decades ahead.

So I would like to thank all of you for coming here today and also for joining the Ecosperity Week that we have ahead. I wish you all fruitful discussions. And I'd like to say one thing. In this very, very difficult geopolitical world, I believe that there is a need for us to continue to have optimism. Because it is only with optimism that we can bring about the solutions that we need for a better world for future generations that rely on us to do the right things for them.

Thank you very much.