Scaling Climate Finance: From Ambition To Execution
Climate finance is entering a more demanding phase. Amidst growing complexity, global volatility, and fiscal constraints, the challenge is to translate ambition pragmatically into scalable execution.
In Asia, which accounts for half of global greenhouse gas emissions — about a third of which comes from coal-fired power plants2 — the climate finance gap is particularly acute, with three critical transitions:
- First, mobilising capital at scale for renewables and battery storage in emerging markets, where investment remains insufficient due to real or perceived risks and fiscal constraints.
- Second, expanding smart grid infrastructure to integrate clean energy sources and optimise system capacity.
- Third, accelerating early retirement of coal, which is challenging in Asia given the region’s relatively young coal fleet.
Blended Finance
Blended finance combines catalytic and commercial capital to improve bankability and mobilise private investment at scale. It is especially important for scaling renewables and battery energy storage in emerging markets, where catalytic capital can address risks and crowd in commercial investors.
- In conjunction with our 50th anniversary, we set aside S$100 million of community gifts as Concessional Capital for Climate Action (CCCA). We support FAST-P, a Singapore blended finance initiative, by deploying CCCA and commercial capital to GIP, and subject to definitive agreements, CCCA to ETAF.
- We also partnered with like-minded investors to support Brookfield’s Catalytic Transition Fund, which blends commercial capital with up to US$1 billion of catalytic capital from ALTÉRRA, deploying into clean energy and transition assets in emerging markets.
Blended finance is also critical for early coal retirement, where conventional financing is constrained by broad “no coal” policies and limited risk appetite. To be economically viable while preserving energy resilience, early coal retirement must be paired with renewable energy and battery storage build-out. This requires a wider set of financiers — both catalytic and commercial — to go where the emissions are, and it should not be seen as financing coal, but financing a transition away from coal.
Carbon Markets
High-integrity carbon markets can complement direct emissions reductions by lowering abatement costs and mobilising more financing to emerging markets and developing economies. Alongside removal credits, high-integrity reduction credits facilitate activities that prevent emissions at source, where prevailing economic conditions and incentives are inadequate.
- High-integrity transition credits can improve the economic viability of early coal retirement. We signed a Statement of Support with MAS’ TRACTION, signalling intent to engage constructively in the potential offtake of transition credits.
- Carbon markets also help address the green premium in hard-to-abate sectors. This includes Sustainable Aviation Fuel certificates (SAFc), which support scaling SAF for aviation decarbonisation. We support this through SAFc purchases, ecosystem building, and piloting a SAF market mechanism with Singapore Sustainable Aviation Fuel Company Ltd.
- High-integrity nature-based solutions support mitigation, adaptation, and resilience, while delivering biodiversity and community co-benefits. These form part of the credits we purchase to compensate for our residual institutional emissions.
Voluntary carbon credits (VCCs) are necessary to catalyse financing. A distinction should be made between removal and reduction/avoidance VCCs, with market mechanisms to determine price differentials and methodologies to account for offsets.
We need innovative financing structures to attract capital providers to fund the capital expenditure required by climate technology solutions such as nuclear fusion.
To scale climate finance, all market participants must work together pragmatically. The urgency of the challenge requires continued innovation and sustained progress. Progress may not always be linear, but delay is far more costly than experimentation.
