Singapore Prepares to Kick Off Inaugural $25 Billion Green Bond Program
The Government of Singapore announced the publication of its Green Bond Framework, taking a step closer to its inaugural green bond issuance to help fund its green transition plan, and to support the development of the country’s sustainable finance market.
The government is anticipating its initial green bond offering in the coming months, and has announced plans to raise up to S$35 billion (US$25 billion) through green bond issuances through 2030.
Proceeds from Singapore’s green bond issuances will be used to finance expenditures and investments supporting the country’s recently launched sustainable transition strategy, the Singapore Green Plan 2030. Singapore has committed to reaching peak emissions around 2030, and has recently announced an acceleration of its ambition to reach net zero emissions by around mid-century, from its prior commitment of halving emissions by 2050 and achieving net zero “as soon as viable in the second half of the century.”
The framework outlines the eligible categories for investment from green bond proceeds, which include renewable energy, energy efficiency, green building, clean transportation, sustainable water and wastewater management, pollution prevention, control and circular economy, climate change adaptation, and biodiversity conservation and sustainable management of natural resources and land use.
Singapore’s inaugural green bond offering will be issued under the Significant Infrastructure Government Loan Act 2021 (SINGA). In addition to meeting the green category criteria outlined in the green bond framework, projects will also need to be classified as nationally significant infrastructure under SINGA.
Speaking at the Singapore Sustainable Investing and Financing Conference 2022 on Thursday, Indranee Rajah, Second Minister for Finance said that the government is also exploring the use of green bonds to finance climate adaptation-related investments, such as coastal protection infrastructure.
Rajah also outlined the plan to help finance the green transition through raising Singapore’s carbon tax. The tax was initially introduced in 2019, setting a price for emissions above a minimum level at $5 per tonne. Under Singapore’s recently released budget 2022, the country plans to raise the carbon tax significantly to $25 per tonne in 2024, $45 in 2026, and between $50 to $80 per tonne by 2030.
Singapore has emerged as one of the leading areas for sustainable finance in Southeast Asia, accounting for approximately 50% of sustainable debt issuances in the region. According to Rajah, the sovereign green bond program aims to “develop the green finance market and make green finance a catalyst for sustainability.”
These public sector green bond issuances are a key part of Singapore’s overall sustainability agenda and will build on MAS’ efforts to develop the green financing market. Through these high-quality issuances, we hope to deepen market liquidity for green bonds, attract green issuers, capital, and investors, and catalyse sustainable financing in the region.
DBS Bank advised the government on the development of the green bond framework. Clifford Lee, DBS Bank’s Global Head of Fixed Income, said:
“As a leading financial hub with an AAA rating, Singapore is well-placed to lead the development of the Green Bond Framework, which will serve as a good reference point to help further develop, grow and deepen ESG financing in Asia.”