Singapore Allocates $1.63 Billion Green Funds to Infrastructure

Singapore’s Ministry of Finance (MoF) on Wednesday said that funds to the tune of $1.63 billion were raised by government-issued “green” bonds and they have been allocated to the Jurong Region Line and Cross Island Line that are now under construction.

The MoF said that both lines support the sustainable living pillar of the Singapore Green Plan 2030 and this pillar aims to have public transport (bus and rail) used by commuters during peak hours from the present 64% to 75%, as opposed to private transport options, by 2030.

This is a key enabler to achieve the ambitious goal of significantly reducing land transport emissions in absolute terms, in alignment with Singapore’s net zero target by 2050, the MoF said.

Indranee Rajah, Minister in the Prime Minister’s Office, Second Minister for Finance and National Development and Chair of the Green Bond Steering Committee said that the Singapore Green Bond Framework remains a key pillar of Singapore’s efforts to channel investments into projects that will advance the city-state’s sustainability efforts and contribute towards its net zero goal.

She added: “Our fight against climate change requires collective effort and urgent action, and critically, we have to marshal the resources for change. Green finance plays a pivotal role in driving the global transition to a low-carbon future.”

The report also said that the land transport sector accounted for about 15% of carbon emissions and one key strategy to reduce carbon footprint in this sector is encouraging greener commutes, among other initiatives such as vehicle electrification and greening infrastructure and operations.

“This second edition of our Singapore Green Bond Report provides an update on the progress made in our national green bond programme, building on the foundation laid in last year’s report,” the Minister added.

It may be recalled that the Singapore Government re-opened the 50-year Green Singapore Government Securities (SGS) (Infrastructure) bond in September 2023, with an issuance size of $2.18 billion. The issuance saw strong market demand, with an overall subscription rate of 1.4 times.

Of this, $1.63 billion have been allocated to finance capital expenditure of the Jurong Region Line (JRL) and Cross Island Line (CRL) in the financial year 2023. This comprised $1.32 billion from the inaugural tranche of bonds issued in August 2022 and $310 million from the re-opened tranche issued in September 2023. The remaining unallocated proceeds of the re-opened tranche are expected to be fully allocated by the end of 2025.

Environmental Impact

The MoF continues to use the methodology developed by Morningstar Sustainalytics to quantify the impact arising from investment of our green bond proceeds. When fully operational, the JRL and CRL projects are estimated to result in total carbon savings of between 100,000 and 120,000 tonnes of CO2-equivalent annually.

This is equivalent to taking at least 22,000 cars off Singapore’s roads, and represents an estimated emissions reduction of 81% compared to the baseline scenario.

The allocated green bond proceeds as at end of FY2023 are expected to have a financed impact of between 4,700 and 7,100 tonnes of CO2-equivalent emissions avoided annually.