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Focus areas include traceability, supply chain decarbonisation, circular business models & tax incentives
The EY organisation recently launched the EY Center for Sustainable Supply Chains. Based in Singapore, the Center provides tailored service offerings that help organizations at every stage of their supply chain…Continue Reading
PT Sarana Multi Infrastruktur (PT SMI), a dedicated infrastructure entity under the jurisdiction of Indonesia’s Ministry of Finance, announced recent success in obtaining a $700 million sustainability-linked syndicated term loan facility. The firm serves as a financing vehicle for the development of nationally significant infrastructure projects, through public-private partnerships (PPPs).
“This syndicated loan is intended to refinance existing projects as well as to fulfil new financing needs primarily for sustainable infrastructure projects in Indonesia,” the press release noted.
The new funds will be used to refinance a maturing $700 million offshore syndicated term loan that was first arranged in 2020. The sustainability-linked offering closed on September 13 with aggregate commitments of $1.8 billion and was 2.6 times oversubscribed.
Key performance indicators (KPIs) linked to the facility include growing the company’s sustainability financing portfolio, and increasing the number of employees undertaking environment, social, and governance (ESG) training.
Green opportunity
Speaking to FinanceAsia about the transaction, Colin Chen, head of ESG finance for Asia Pacific at MUFG Bank, which served as one of the transaction’s mandated lead arrangers and bookrunners (MLABs), highlighted the opportunities brought by sustainability-linked financing for companies active in “hard-to-abate sectors,” given no requirements around the use of proceeds.
Kunardy Lie, director of institutional banking at DBS Indonesia – also a MLAB – said his team sees “abundant opportunities” to push the sustainability agenda through green and transition financing solutions in the local market.
Although emerging economies like Indonesia are tasked with driving economic growth alongside a low carbon budget, environmental and socially-conscious funding initiatives can help advance sustainability agendas, Lie noted. He cited the market’s PPP scheme as a policy catalyst which convenes industry players, financial institutions and regulators to establish common practices to approach ESG issues.
First introduced in 2005, the state-backed PPP Project Book lists out a range of infrastructure projects that are open to private sector participation, with a view to bridging the existing infrastructure funding gap and driving Indonesia’s national economy. PT SMI is actively involved in the scheme and acts as a crucial financier in some of the key national infrastructure projects.
“We are excited to support PT SMI in their venture to finance ongoing projects including sustainable infrastructure projects,” Lie said, noting that DBS’s relationship with PT SMI started in February 2020 around the arrangement of the original working capital facility.
Renewables projects, as well as other forms of energy transition segments constitute growing sub-sectors within the domestic infrastructure market, Chen added.
He cited supportive policy initiatives, including the Just Energy Transition Partnership (JETP) which was signed off during last November’s G20 summit, and the country’s rich solar and wind resources as helping to drive Indonesia’s developing green economy.
“We will want work closely with policymakers and the private sector to leverage this important initiative in support of Indonesia’s net zero transition,” Chen said.
“This sustainability-linked syndicated term loan facility is a real example of innovative fundraising, by also implementing our commitment towards sustainability target,” Edwin Syahruzad, president director of PT SMI, commented in the press release.
In addition to DBS and MUFG, the MLABs for the transaction included Bank of China (Hong Kong), CTBC Bank Co., Ltd., Mizuho Bank, and United Overseas Bank (UOB). UOB also acted as the MLABs’ transaction and overall sustainability coordinator for the transaction.
PT SMI and the remaining MLABs did not respond to FA’s requests for comment.
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In the report, MOF stated that the expansion of public transportation system and an electric rail system is essential to reducing the carbon footprint in this business, with the property transfer sector currently accounting for about 15 % of carbon emissions in Singapore.
The Monetary Authority of Singapore( MAS ) added in a separate press release in August 2022 that the expansion of the country’s electric rail network would improve connectivity and encourage more commuters to use mass public transportation.
The Singapore Green Plan 2030’s” Sustainable Living” pillar, which aims to achieve a 75 % mass public transportation modal share, is supported by the development of the JRL and CRL & nbsp. & nbsp,
According to Ms. Rajah,” the expansion of our energy road network is a key enabler to reach our ambitious target of substantially reducing land transportation emissions in absolute terms, in line with Singapore’s target of achieving net zero by 2050.”
According to MOF, when both lines are fully operational, a complete annual carbon monoxide equivalent of between 100,000 and 120 000 kilograms will be saved.
” This is comparable to removing 22, 000 vehicles from Singapore’s roads ,” nbsp
According to MOF’s report, it & nbsp hired Morningstar Sustainalytics, an independent consultant, to create a methodology to calculate the avoided greenhouse gas emissions and air pollutants due to investments in the electric rail projects. & nbsp,
It was also stated that the amount of greenhouse gas( GHG ) emissions avoided by the project ranged from & nbsp, 100,000 to 120, 000 tCO2e per year, and the quantity of emissions financed, 1, 200, to 1, 800, respectively. Both figures had two major figures rounded out of them.
Coming natural bond reports will include yearly updates on the estimated effect.
20 September 2023 at 4:27 p.m.
At the end of this month, the Sustainability Expo 2023 ( SX2023) will be held with the theme” Good Balance, Better World.”
The annual exhibition, which is regarded as the biggest conservation event in the Asean area, will be held for the fourth season with a focus on” Sufficiency for Sustainability” to encourage customers to take part in and work on sustainable techniques and information, along with several engrossing workshops.
Leading local and international businesses may present conservation developments and innovations at the event. Eight significant districts may be present in SX 2023.
Visitors will embark on a journey through the” SEP Inspiration Zone” where they will gain knowledge from trailblazers and experts in sustainable development.
SEP is an acronym for the validity economy theory developed by His Majesty King Bhumibol Adulyadej The Excellent.
Guests can learn more about food technology, healthcare, and longevity in the next zone,” Better Me.” Leading initiatives related to a circular economy leading to net zero emissions are highlighted in the” Better Living” area.
At the Sustainability Expo 2022, kids will learn how to separate recovered spend by placing plastic bottles in a recycling package.
With more cosmopolitan green spaces, cover for the underprivileged, and a concept of sustainable community development, the” Better Community” zone demonstrates how everyone is united to support one another and promote equality.
An SX location and art museum highlighting conservation viewpoints from local and international musicians can be found in the” Better World” area.
The” SX Food Festival” serves food with the theme” Thai Street Food Museum ,” where visitors can see landmarks from Bangkok, Phuket Old Town, and other major cities while tasting food prepared by famous chefs who use the zero-waste cooking method.
The final two zones are” SX Marketplace ,” which has 200 stores selling environmentally friendly goods and community goods, and” X Kids ,” where kids can take advantage of a creative learning environment for sustainable development.
The Queen Sirikit National Convention Center will host the SX 2023 from September 29 to October 8. Explore its site at or Facebook account at website for more details. Alternatively, visit sustainabilityexpo.com / sx / or Facebook account at www. facebook.com / SX. Sustainability Expo
EPASergei Lavrov, the foreign secretary of Russia, has praised a joint statement made in Delhi by the G20 leaders that refrains from denouncing Moscow for its war against Ukraine.
According to Mr. Lavrov, Russia had not anticipated a compromise and that deal on the language was” a step in the right direction.”
The African Union was even admitted as a permanent part during the two-day height.
The 55-member union joins at the offer of hosts India, whose president has made it a priority to increase the inclusion of so-called Global South nations in the G20.
Although there was censure of the tournament’s failure to send to phase-outing fossil fuels, the largest economies in the world reached another significant agreements in Delhi, including one on weather and biofuels.
There was no established G20″ family picture” for the second time in a column. There was no explanation given, but according to reports, many officials declined to be photographed, indicating that Russia was present at the conference.
Some people, not least on the summit’s opening moment, had anticipated a joint announcement at the G20 this year. Regarding Russia’s invasion of Ukraine last year, the group is bitterly fragmented. Neither Xi Jinping of China nor Vladimir Putin of Russia showed up in Delhi, sending lower-level ambassadors in their place.
Therefore, it came as a shock when Indian Prime Minister Mr. Narendra Modi announced that the Ukraine part of the statement, which had last month’s direct criticism of Russia watered down, had reached consensus just hours after the summit began.
On Sunday, Mr. Lavrov declared that a” step” had been accomplished.
Sincerely, we didn’t anticipate that. We were prepared to defend the text’s language. In response to a query from the BBC’s Yogita Limaye, he stated that” the Global South is no longer willing to be lectured.”
The joint statement was promoted by the UK and the US as well, but Ukraine, which attended the Bali summit last year but was not invited this year, claimed it was” nothing to be happy of.”
The majority of users expressed” in the strongest terms” their regret for the Russian Federation’s aggression against Ukraine in Bali next year. The Delhi announcement, in contrast, discusses” the people suffering and additional negative effects of the war in Ukraine with regard to international food and energy security.”
In addition to urging state to” abstain from the threat or use of force to get regional skill ,” which could be interpreted as being directed at Russia, it also mentions” different views and analyses of the condition.”
According to analysts, the G20’s financial balance and power dynamics are shifting apart from Western developed market economies and toward emerging giants, especially in Asia.
There were other significant events at the tip as well, such as significant agreements aimed at combating climate change.
A complete agreement has been reached among the G20 members to” do and stimulate efforts to triple global renewable energy capacity through existing targets and policies.” More than 75 % of the nation’s greenhouse gas emissions come from the union.
In order to encourage the use of cleaner fuels, India also established a global biodiesel alliance with the US and Brazil. By facilitating industry in renewables made from plant and animal waste, the clustering aims to hasten international efforts to achieve net zero emissions targets.
On the outside of the conference, there was also a global road and port agreement connecting the Middle East and South Asia. The agreement is seen as a response to China’s Belt and Road initiative to improve world equipment.
Mr. Modi concluded months of hype and excitement by closing the summit early on Sunday evening. President Luiz Inacio Lula da Silva of Brazil, who is assuming the presidency, received a royal hand from him.
President Lula’s talk was largely focused on issues facing developing nations.
He claimed that” we are living in a world where money is more concentrated, where millions of people continue to go hungry, in which sustainable development is perpetually threatened, and where global government institutions still reflect the reality of the 20th century.”
Leaders walked in the rain to honor Mahatma Gandhi, India’s independence warrior, at the location of his death because the rain downpours had derailed some earlier-in-the-day plans. A meeting to plant trees was downgraded to a symbolical swap of trees between G20 presidents in the past, present, and potential.
Delegates were treated to social shows, a gala dinner party, and the best of American hospitality as part of Mr. Modi’s luxurious show, which was put on from beginning to end.
However, it also sparked some debates, particularly after Mr. Modi’s sign, which introduced India as” Bharat”( which means India in Hindi ) as he opened the summit, suggested that the nation might change its name.
But, Mr. Modi and his officials hailed the occasion as a huge success and claimed that India’s G20 administration had demonstrated its leadership skills on the international stage.
Foreign Minister S Jaishankar stated,” We have sought to make this G20 as inclusive as possible.”
According to Nirmala Sitharaman, the finance minister, India has succeeded in preventing issues from obscuring the fundamental development issues facing the world.
She stated that” India’s G20 Presidency has walked the discuss safely.”
Mr. Lee also discussed how new markets and technologies provide” trust” for nations like Singapore that are dealing with inherent difficulties in climate transitions, in addition to fresh borrowing models.
For instance, Singapore has created a national plan to use gas, one of the burgeoning technologies that can aid in the country’s shift away from carbon emissions and toward green energy. & nbsp, It was revealed in October of last year that by 2050, low-carbon hydrogen could meet up to half of Singapore’s power needs.
Establishing dependable and adaptable global supply chains with global partners may be necessary for the validity of scaling up gas deployment. No nation can accomplish this on its own, Mr. Lee continued, adding that Singapore is eager to collaborate with” like-minded partners” to broaden its power base.
Regarding new areas, Mr. Lee remarked that institutions will need to cooperate in order to foster investments in decarbonization, such as by defining what natural and change activities are.
The first step in determining effective strategies to combat climate change, create new markets, and immediate funding to where it is most needed, according to The & nbsp, is the development of various prevention policies.
Singapore supports multilateral strategies for achieving mitigation objectives for this reason, such as the inclusive forum on carbon mitigation strategies hosted by the Organization for Economic Co-operation and Development ( OECD ).
New markets, new funding models, and new technologies will both necessitate international cooperation, which the G20″ can and should offer” leadership for, he continued.
Singapore is a small, resource-constrained nation with few possibilities for solar power and imports almost all of its energy requirements.
In order to help Singapore’s global climate commitment to achieve net zero emissions by 2050 while also enhancing the nations energy endurance, EMA is investigating indigenous energy choices other than renewable.
In order to achieve net zero emissions as soon as possible in the second half of the century, Singapore has committed to halving its 2030 top greenhouse gas emissions by 2050.
Singapore would be one of the first nations to install next-generation thermal systems in a densely populated city, according to EMA, if it adopted the practice in the future.
In 1938, 18-year-old Eric Newby, later a famous travel writer, left home and sailed on the last voyage of the four-masted barque Moshulu, hauling grain from Australia to Britain. It was to be the final year that sailing ships seriously played a part in world cargo transport. Until now, perhaps.
The agricultural trade giant Cargill has just finished retrofitting a dry bulk carrier, the TR Lady, with rotor sails. The same company has also deployed wing sails on another ship, the Pyxis Ocean, which recently set sail from China for Brazil. The wind could now blow modern maritime trade into a lower-carbon future.
International marine traffic accounts for nearly 3% of global greenhouse gas emissions, more than direct emission from much-criticized aviation. Air travel is sometimes, wrongly, regarded as a luxury, but ships carry 90% of world goods and commodities and have no viable alternatives on most routes. Without action, the expansion of world trade means shipping emissions could roughly double by 2050.
The International Maritime Organization decided in July that international shipping should reduce its carbon-dioxide emissions intensity (that is, per metric ton of cargo carried per nautical mile) at least 40% by 2030, and reach net-zero emissions around 2050. Large ships have a lifetime of 20 to 30 years, so vessels constructed over the next few years will still be plying the seas by the net-zero date.
There are various ways to improve performance: in the short term, boosting efficiency by better ship design and engines, drag-reducing agents, and slower steaming, which reduces fuel consumption.
The main long-term decarbonization concept is to replace today’s predominant heavy fuel oil and marine diesel with low-carbon fuels: batteries over short distances, biofuels, ammonia, “green” methanol or others for longer voyages.
But these are expensive and not readily available at all ports, and shipping will compete for a likely limited pool of fuels with aviation. On-board carbon capture and storage is feasible but would raise costs and take up cargo space. Marine haulage is a highly competitive industry, and fuel represents 50-60% of total operating costs.
This does not resemble the elegant but complex, labor-intensive array of mainsail, topsail, sheets, jib and skysail that adorn classic ships such as the Cutty Sark or HMS Surprise or the lateen sails of Oman’s historic Fateh Al-Khayr dhow. Modern wind assistance has various forms.
The TR Lady has three rotor sails, which look like large chimneys, built by Anemoi Marine Technologies, a UK-based company. They spin in the wind, exploiting the Magnus effect, which creates a pressure differential. This helps drive the ship, saving 10% of its fuel consumption. They can fold to pass under bridges or avoid damage in storms, or move from side to side on rails so as not to obstruct unloading.
The Pyxis Ocean has been equipped with large solid wings that could reduce emissions by 30%. Designed by UK-based BAR Technologies, they draw on technology used in America’s Cup racing yachts.
Airseas, founded by former Airbus engineers and based in Nantes, France, has a different system, a large parafoil kite that deploys on cables ahead of the vessel.
Other options include inflatable wing sails, or an automated modern version of traditional sails.
As well as Cargill, shipping giants such as Maersk Tankers and Mitsui O.S.K. Lines are looking seriously at wind assistance. In 2019, they created Njord, a partnership for shipping decarbonization that offers several technologies, including wind power.
Rotors and rigid sails can cost US$1 million to $1.5 million each, and a ship may need three or more. That is a substantial addition to a bulk carrier costing $25 million to $40 million to build, but relatively less for a very large crude carrier valued at $120 million to $130 million. The payout time may be seven to eight years.
But the economics look better using more expensive “green” fuels, or if a maritime carbon price is imposed.
Maersk has proposed a stiff tax of $150 per metric ton of carbon-dioxide emissions, while from 2024, ships will fall under Europe’s emissions trading system, currently around €88 (US$95) per metric ton. This will increase the effective cost of bunker fuel by almost half, cutting the sails’ payback period to about five years.
Maritime is a conservative business, though, and financing innovative vessels is difficult. Only in the past couple of years has the combination of higher bunker-fuel prices and decarbonization pressures imparted momentum to modern sails.
The International Energy Agency’s roadmap for net-zero shipping saw wind assistance contributing about 15% of the required reductions. Today’s satellite-aided weather forecasting would allow ships to adjust routes to take advantage of the winds. They would still run primarily with engines so areas of low wind would not halt them.
The combination of improved and purpose-built sails, route optimization and other efficiency measures delivers bigger combined savings.
As historian Felipe Fernandez-Armesto’s book on exploration Pathfinders explains, places that look easy to reach on a modern chart may not have been in the past age of sail. Winds don’t blow and currents don’t flow conveniently on the shortest route between ports.
A future of hybrid sails and engines wouldn’t quite have that problem, but still, ships’ courses may be longer and more circuitous to take advantage of strong winds.
Harbors that were hitherto backwaters might find themselves literally on the map. And a new twist on an ancient technology could help clean up one of the toughest polluting sectors.
This article was provided by Syndication Bureau, which holds copyright.
Developed and developing countries have been escalating the use of industrial policy through subsidies, trade restrictions and other instruments to secure the supply of transition-critical minerals and rare earths essential for developing low-carbon technologies and the move to green energy.
But these policies have created uncertainties and their impact on the green transition needs careful assessment.
Achieving net zero carbon emissions will require an estimated seven-fold increase in demand for transition-critical minerals between 2021 and 2040. Currently, the United States and the European Union import 80% and 98% of their critical mineral needs respectively, while Japan imports 90%.
Given these dependencies, there are heightened concerns around access to the supply of transition-critical minerals, especially given the concentration of supplies in China.
While the extraction of critical minerals is dominated by Chile and Peru for copper, Indonesia, the Philippines and Australia for nickel, the Democratic Republic of the Congo for cobalt and Australia for lithium, China is the leading processor.
To reduce dependency on these concentrated supplies of transition-critical minerals, developed countries have introduced industrial policies such as reshoring the sourcing of transition-critical minerals and the production of low-carbon technologies.
In the United States, the Inflation Reduction Act provides subsidies of US$7,500 for electric vehicle (EV) purchases as long as the components, such as batteries, are produced in the United States or in allied countries that have a free trade agreement (FTA) with the United States.
This has led to Japan signing a limited FTA with the United States on minerals so it can provide components that qualify for the subsidy. The European Union, Indonesia and the Philippines have also approached the United States for similar limited trade agreements.
The European Union has proposed legislation – the Critical Raw Materials Act – which requires members to reduce their dependence on China for critical minerals from 80% to 65%, with a target to increase supply from within the European Union to 10%.
Since 2020, Japan has also introduced a range of industrial policies to incentivize the relocation of Japanese-owned facilities from China to ASEAN and other countries.
In May 2022, Japan introduced the Economic Security Promotion Act, which aims to secure supply chains for critical minerals and support the development of critical and emerging technologies.
Industrial policy targeted at onshoring or building supply chains with allies is unlikely to reshape the industrial geography of critical minerals any time soon.
The investments required to uproot supply chains face uncertainty from increased demand, shifting industrial policy and geopolitics, and long lead times, as well as limits from relying only on supply from “allies.”
Even if onshore extraction could be increased in developed countries, pushback on environmental concerns is likely to hamper progress. Meanwhile, industrial policy has the potential to disrupt or raise the cost of access to critical minerals and transition technologies, especially for developing countries.
The better policy response is not onshoring or creating strategic alliances. Expanding and diversifying investment in resource-rich developing countries would increase and diversify supply, reducing reliance on a few countries and firms. China must be accommodated in the interim given its significant role in reducing the cost of decarbonization in other countries.
Diversifying investments to resource-rich developing countries also has its challenges, as industrial policy intended to increase the value-add of mineral resources can distort investment decisions.
Fiscal constraints mean that subsidies are not an option, so policies have come in the form of restricting raw materials exports, linking mining concessions with phased-in downstreaming and local content requirements.
Indonesia, for instance, passed a law in 2009 restricting exports of unprocessed minerals and requiring mining concessions to build smelters by a given deadline.
In the case of nickel, Indonesia has the largest reserves in the world and accounts for 22% of exports. In 2014 Indonesia banned the export of nickel ore. The policy has been deemed a success, with exports of ferronickel and stainless steel increasing from $2.2 billion in 2014 to $29 billion in 2022.
This led to increased investment from China and nickel mining companies such as Vale, spurring economic growth in east Indonesia. With ample supplies of nickel, copper and graphite, Indonesia has ambitions to become a supply hub for EVs and batteries.
The costs and benefits of export restrictions as a means of increasing value-add are, however, problematic.
Value-add is not just the increase in exports of the final product, or even jobs growth – which is low given the capital-intensive nature of the industry – but the difference between the cost of production and cost of materials, including the cost of building infrastructure and meeting energy needs and revenues forgone as other suppliers expand market share for unprocessed ore.
Success in expanding nickel production might not be repeated with other commodities where Indonesia is not a major producer or where substitutes are readily available. And other minerals may not attract investments in the way that nickel did.
To ensure that further downstreaming leads to value-added industrial development, complementary policies such as building infrastructure, access to clean energy and human capital development will be necessary.
As the search for lithium to make EV batteries shows, it is not enough to be rich in one resource. Keeping trade open and predictable is as vital to resource-rich countries as it is to resource-poor economies. It is also essential for the diversification of refining and processing capacity to reduce dependence on single suppliers.
Mari Pangestu is Professor of International Economics at the University of Indonesia. She is former World Bank Managing Director of Development Policy and Partnerships.
This article was originally published by East Asia Forum and is republished under a Creative Commons license.
Earlier at the dialogue session, Mr Gan delivered a speech where he touched on the global challenges confronting Singapore.
“We exited the acute phase of the COVID-19 pandemic earlier this year, but we have stepped into a rather unstable and unpredictable environment. New challenges have emerged and in some instances, are intensifying,” he said.
These include slower global growth amid monetary policy tightening worldwide to combat inflation, the multilateral open trading system coming under pressure, the rise of new technology such as generative artificial intelligence (AI) that has disrupted industries and businesses, as well as climate change.
However, these “daunting” challenges can also present opportunities for Singapore, the minister said.
Singapore, for one, can continue to distinguish itself as “a trusted and reliable trading partner”. The emergence of new technologies and the net zero transition also serve up opportunities to grow the country’s digital and green economy, respectively.
Efforts to capitalise on these opportunities are underway, said Mr Gan, pointing to the Singapore Economy 2023 vision announced last year. This vision comprises strategies to achieve long-term growth by expanding trade, growing the manufacturing and services industries, as well as uplifting enterprises and workers.
More can be done and these include having an agile workforce and strengthening Singapore’s economic connectivity to new markets and appeal as a business hub, the minister said.
“Singapore must resist the pressure to turn inward and become more protectionist,” Mr Gan said. “We have always earned our living by remaining open, expanding our economic space, and staying connected to the world.”