Reply to Parliamentary Question on the financing of coal power projects
QUESTION NO 1811
NOTICE PAPER 1044 OF 2018
FOR ORAL ANSWER
Date: For Parliament Sitting on 19 February 2018
Name and Constituency of Member of Parliament
Asst Prof Mahdev Mohan, NMP
To ask the Prime Minister in light of reports that Singapore banks have provided loans to multiple coal power projects totalling more than US$2 billion over the last five years (a) whether these investments have any impact on the Government's proposed measures to reduce carbon emissions including that of a carbon tax; and (b) whether the banks will be required or encouraged to make public pledges to restrict lending to such projects.
Answer by Mr Ong Ye Kung, Minister for Education (Higher Education & Skills) and Second Minister for Defence, on behalf of Mr Tharman Shanmugaratnam, Deputy Prime Minister and Minister in charge of MAS:
1. Recent media reports have noted local banks’ financing of coal power projects in the region, and asked if this is at odds with the global push to shift to cleaner sources of energy.
2. The local banks’ financing of coal power projects have to be understood, firstly, in the context of rapidly growing energy needs in the region. These increased needs are driven by growing populations, progress in widening people’s access to electricity, and economic growth.
3. What this means is that even with countries making full efforts to meet their commitments under the Paris accord, the region’s consumption of all fuels will grow. The International Energy Agency hence projects a significant increase in consumption of coal, even as the region increases its use of renewables and lower-carbon energies. It also projects that future coal production would be based on newer technologies that reduce coal’s carbon emissions.
4. Secondly, the local banks have been taking steps to make financing practices more environmentally responsible. They have implemented the guidelines on responsible financing issued in 2015 by The Association of Banks in Singapore (ABS). They have also identified activities that pose higher risk to the environment , including coal-powered plants that emit higher carbon emissions, and are taking measures to address the sustainability risks specific to these activities. This includes reviewing their clients’ sustainability profiles and working with them to improve their sustainability practices. The local banks are expected to complete the review of their entire customer portfolios by the end of this year.
5. Further, since 2016, the banks have been disclosing their policies and approaches toward responsible financing in their annual reports and websites. They are on track to fully implement the SGX sustainability reporting requirements this year.
6. For example, DBS Bank has recently pledged that it will stop financing new greenfield coal-fired power generation projects in OECD/developed markets. The bank will also cease all project financing of greenfield thermal coal mines.
7. MAS has also included banks’ sustainability practices in its supervisory assessments of banks. This will strengthen our banks’ efforts to integrate sustainability considerations into their core business and risk management processes.
8. Overall, the measures which local banks are putting in place should contribute to sustainable practices among their clients, supporting our efforts in Singapore as well as amongst our neighbours to meet our targets under the Paris Agreement.