Singapore has unveiled its third investment theme focused on decarbonising hard-to-abate sectors and emerging technologies under its blended finance initiative, Financing Asia’s Transition Partnership (FAST-P), on Tuesday at the COP29 climate summit in Baku.
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Known as the “industrial transformation” programme, it will be led by the world’s largest asset manager BlackRock alongside the city-state’s central bank. Other contributing partners include the World Bank’s International Finance Corporation (IFC), Japanese megabank Mitsubishi UFJ Financial Group (MUFG), Japanese government-owned insurance firm Nippon Export and Investment Insurance and Hong Kong-based life insurer AIA Group.
According to a joint press release on the announcement, the programme will explore “mutually beneficial opportunities”, particularly in Southeast Asia, to provide private-sector borrowers with debt financing to decarbonise their businesses, including “technology solutions for the low-carbon transformation”.
While it did not specify what specific technologies the players are looking to support, ex-Monetary Authority of Singapore (MAS) chief Ravi Menon previously shared at an Eco-Business event that the new FAST-P theme would cover nascent low-carbon fuels like hydrogen and ammonia.
Launched at COP28 last year, FAST-P aims to mobilise US$5 billion from public, private and philanthropic sources to accelerate the region’s clean energy transition.
In support of FAST-P, the Singapore government has pledged up to US$500 million of dollar-for-dollar matching in concessional funding from other partners, including governments, multilateral banks and development finance institutions and philanthropies, said the city-state’s minister for sustainability and environment Grace Fu at the COP29 Singapore pavilion on the same day.
Further updates were also given for the two other FAST-P thematic funds, including a green investments partnership with the state investor Temasek, New York-based philanthropic organisation Allied Climate Partners and the IFC, as well as an energy transition-focused fund with the Asian Development Bank and the Global Energy Alliance for People and Planet.
MAS has appointed Pentagreen Capital, a sustainable infrastructure debt financing entity established by Hong Kong-based lender HSBC and Temasek in 2021, as the fund manager for the green investments partnership.
In a press statement, Pentagreen said that it expects to commence capital deployment in 2025 to marginally bankable projects in renewable energy and storage, electric vehicle infrastructure, transport as well as water and waste management sectors. It is seeking to deploy US$1 billion under this programme.
The European Commission and as well as European development finance institutions Dutch Entrepreneurial Development Bank (FMO) and the German Development Finance Institution (DEG) are in discussions to join the partnership, Pentagreen said.
As for the energy transition-focused partnership, MAS is in discussion with Clifford Capital, an infrastructure finance firm funded by a Temasek-led consortium, to manage it. The fund is looking to invest in the early retirement of coal, renewable energy and grid modernisation, said the central bank.
It was not specified how much of the targeted US$5 billion in capital FAST-P has managed to mobilise across the three thematic funds to date.
Asia requires US$88.7 trillion of investments – 20 per cent above what is currently pledged – by 2050 to meet the Paris Agreement goal of limiting global warming to 1.5°C above pre-industrial levels, a report by Temasek-owned investment platform GenZero and research provider BloombergNEF found last month.
Blended finance has often been mooted as a way to use public and philanthropic capital to crowd in more private capital to close the climate financing gap. Climate blended finance deals reached a record high last year, after a significant decline in 2022 and years of muted activity.
