The Role of Renewable Energy Sources in the Financial Industry of Singaporeby Fintech News Singapore February 7, 2024
Singapore is the region’s economic, financial, and fossil fuel hub. However, climate change has been posing a real threat to that as the city-state still sources 95% of its electricity from imported natural gas. And with the whole world driving towards sustainability, the country has been shifting its power goals to renewable energy. The finance industry has been at the forefront of that to help the country’s aim to cut its CO2 emissions to “net zero by 2050” while also creating lots of renewable energy jobs.
So, what role does this push for renewable energy play in the financial industry?
Shift Towards Renewable Energy
Although the financial industry’s big agenda has been the country’s economic and technological focus on renewable energy, the best starting point is always looking at the inside. Lots of companies in the industry have therefore started embracing the idea of sustainability. This has started from the top with a change in how and what decisions are made as the world tries to create a greener planet.
To lead from the front, lots of FinTech and financial institutions are now embracing solar power as a source of energy. This has been done by installing solar panels on the roofs of buildings, and the approach has worked quite well thanks to the country’s abundance of sunshine. Doing so has been serving as an example as financial institutions are key in empowering the change to renewable energy. On top of that, this is also contributing to the decentralization of energy production, which is a key agenda of the government.
Diversifying Portfolios with Renewable Energy
The fact that renewable energy is only gaining momentum means that there are lots of investment opportunities. FinTech and other industries have been keen on this as they try to develop solutions that help achieve sustainability. The big one has been various companies working with the government and real estate investors to develop innovative ways of integrating solar energy systems into the grid. These have gone as far as incorporating technologies such as Artificial Intelligence (AI) and the Internet of Things (IoT) to help optimize available renewable energy.
Besides this, we have also seen innovative solutions such as waste heat recovery, energy-efficient production processes, and even precast concrete with recycled materials to optimize the construction process for the environment.
Increased Investment in Renewable Energy Projects
The financial industry is known for being a key catalyst in growth, and it has taken an important role in helping the country shift towards renewable energy. The industry has collaborated with the government through various grants, tax incentives, and subsidies to develop and finance renewable energy projects. This has then seen financial institutions allocate funds to projects that promise both financial returns and positive environmental impact.
One way has been through green bonds, with the country now ranked as the leader in green bond issuance in ASEAN, thanks to institutions such as DBS, OCBC, and UOB. These play a very important role in raising capital for projects such as renewable energy, clean transportation, and green buildings. We then have the likes of sustainability-linked loans (SLLs) and the Green and Sustainability-Linked Loan Grant Scheme (GSLS), as well as green fintech platforms that connect capital with green projects.
Job Creation and Workforce Development
As the country has continued to embrace renewable energy projects, the impact has extended beyond the environment to job creation. Lots of industries have converged in this push, and this has created a need for skilled professionals such as project managers and engineers. Lots of workforce has also been needed in solar farms, wind turbines, automation, and green finance. This has greatly benefitted the local community and led to economic growth and a general impact that goes beyond the environment.