S$700 million in proceeds from first sovereign green bonds put towards expansion of Singapore's rail network

SINGAPORE: Under the Singapore Green Bond Framework, S$700 million (US$511 million) has been allocated to finance Jurong Region Line (JRL) and the Cross Island Line (CRL) of the country's rail network.  

This represents 30 per cent of the S$2.4 billion Green Singapore Government Securities (Infrastructure) bond proceeds as of Mar 31 this year.

The remaining S$1.7 billion proceeds are expected to be fully allocated to the JRL and CRL by the end of FY2024, said the Ministry of Finance (MOF) in the inaugural edition of the Singapore Green Bond Report, which was published on Thursday (Sep 21). 

The 50-year sovereign green bonds, issued in August 2022, mark Singapore’s first issuance of sustainable debt. The second tranche of Green SGS (Infra) bonds was issued on Sep 4, 2023, and its allocation and impact details will be included in next year’s report.

These bonds are part of the pipeline of up to S$35 billion of sovereign and public sector green bonds that the Government and its statutory boards will issue by 2030. As of Mar 31, S$8.2 billion of green bonds have been issued across four green categories: Clean transportation, waste management, green building and sustainable water. 

With climate change being the "defining challenge" of our generation, Second Minister for Finance and National Development and Chair of the Green Bond Steering Committee Indranee Rajah said in the report that "sustainable finance plays a pivotal role as a catalyst for decarbonisation to tackle this climate crisis".

Proceeds from green bond issuances must adhere to guidelines and can be used for projects such as renewable energy, energy efficiency, preventing pollution and climate change adaptation.

Projects financed by these green bond proceeds will facilitate Singapore's transition to a low-carbon economy and put the country in a better position to meet its climate goals under the Paris Agreement and commitments under the United Nations’ Sustainable Development Agenda. 

With the land transport sector currently accounting for about 15 per cent of carbon emissions in Singapore, MOF said in its report that the expansion of public transport infrastructure and electric rail network is key to reducing carbon footprint in this sector.

"The expansion of Singapore’s electric rail network will enhance connectivity and encourage more commuters to take mass public transport," the Monetary Authority of Singapore (MAS) added in a separate press release in August 2022.

The development of the JRL and the CRL supports the "Sustainable Living" pillar of the Singapore Green Plan 2030, which targets to achieve 75 per cent mass public transport modal share. 

"The expansion of our electric rail network is a key enabler to achieve our ambitious goal of significantly reducing land transport emissions in absolute terms, in alignment with Singapore’s target to achieve net zero by 2050," said Ms Indranee.

MOF said when both lines are fully operational, it will result in total carbon savings of between 100,000 and 120,000 tonnes of carbon dioxide equivalent annually.

"This is equivalent to taking 22,000 cars off Singapore's road." 

MOF said in its report that it engaged an independent consultant, Morningstar Sustainalytics, to develop a methodology to compute the avoided greenhouse gas emissions and air pollutants, as a result of investments in the electric rail projects. 

It added that the project emissions avoided ranged from 100,000 to 120,000 tCO2e of greenhouse gas (GHG) emissions per year and the financed emissions avoided ranged from 1,200 to 1,800 tCO2e of GHG emissions per year. Both figures were rounded to two significant figures.

Annual updates on the estimated impact will be provided in future green bond reports, MOF said.