Can Singapore become the world’s Climate Tech hub?

When you think of Singapore’s startup ecosystem, the first sector that may come to mind is FinTech.

But Singapore also has a chance to establish itself as one of the leading Climate Tech ecosystems in the world. Factors such as favourable government policies, the regional leadership opportunity and Singapore’s need for self-resilience all come into play.

Singapore’s government is proactively addressing this by implementing climate mandates such as the Singapore Green Plan 2030, which aims to reduce waste and carbon emissions, among other targets.

Tech founders here have launched startups such as solar system developer GetSolar, BioTech firm TeOra, and WasteX, that deals with biochar.

In the first 11 months of 2023, Southeast Asian Climate Tech startups raised US$685 million (S$927 million) in equity funding, and 58 per cent of that deal volume was in Singapore. Singapore is already taking the lead on potentially becoming Southeast Asia’s Climate Tech hub.
 

Friendly environment for startups

Startups in Singapore benefit from a friendly environment for innovation. For example, the government plays an active role in encouraging international tech talent to come to Singapore through visa programmes such as Tech.Pass.

Singapore is also known for having some of the strongest intellectual property laws in the world, helping startups retain their competitiveness and attracting investors.

Thanks to Singapore’s position as a trading hub, there is a large base of potential customers for Climate Tech, and the Republic also serves as a springboard to other key Southeast Asia markets.

But there are challenges that Singapore’s Climate Tech ecosystem and government need to address before it can take its place on the global stage.

Despite the government’s visa programmes for tech talent, Singapore still faces a critical labour shortage. For Climate Tech startups, finding the right talent is crucial because many of them focus on hardware or deep-tech, and need people with highly specialised skills as well as appropriate research facilities.

High operational costs are another issue. In a Singapore Business Federation survey conducted late last year, 58 per cent of businesses said that rising costs were their top challenges, while 53 per cent cited the availability of staff.
 

Levelling the Climate Tech playing field

Singapore’s financial industry has historically created many “innovation pull-throughs” – or opportunities for tech to fix problems in legacy solutions.

For example, InsurTech companies disrupted traditional methods for assessing claims and disbursing funds. But in Climate Tech, opportunities aren’t yet as well defined.

A key reason is that governments around the world have implemented different climate policies.

For example, the carbon dioxide equalisation approach adopted by the European Union is different from strategies in the United States (and Australia, which has a chequered climate policy history), resulting in different end-use cases.

This means that Singapore Climate Tech startups currently have a less-defined path for going global, which makes it more difficult to innovate.

Singapore’s tech ecosystem also needs more deal flow. That’s one reason that the venture capital industry hasn’t made more Climate Tech investments yet, because there aren’t that many deals available compared with other sectors.

But as climate policies develop around the world and stakeholders gear up for new regulations, innovation pull-throughs like those seen in the financial industry are developing in Singapore for Climate Tech.
 

For example, decarbonising complex global supply chains is an early opportunity for Singapore to take a global lead.

The number of family offices in Singapore is significant, with many operating global supply chains for their core businesses. Family offices understand that the supply chain is vulnerable. For example, if the US decides to implement a carbon tax, they would need to be prepared to meet the cost of the tax by making their supply chain more efficient.

Another opportunity for Singapore’s Climate Tech ecosystem to have a global influence is through its approach to fossil fuel alternatives.

Singapore expects its carbon dioxide emissions to peak between 2025 and 2028 before declining to net zero by 2050. About 95 per cent of Singapore’s electricity, however, is currently generated from natural gas, most of which is imported from Indonesia and Malaysia.

How Singapore’s Climate Tech innovators solve its carbon problem can serve as a model for other countries.

Singapore’s Climate Tech ecosystem echoes Australia’s, because both countries are creating globally relevant solutions by fixing their own pain points.

Like their Singapore counterparts, Australian founders have had eyes on worldwide expansion from the beginning, with half of Australia’s Climate Tech startups already global operationally and 94 per cent holding global ambitions.

One sector that Australian Climate Tech excels at is AgriFood. Agriculture uses half of Australia’s land, up to 70 per cent of its water and produces about 16.8 per cent of the country’s net greenhouse gas emissions.

Startups such as FarmLab and Agrimix are helping Australian farms reduce their carbon emissions, with potential too in other markets with large agriculture industries.

Before establishing itself as a global Climate Tech hub, Singapore’s ecosystem needs to address several pain points, including getting the right talent and establishing its end-user base.

But the country’s blend of business-friendly regulations, geography and trading means that it is a unique proving ground for Climate Tech, and positioned to have global influence.
 

The writer is chief executive officer of Investible.

Source: The Business Times © SPH Media Limited. Permission required for reproduction.