Singapore’s climate tech startups are set to clean up

Already a major global financial center, Singapore is on a parallel track to become one of the world’s top climate tech hubs. While places like Silicon Valley, London and Boston already lead the world in climate tech innovation, Singapore has many assets in its favor like a strong startup ecosystem, government mandates for net-zero and its position as an international trade hub.

The city-state is already the climate tech hub of Southeast Asia, and most of the equity funding for the region’s climate tech hubs in the first 11 months of 2023 went into Singaporean startups. Some examples of climate tech startups already founded in Singapore include solar energy solutions provider GetSolar, sustainable aviation fuel last-mile solution provider FlyORO, green hydrogen production materials producer SunGreenH2 and energy-efficiency tech developer TablePointer.

To be sure, Singapore has a lot of competition for becoming a world-leading climate tech hub, especially in Asia. For example, China is the world’s leading exporter of clean tech. However, it is also facing new obstacles as the U.S. ponders tariffs on Chinese-produced clean tech products to protect its own industries. The European Union has already imposed a maximum tariff of 38% on Chinese EVs, with more being considered. If these levies escalate, that may short-circuit opportunities for Chinese clean tech by narrowing its customer pool.
 

Despite its technological prowess, Japan is struggling with its transition to renewable energy and, in contrast to most other developed countries, the fossil share of its grid has increased over the past decade. Combined with the relatively isolated nature of its startup ecosystem, Japan’s clean tech startups may prefer to focus on solving domestic challenges.

South Korea has the makings to thrive as a climate tech hub thanks to a significant amount of funding pledged by the government, but its critics say it isn’t putting enough pressure on industrial polluters and may miss its own goals for reducing emissions.

Fueled by government mandates like the Singapore Green Plan 2030, Singapore is already on track with its own climate targets, giving it a strong foundation to take its technology to the rest of the world. It expects its carbon dioxide emissions to peak between 2025 and 2028, earlier than its previous goal of 2030.

Innovation is fueled by Singapore’s size and limited natural resources, which mean it cannot have large wind or solar farms. Instead Singapore has to find other ways of solving challenges like the fact that 95% of its electricity is still generated from natural gas, most of which is imported from neighboring Indonesia and Malaysia. The solutions that Singapore’s climate tech innovators develop to solve its carbon problem and reach government targets can provide a model for other countries.

When climate tech developed in Singapore is ready for commercialization, it has a path to reach customers far beyond its borders. The city-state’s position as a trading hub means it is an ideal location to help startups meet global buyers for their technology while also serving as an ideal launchpad for expansion in other Southeast Asian markets and Australia.

For example, the challenge of decarbonizing global supply chains presents an early opportunity for Singapore-based startups to take the lead. There are a large number of family offices domiciled in Singapore, and many run global supply chains as part of their core businesses. They are well positioned to understand the vulnerability of these supply chains to external shocks such as tariffs. If the U.S. decides to implement a carbon tax, for example, family offices need the tools to meet this expense by making their supply chains more efficient and less carbon-intensive.
 

Singapore also has trade agreements with the U.S. and the EU that cover clean tech. The U.S. Singapore Strategic Technology Partnership covers regional initiatives to decarbonize and deploy renewable energy. A similar agreement with the EU focuses on low-carbon energy solutions, carbon trading and services, waste management and food production.

Part of Singapore’s appeal includes policies designed to foster innovation. For example, international tech talent is encouraged to come to Singapore through the Tech.Pass visa program. Strong intellectual property laws also help startups remain competitive and attract investors.

But it is important to note the problems that Singapore must tackle on its way to becoming an international climate tech hub. The tech talent shortage that Tech.Pass and other visa programs were created to address are still an issue for tech companies of all sizes. For climate tech startups, this is a hindrance because many of them are developing hardware or deep tech, requiring people with highly specialized skills. For startups, putting together the best team is complicated by the high operational costs of doing business in Singapore.

Before reaching its full potential as a global climate tech hub, Singapore needs to address those obstacles. It has a strong head start through a vibrant startup and venture capital ecosystem coupled with its position as an international trading center. When coupled with government policies that support clean tech innovation and strong global allies, Singapore is set to be one of the main centers for climate tech innovation in the world.
 

Rod Bristow is the CEO of Investible, an Asia-Pacific-based venture capital firm.

A version of this article was first published by Nikkei Asia on Aug 7 2024.
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