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Temasek and BlackRock’s $600 million decarbonisation fund

Updated: Aug 1

A closer look at decarbonisation initiatives in Singapore.

Singapore’s sovereign wealth fund; Temasek Holdings and global investment management heavyweight BlackRock have recently announced that they have established a jointly held partnership called Decarbonisation Partners. According to the press release from Temasek Holdings, the partnership will launch a series of late stage venture capital and early growth private equity investment funds that are thematically focused on advancing decarbonisation solutions to accelerate global efforts to achieve a net zero economy by 2050. Following an initial intended capital commitment of US$600 million by Temasek and Blackrock to invest across the partnership’s multiple funds, they will also aim to raise capital from long-term oriented investors who are committed to achieving a net zero world, with an overall fundraising target of US$1 billion for its first fund.

Decarbonisation Partners follows a growing trend of corporate partnerships between the public and private sectors with the goal of advancing decarbonisation efforts. Most recently, the Maritime and Port Authority of Singapore established a S$120 million fund in joint funding efforts with industry partners to establish a decarbonisation centre to fund maritime decarbonisation related research and technology development projects.

Low-Carbon Future

The ambitious goals of the partnership are certainly aligned with the Singapore Government’s Long-Term Emissions Development Strategy (LEDS), with the ultimate aim of halving emissions by 2050 and achieving net-zero emissions by the second half of the century. In 2019, Singapore became the first Southeast Asian country to introduce a carbon tax, with plans to progressively raise rates from S$5 per tonne of greenhouse gas emissions currently to between S$10 and S$15 per tonne by 2030 according to the National Environment Agency. As an early proponent of broad-based economy-wide decarbonisation initiatives in Southeast Asia, Singapore is certainly positioned as a standard setter, where it now remains to be seen how such efforts coupled with growing international pressure will have a ripple effect on policy-making across other Southeast Asian countries.

What does this mean for startups and innovation in Asia?

With mounting legislative pressure on high-emissions industries, we will likely see overall market expansion as well as growing demand for decarbonisation technologies within the private sector, specifically in carbon capture, storage and utilisation (CCUS) that will help tangibly abate emissions, ensure compliance with various climate goals and standards, and eventually enable the transition to clean energy and net zero emissions across all industries. The National Climate Change Secretariat (NCCS) of Singapore has particularly singled out carbon utilisation as especially pertinent to Singapore’s context due to land constraints, as well as prohibitive costs associated with carbon storage infrastructure.

ESG (environment, social, corporate governance) and sustainability focused investing has recently become a dominant theme across capital markets. Net new money invested by private investors globally in ESG focused thematic funds more than doubled in 2020 to a record high of US$51.1 billion. The Singapore government has even recently announced its intention to issue S$19 billion worth of green bonds to finance public infrastructure projects aligned with its broad decarbonisation goals. Following the acquisition of Singapore-based electric car ridesharing startup BlueSG in February this year by Goldbell group, which firmly reiterated its commitment to invest a further S$70 million to expand service capabilities and infrastructure across Southeast Asia, there is evidently growing investor and consumer appetite for climate-positive investments and services, signalling greater private and public market participation that will serve to continue effectively funnelling capital towards meaningful decarbonisation initiatives.

Given this current backdrop of positive market sentiment and policy action, we believe that this presents a significant opportunity for startups and innovation incubators to capitalise on the wealth of opportunities currently available to potentially fill a gap in the market by collaborating intimately with the private and public sectors to supply innovative, high value-added decarbonisation technologies, and achieve broad emissions goals for the benefit of all economic stakeholders in the long run.

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