Singapore state investor Temasek [TMSK:SP] will raise its internal carbon price from USD42 to USD50 per ton this year, with plans to lift the price to USD100 per ton by 2030, as reported by Strait Times on July 12. An internal carbon price provides a theoretical or assumed cost for every ton of emissions, and enterprises can leverage the pricing mechanism to calculate the projected cost of emissions that could arise from their investments. The method was intended to manage climate-related business risks and pave way for Singapore’s transition to a low-carbon economy. According to Temasek, the group will soon put forward sustainability-linked incentives based on the increased internal carbon prices.
Internal carbon pricing can help Temasek reevaluate its portfolio. The investment company vowed to reduce the net carbon emissions of its portfolio to half the 2010 levels, or around 11m tons of carbon dioxide equivalent (CO2e), by 2030, bracing for its 2050 net-zero emission aim. As of March 31, Temasek’s total portfolio emissions amounted to 26m tons, while the carbon intensity of its equity portfolio dropped from 103 tons of CO2e per SGD1m (USD0.72m) portfolio value to 81 tons. Aside from reducing investment in carbon-intensive sectors, Temasek is also helping its portfolio companies grow in sustainability. For example, Temasek contributed to the collaboration between Singapore Airlines (SIA) [SIA:SP] with Exxon Mobil [XOM:US] this February, enabling the airline to trial sustainable aviation fuel (SAF) produced by the US company in 3Q22.