S’pore launches initiative to fund agri-food adaptation projects in S-E Asia at COP31

ANTALYA, Turkey — South-east Asia is a major producer of the world’s rice and other agricultural products, but climate change is threatening the yield of these crops.

New business models and projects, such as planting climate-resilient varieties, could help boost production.

But these endeavours often struggle to attract the financing needed to scale them up, as they are often too small, at too early a stage of development, or lack the data needed to meet the requirements of investors.

A new initiative launched on Nov 10 at the Singapore Pavilion during the UN climate change conference COP31 could help address these gaps.

The Singapore Government-backed initiative, dubbed the Scaling Projects and Investments for Resilience in Asia Programme, or SPIRE Asia, will help to boost investments into promising agri-food adaptation projects. Adaptation refers to efforts to reduce the impacts of climate change on communities.

The annual summit is being held from Nov 9 to 20 in Antalya in Turkey. Governments from close to 200 countries are meeting to negotiate their joint efforts to tackle climate change.

This year’s conference, which is taking place against a backdrop of wars, skyrocketing energy costs and rising costs of living, has been billed as an implementation COP. This is a reference to translating pledges to concrete actions.

Details of the new agri-food financing initiative were given at COP31 by Singapore’s Ambassador for Climate Action Ravi Menon, who cited it as one of the practical ways in which the Republic is promoting climate action.

“Political priorities may shift. Economic cycles may turn. But nature’s laws do not change. Climate change is already here and will only get worse,” Menon said. “The fact that international climate cooperation has become more difficult only strengthens the case for practical partnerships, new ways of working together.”

He also pointed to other efforts by Singapore to contribute to climate action.

This includes developing the carbon markets, which contributes to climate action by directing funds from large emitters to projects such as forest protection in developing countries. Singapore is also funding research into cooling solutions, and emerging decarbonisation technologies, Menon said.

The ambassador also said that Singapore has deployed nearly US$240 million (S$306 million) into climate-friendly projects in the region under its national blended finance initiative, Fast-P.

Blended finance starts with capital from public or philanthropic sources to draw in the involvement of the private sector, which holds most of the world’s wealth. Fast-P aims to raise up to US$5 billion to help finance Asia’s decarbonisation efforts.

Examples of projects funded under Fast-P include three projects which paired wind and solar with batteries in India, as well as another initiative that turns farm waste into factory steam in the Philippines, Indonesia, Thailand, Cambodia and India. This helps to reduce the need to burn fossil fuels for factory processes.

Overall, the projects funded so far helped to avoid the release of over one million tonnes of emissions annually. This is equivalent to taking about 233,000 cars off the road for a year.

On SPIRE Asia, Menon noted that agri-food systems in South-east Asia are at particular risk.

Rising temperatures, changing rainfall patterns and more frequent extreme weather events are already affecting agricultural production across the region. These impacts will worsen as climate change accelerates, he said.

An earlier study had found that average crop production in South-east Asia could fall by up to 10 per cent in years with very strong El Nino events. Rice, in particular, is likely to be affected by the drier and hotter weather caused by the climate phenomenon out of the five major crops assessed.

The new initiative has three pillars, including one that aims to make climate, agricultural and investment data more relevant to investors and project developers.

Singapore will establish a new Solutions Centre for Regional Smallholder Farmers which aims to address barriers such as fragmented data and limited access to financing and is slated to launch by end-2027.

A market development facility to identify suitable projects, develop them further, and aggregate them into investment-ready projects is another feature of SPIRE Asia, said the three government agencies backing the initiative in a joint statement.

The three are the National Climate Change Secretariat, the Monetary Authority of Singapore and Enterprise Singapore.

Thirdly, to close the financing gap, the initiative will include a blended finance fund of up to US$500 million.

Menon said this fund targets agri-food companies and solutions that struggle to access financing on commercial terms, and help them scale climate-resilient practices.

Asked to comment on the new initiative, Capital Innovation for Impact’s chief executive Dawn Chan said that SPIRE Asia could help direct investments into the sector in two ways. The entity is a non-profit established by Temasek Trust, which manages philanthropic assets from Temasek and other donors.

First, it could plug the data gap, which may make investors perceive the agricultural sector as being riskier than it actually is, she said.

Second, the initiative’s blended finance fund could help to make such investments into agri-food adaptation projects more attractive to the commercial sector.

Chan noted that some adaptation projects take 10 to 15 years to realise. A typical commercial investment fund, which lasts about 10 years, may therefore be unable to finance the whole process, she said.