Why blue carbon is a natural growth sector for Singapore and Asean

Dr Biz • January 12, 2021

Blue carbon is a new entrant to the lexicon of climate change mitigation, and one that has special significance for Singapore and all of SouthEast Asia. It refers to the ability of marine plants to absorb carbon and reduce overall emissions, particularly mangrove swamps, tidal salt marshes and seagrass meadows - all of which are found in abundance throughout the region.

While previously undervalued and underserved within global conservation efforts, recent scientific studies have come to underline the enormous value that blue carbon assets hold. According to a study by the National University of Singapore, DBS Bank and Temasek, so called Natural Climate Solutions (NCS) - of which blue carbon is a big part - has the potential to absorb over 30% of the carbon needed for the world to achieve net-zero emissions by 2050.

Manifold benefits to blue carbon

Beyond carbon removal and storage, blue carbon plant life also has significant benefits in areas such as storm protection and water filtration - issues that are becoming ever more pressing throughout SouthEast Asia. This is particularly true for mangrove forests, which have been found to be one of the most effective tools the world has in terms of carbon capture and flood defence.

As the region most heavily affected by the rising temperatures and increased extreme weather events that climate change presents, as well as high levels of pollution, South East Asia stands to benefit in manifold ways from the preservation and restoration of blue carbon assets. Globally, SouthEast Asia has been identified as having the greatest area of potentially restorable mangrove forests - over 3,000 square kilometers or more, which represents a third of the global total.

As asset to Singapore and beyond

Indonesia holds the greatest potential for blue carbon mangrove restoration - with a greater area than the whole region combined. Meanwhile, Vietnam could reap the greatest co-benefits for its population, with an estimated 2.8 million people that could directly benefit from mangrove restoration. In terms of physical restoration capacity, Singapore has a smaller opportunity, with mangroves covering around 1% of the city-state’s total land-mass.

However, mangroves remain an important asset in Singapore. While they account for only 6% of the total forest area, mangroves store around 11% of the carbon in all of Singapore's forests. Restoration and expansion of mangroves in Singapore could therefore be a big opportunity as it strives to meet globally agreed climate targets: a difficult task for a country with a landmass of just 728km2, but yet where energy consumption per capita is among the highest in the world.

Natural investment opportunities

Blue carbon also presents a significant investment opportunity for Singapore. According to the National University of Singapore study, investments in Natural Climate Solutions could generate a potential return on investment of US $27.5 billion per year in SouthEast Asia. As a leading economic and investment hub in the region with a well established investment market, Singapore could lead the way on NCS financing, which currently accounts for just 3% of all global climate financing.

Considering the huge benefits that the revitalisation of mangrove swamps alone presents, there is a clear mismatch between the potential benefits that investing in blue carbon presents and the amount of money being invested into it. With Singapore set to spend an estimated US $74 billion on mitigating climate change over the next 50 to 100 years there is a clear opportunity for the country to put more of this toward blue carbon.

Public and private opportunities

Within the private sector, Natural Climate Solutions also presents a significant opportunity to businesses and investors. Not least, businesses with risks within their supply chains linked to deforestation and the change of land-use could benefit from investing in local or regional blue carbon projects. Likewise, investors looking for cost-effective options to meet their climate commitments and targets could also look to this sector.

The world faces a tough challenge in coming decades as we seek to find a way to halt global warming and mitigate the effects of climate change that we are already seeing, especially in SouthEast Asia. However, with new and innovative solutions such as blue carbon projects like mangrove restoration increasingly revealing themselves, there is hope that Singapore and its global partners will continue to successfully tackle this threat.

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