Temasek-owned GenZero cuts 3 million tonnes of emissions through decarbonisation investments

(Photo credit: Lianhe Zaobao File)

Source: The Straits Times

Three million tonnes of planet-warming emissions have been directly reduced or removed from the atmosphere due to investments made by Singapore-based climate investment firm GenZero as at Dec 31, 2024.

In its inaugural sustainability report published on Sept 1, GenZero said it aims to contribute to at least seven million tonnes of direct emission reductions or removals through its investments by March 31, 2028.

This is equivalent to about 10.9 per cent of Singapore’s emissions projected for 2028.

GenZero was set up by Singapore’s investment company Temasek in 2022 with an initial injection of about $5 billion.

Its focus is on enabling a global trade in carbon credits by investing in nature and technology, as well as services to boost the credibility of carbon markets.

GenZero chief executive Frederick Teo declined to reveal the investment quantum utilised so far, saying only that “the majority of the firm’s initial funding has not been deployed”.

Setting a climate impact performance target puts GenZero among the first global investment entities to do so.

Other ways of measuring climate impact used by other firms include the size of investments in sustainability initiatives, size of nature areas restored, and species saved.

The report’s coordinator Sofia Galanek told the media at a briefing ahead of the report’s release that by setting the target, the firm hopes to hold itself to “a higher level of accountability” in a market where few set goals for the amount of emissions reduced or removed by their actual level of investment.

“We see a lot of net-zero targets, emission reduction targets, but not so much on the achievement of climate impact,” said Ms Galanek, GenZero’s senior associate of strategy and development.

“While the ecosystem is still on its journey to standardise climate impact measurement, we hope that by setting the target, we can contribute to the dialogue in this industry and demonstrate our achievements over time.”

GenZero’s climate impact target is also calculated based on its own stake in its investments.

Mr Teo said the firm chose 2028 as a near-term milestone, as the deadline provides “enough time to generate some climate impact from our early investments and instils early accountability for our impact performance”.

“The capital we have deployed will continue to generate climate benefits well beyond 2028,” he added. “Together with new investments in the coming years, we are laying the foundation for more ambitious long-term climate impact.”

The firm maintains a global portfolio of investments that are split across solutions that use nature to reduce emissions, decarbonisation technologies and levers that enable carbon markets to grow.

For instance, it has invested in Aurora Sustainable Lands, a firm that employs various ways of managing forests in the United States to maximise carbon dioxide absorption.

GenZero has backed CleanJoule, a firm that is commercialising technology to produce sustainable aviation fuel that can reduce aircraft emissions.

The investment firm has invested in related services that can boost the credibility of carbon projects, such as BeZero Carbon, a global carbon ratings agency that validates projects.

Mr Teo said GenZero’s climate impact target includes only emission reductions or removals that directly do so, such as nature restoration projects.

Investments that indirectly lead to climate impact, such as sustainable aviation fuel production, or those that contribute to a more favourable market for these technologies, are not factored into the target.

Mr Teo said such investments make nature and technology solutions investable, translating into direct impact in the long run.

“So without the enablers being in place, without investing into the development of a proper ecosystem, you cannot unlock the potential in nature and many other things.”

Responding to queries from the media, Mr Teo said it did not count carbon emissions from its carbon credit investment involving US firm C-Quest Capital, which had been embroiled in fraud charges.

Cumulatively, the direct and indirect climate impact by GenZero amounts to 12.9 million tonnes as at Dec 31, 2024.

GenZero also addressed questions on the outlook for carbon markets, given the ongoing trade tensions, economic uncertainty and faltering political support for climate action.

This follows a 2023 Guardian report that rubbished forest carbon offsets and claimed that about 90 per cent of rainforest credits were ineffective.

According to GenZero, climate technology financing dropped by 29 per cent, from US$79 billion (S$101.4 billion) between the fourth quarter of 2022 and the third quarter of 2023, to US$56 billion in the following four quarters.

But there are tailwinds that could help lift the dampened outlook, according to GenZero’s director of policy and analytics Anshari Rahman.

He highlighted improved standards, as well as greater transparency and assurance in the quality of these credits, as being a silver lining for the market.

Moreover, many companies have set corporate net-zero targets. They may also face greater regulation that requires them to factor the price of their carbon emissions into their bottom lines.

One carbon credit represents one tonne of planet-warming emissions that is either prevented from being released or avoided. Emitters can buy these credits to offset their carbon footprint.

The carbon market can benefit countries that host carbon projects as it is a source of revenue for underfunded climate initiatives, such as forest conservation projects, that would not otherwise have been implemented.

South-east Asia has a lot of untapped potential for becoming a source of carbon credits, Mr Anshari added.

He said: “Carbon markets can be leveraged as an accelerator for decarbonisation in South-east Asia and the broader Asian region.”

Going forward, GenZero hopes to invest in more projects that have benefits that go beyond carbon, with biogas and agroforestry on its radar.

For example, biogas can contribute to energy security, while agroforestry has the potential to contribute economic opportunities that benefit local communities.

The firm’s managing director and head of investments Kimberly Tan said: “For instance, it may be sustainable cocoa production or sustainable coconut production where local communities benefit from carbon and increased productivities from what we’re doing.”