Temasek 'unlikely' to meet 2030 climate target amid tougher global landscape: CEO Dilhan Pillay

SINGAPORE: Temasek Holdings is unlikely to meet its interim 2030 climate target, CEO Dilhan Pillay said on Monday (May 18), citing a more fragmented global environment, rising energy demand and the difficulties of decarbonising hard-to-abate sectors such as aviation and power generation.

The acknowledgement did not reflect a retreat from the state investment firm’s longer-term 2050 net zero goal, Mr Pillay said, adding that the commitments still serve as an “an important directional marker, befitting of our ambition”.

“We will continue to press forward on every available lever, but our pace must reflect today’s realities,” he said.

This is even as emissions attributable to its portfolio have already declined by about 30 per cent since Temasek first set its climate targets in 2019, Mr Pillay said at the opening dinner of Ecosperity Week 2026, an annual sustainability and business conference hosted by the firm.

In 2019, Temasek set a goal to halve the net carbon emissions attributable to its portfolio from 2010 levels by 2030, and targeted to achieve net zero by 2050.

The climate target covers Scope 1 and Scope 2 absolute greenhouse gas emissions associated with Temasek’s investment portfolio, measured in tonnes of carbon dioxide equivalent (tCO2e).

As at Mar 31, 2025, Temasek’s total portfolio emissions remained at 21 million tCO2e.

The firm has previously highlighted the challenges of meeting its 2030 climate goal, but Mr Pillay’s admission marks the clearest signal yet that it is likely to fall short of its target.

The global operating landscape had fundamentally changed since Temasek’s inaugural Ecosperity in 2014, he said, describing today’s world as defined by volatility, uncertainty and accelerating change.

“Global energy transition has entered a far more complex and uncertain phase with geopolitics reshaping markets,” Mr Pillay said, referring to recent tensions among Gulf states that have served as a reminder that fossil fuel systems are vulnerable.

“This makes the case for renewable energy even stronger, not just as a climate solution, but as a pathway to greater energy security, resilience, and long-term strategic competitiveness in a more volatile world.”

PORTFOLIO CHALLENGES

Aviation remains one of the hardest sectors to decarbonise, he said, pointing to portfolio company Singapore Airlines (SIA) as an example.

SIA’s next-generation passenger aircraft are expected to improve fuel efficiency by around 25 per cent, while its new Airbus freighters are projected to deliver fuel savings of around 40 per cent relative to the aircraft they replace.

But sustainable aviation fuel – critical to the industry’s long-term plans – accounts for less than 1 per cent of global jet fuel supply and remains around two to five times more expensive than conventional jet fuel.

The realities of the global energy transition is another factor. “Countries are increasingly prioritising energy security, affordability, and grid stability alongside longer-term decarbonisation goals,” said Mr Pillay.

Citing International Energy Agency data, Mr Pillay said global electricity demand is expected to grow at least two-and-a-half times faster than overall energy demand through 2030.

“Renewables will drive decarbonisation and account for most future capacity growth, but during the transition, thermal baseload power will continue to play an important role in maintaining grid stability and affordability,” he said.

Mr Pillay also pointed to artificial intelligence as a near-term obstacle to climate goals. While AI could improve industrial efficiency and optimise energy systems, it can also significantly increase emissions, adding complexity to the transition.

He described the current global operating environment as a “major revision of the international rules-based order”, shaped by two ongoing wars, a global energy crisis, a climate crisis and AI disruption – requiring, he said, discipline and a forward-looking lens.

Despite the tougher outlook, Temasek said it remains committed to its 2050 net-zero ambition and to investments aligned to what it calls the Sustainable Living trend.

As at Mar 31, 2025, the firm’s portfolio value of such investments stood at S$46 billion (US$35.9 billion), comprising S$39 billion in sustainability-focused investments and S$7 billion in climate transition investments.

Temasek said it will continue engaging portfolio companies and embedding climate considerations into business and investment decisions.

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