(Reuters) – White-gloved hands carefully pack azure blue solar cells at a vast new S$2.6 billion ($1.85 billion) plant that Singapore persuaded Norway’s Renewable Energy Corp (REC.OL) to build in the city state.

The plant is the world’s largest of its type making solar wafers, cells and panels that harness the sun’s energy.

Luring REC was a major coup and key element of Singapore’s drive to become a global hub for clean-tech investment, development and education and a center for the carbon market.

The clean-tech sector is also part of the government’s efforts to try to gradually shift one of Asia’s most energy-intensive economies onto a greener footing as well as tap a boom in green energy and services in the region.

“We believe that Asia is going to be a huge market for clean-tech products and solutions and we want to make sure Singapore is plugged into this entire market place,” said Goh Chee Kiong, director, clean-tech, at the government’s Economic Development Board, or EDB.

The country faces keen competition from Japan and South Korea as well as from China, now the world’s top solar panel maker and the leading market for wind power. India has also sharply increased support for renewable energy and green buildings.

“The rate of urbanization is fastest in Asia. Therefore, it creates a lot of additional burdens on cities and the need for green solutions is simply accelerating as a result,” Goh said in an interview.

PILLAR

The government wants the clean-tech sector to become a major pillar of the city state’s booming economy, which is already a regional center for financial services, petrochemicals, semiconductors, education, shipping and aviation.

It has rolled out a series of investments, tax sweeteners and other incentives since 2007 to achieve its goal.

This is a well-rehearsed formula that has helped the economy of five million people become one of the richest in the world on a per-capita basis, and one of the most nimble as it tries to compete with rivals such as Hong Kong and Shanghai.

The city’s clean-tech sector employs nearly 10,000 people and the aim is to reach 18,000 people by 2015.

REC’s plant, which officially opens later this year, already employs 1,200 people and sits on a one square km plot of recently reclaimed land in the city’s Tuas industrial area.

“One of our criteria among many reasons for selecting Singapore was the fact there was land available,” said John Andersen Jr., REC’s executive vice president and group COO. The size of the Tuas site is all the more remarkable given Singapore only has 710 sq km of land.

REC received more than 140 proposals from around the world for a next-generation solar production plant. In the end, availability of skilled labor, tax incentives, government support and Singapore’s investment environment clinched the deal, Andersen said in an interview from Norway.

“One of the things we like about Singapore is that it is well-regulated, there is transparency and they have a strong focus on clean technology. You don’t get surprises,” he added.

Government support for research and development was also key.

CARBON HUB

The government has set aside S$700 million to develop R&D in the sector and has announced 200 scholarships for doctoral degrees in clean technology as well as rolled out clean-tech courses for students to ensure a flow of skilled workers.

To boost the sector, the government has created a solar energy research institute. It has also announced a 50-hectare (125-acre) clean-tech park aimed at creating, testing and commercializing products such as energy-efficient buildings, waste treatment and electric vehicles.

Other firms drawn to the country include Vestas (VWS.CO), the world’s top wind turbine maker, which has committed to spend S$500 million over 10 years to develop a major R&D center.

Sweeteners, such as low trading and company taxes have drawn 30 carbon firms to the city state. Clean-energy project developer Tricorona (TRIC.ST) of Sweden has set up its global administrative headquarters in Singapore.

German utility E.ON (EONGn.DE) recently moved its clean energy project development team — whose task is linked to the creation of tradeable carbon emissions offsets — from Malaysia.

Russia’s Gazprom (GAZP.MM) chose Singapore as its Asia base for LNG and carbon business.

“It’s more the quality of life, the efficiency. Singapore has all the support sectors that we need — banks, legal and accounting firms. This is really a hub for Southeast Asia,” said Edgare Kerkwijk, managing director of Asia Green Capital, a renewable energy investment firm based in Singapore.

LABORATORY

For all its business acumen, the government has been accused of not putting in the same effort to cut the nation’s growing greenhouse gas emissions, which at roughly 12 metric tons per capita are higher than some European countries.

Singapore is not obliged under U.N. treaties to commit to binding emissions cuts but has pledged, at a minimum, to cut emissions by 11 percent from projected levels by 2020 from 2005′s output and has rolled out a blueprint.

Green groups, such as WWF, think the government should be more ambitious by pledging absolute cuts in its carbon emissions, said Amy Ho, managing director of WWF Singapore.

The government, though, says it is doing much more and wants to turn the city into a test-bed for new technologies.

It has already announced programs for electric vehicles, smart and micro-grids as well as trialing solar panels on top of public housing estates and carparks in 30 locations.

“The next phase is making Singapore a living laboratory,” said EDB’s Goh. “The idea is for Singapore to be the site of first adoption, the site of demonstration, the site of test-bedding. This is a key selling point,” he said.

(Editing by Anthony Barker)