Energy investments in MENA will continue to grow

Advertisements
Energy investments in Middle East and North Africa (MENA) are forecast to grow in 2022 from $805 billion and continue in the next five years on the strength of higher oil and gas prices and planned unconventional gas and upstream investments.

Energy investments in MENA will continue to grow: Apicorp

Nicolas Thevenot

For petrochemicals, the drive for further integration and rationalisation will continue with reconfigurable petrochemical plants shifting to high-margin products such as plastic packaging films and healthcare and hygiene products, The Arab Petroleum Investments Corporation (Apicorp), a multilateral development financial institution, said in its annual Top Picks 2022 outlook on the key trends that are expected to shape the Mena energy markets landscape this year.

“The strong pipeline of investments we are seeing in the downstream projects reflects the region’s push to direct more funds to this sector, especially in brownfield petrochemicals projects versus greenfield ones. This makes sense in light of the current market conditions which favor improving cost and operating efficiencies in existing projects rather than sheer expansion,” said Nicolas Thevenot, Managing Director of Corporate Banking at Apicorp.

As for the energy markets, the report forecasts that they will remain comparatively stable during 2022 due to higher oil production by Opec+ and non-Opec countries and increased gas production and LNG supply. Brent is expected to average between $65/bbl. and $75/bbl. As for gas, the JKM and TTF/NBP hub prices in Asia and Europe are expected to cool down considerably from their all-time highs of 2021, especially after the winter season.

Meanwhile, the uptick in regional energy investments, which registered a modest $13 billion increase in Apicorp’s latest five-year outlook, will continue over the mid-term on the strength of higher oil and gas prices throughout 2022.

Among the trends the report examines is the impact of oil and gas prices on energy investments in the region and the main factors weighing down on broader economic recovery. 

“Despite the volatility in commodity prices which is expected to persist throughout 2022, the good news in the short-term is that oil and gas prices will likely remain elevated throughout the year, providing support for energy investments including renewable energy and ESG-related projects. Power sector investments in Mena are also expected to continue to thrive, with an accelerating shift towards renewables. Collectively, the region is expected to add nearly 20 GW of solar power over the next five years,” noted Dr Ahmed Ali Attiga, CEO of Apicorp.

The Mena region will take centre stage in the ongoing global energy transition as all eyes shift to Egypt, which will host COP27 in November — and UAE for COP28 in 2023. Yet while the transition continues to steadily gain momentum, the report notes that it may be marred by mixed policy signals from governments as they attempt to balance imperatives which are oftentimes very difficult to align: emissions reduction, energy affordability and energy security.

Thus, a sustainable and comprehensive policy is needed in order to avoid tilting the policy scale too far towards in favor of one of these factors, as this may lead to unintended consequences such as market distortions, heightened volatility, and energy shortfalls.

The already substantial pressure on policymakers is expected to be further exacerbated by continued volatility in commodity markets in 2022 due to the pandemic, uncertainty over macroeconomic policy, and supply chain disruptions. Despite the modest –-albeit uneven—recovery in 2021, it will take time for this improvement to migrate downstream and ease cost pressures this year.

The report’s analysis of energy investment trends suggests that the expected robust oil and gas prices in 2022 have triggered an opportunity to return to pre-pandemic activity. 

The uncertainty around Covid recovery will continue to influence how market dynamics will ultimately play out. Given the global vaccine inequity and a constantly evolving virus, governments are still grappling with the dilemma of public health versus economic recovery. 

In addition to global trade, supply chains and services, the current surge in cases globally will also adversely affect international travel and tourism. This will dent economic growth during 2022, which has already prompted a slight downward revision of the 2022 GDP growth forecasts in some regions and a likely asymmetric global recovery that is not necessarily sustainable for all countries.

Another uncertainty stems from the need for governments to introduce fiscal austerity measures to rein in spending and curb soaring inflation. Although markets ended 2021 with high returns (27% in the case of the S&P 500 index), high jobs growth and soaring commodity prices pushed inflation rates higher.

A fear of stagflation looms as public fiscal stimulus packages are withdrawn, asset purchasing programs are tapered and interest rates rise. While these measures will very likely cause economic recovery to slow down, the lagging unemployment rates are expected to remain relatively high amid a simmering inflationary cycle that may turn out not to be transitory after all. — TradeArabia News Service

The above-featured image is for illustration and is credit to Oil Price.

How greed and politics are slowing the switch to renewable energy

Advertisements

Wind and solar are now as cheap as the cheapest fossil fuel power, if not cheaper. And these price comparisons typically do not include the costs of climate change, air pollution, and price variability from fossil fuels. Those costs represent an enormous subsidy for fossil fuels and, if you include them, fossil fuels become far more expensive than renewable energy. Andrew Dessler, a climate scientist who studies both the science and politics of climate change, explains how greed and politics are slowing the switch to renewable energy.

 The image above is a Photo by Dan Meyers/Unsplash

January 17, 2022

It is (with apologies to Charles Dickens) the best of times; it is the worst of times.

Thanks to fossil fuels, billions of people in 2022 enjoy lives of wealth, comfort, and material possessions unimaginable before the industrial revolution.

But fossil fuels have their dark side. You might think you understand that, but it’s likely fossil fuels are even worse for the world than you think. Let’s start with climate change. Contrary to what you might hear listening to Fox News, the scientific understanding of climate change is good and it is progressing at exactly the rate predicted decades ago by Exxon.

What you probably don’t realize is how massive these changes may be. In the depths of the last ice age 20,000 years ago, the Earth was only 6 degrees Celsius colder than it is today. That world—with thousands of feet of ice sitting over much of North America, sea level 300 feet lower, and completely different ecosystems—would be unrecognizable to those living on today’s Earth.

This helps us put predictions of future warming into context. The chart below shows predictions for the twenty-first century, but instead of units of temperature, I have plotted units of ice ages, where one ice age unit equals 6 degrees Celsius. Business-as-usual emissions gives us about 3 degrees Celsius of warming in 2100—about half of one ice-age unit. Given how much the Earth has changed since the last ice age, 3 degrees Celsius of warming may well remake the planet, leading to an Earth in 2100 as unrecognizable to us today as the world of the last ice age.

Warming over the historical period (blue line) and future projections under four scenarios. Warming is expressed in ice age units, equal to the amount of warming since the last ice age (one ice age unit equals 6 degrees Celsius). These model simulations are from CMIP6 models and downloaded from https://github.com/swartn/cmip6-gmst-anoms.

The earth is presently about 1.1 degrees Celsius above preindustrial temperatures, so we have already warmed about 17 percent of an ice age, and the impacts are clear. For example, there is widespread agreement in the scientific community that climate change contributed to the unprecedented rainfall during Hurricane Harvey in 2017, and that the massive heatwave in the Pacific Northwest last year could not have occurred without global warming.

But fossil fuels cause even more insidious damage. Billions of people today live in air polluted by fossil fuel combustion. This harms people in surprisingly numerous ways. One fact that stands out: One in five deaths worldwide is due to air pollution, amounting to more than 8 million deaths every year.

But fossil fuels are even worse than that. As commodities whose price is set on the world market, international politics can cause the price to whipsaw. Oil price spikes associated with Middle East conflicts, oil embargoes, and other political events have often been followed by painful economic recessions. In 2020, the price of oil dropped significantly because of the coronavirus pandemic combined with a price war between Russia and Saudi Arabia. This laid waste to the US oil industry, bankrupted oil producers, and increased unemployment.

As a consequence, US foreign policy over the last 70 years has been hyper focused on maintaining stability in the world energy market. This has led the United States, for example, to invade Iraq twice, first in 1990 and then again in 2003, starting wars that cost the United States trillions of dollars; hundreds of thousands of lives of people of many nationalities were lost.

Putting everything together, one conclusion is clear: Fossil fuels are terrible. While many people in 2022 are living much better lives because of fossil fuels, people in 2100 will be much worse off because of them.

The story doesn’t end there. The world needs power. People need it so much, in fact, that as bad as fossil fuels are, people would continue to use them if there were no alternatives. But we do have an alternative: renewable energy. This means primarily wind and solar energy, although other energy sources (e.g., geothermal) will also play a role. Non-renewable energy sources such as nuclear could provide another source of climate-safe energy.

The amount of renewable energy available is almost unfathomable. Human society consumes about 15 terawatts of power. Sunlight falling on the earth provides more than 100,000 terawatts, enough to power 7,000 human civilizations. There are obviously issues with the intermittency of solar and wind. The sun is not always shining everywhere, not at night nor when it is cloudy. Similarly, the wind does not always blow.RELATED:Climate scientist: “It’s already worse than what I imagined”

However, a huge amount of research has gone into how to build a reliable energy system that relies predominantly on intermittent renewable energy. First, wind and solar power tend to be uncorrelated, so a system combining these energy sources will have more consistent power than a system that is solar- or wind-only. Thus, diversifying your energy portfolio solves a lot of the intermittency problems.

Second, we need to be able to transport power. While the sun may not be shining or the wind blowing where you are, the sun is always shining and the wind is always blowing somewhere. By enhancing our electrical grids, power can be shifted regionally from where it’s generated to where it’s needed, further reducing the impact of intermittency of solar and wind power.

Third, intermittency becomes an even smaller problem if part of the energy mix is dispatchable climate-safe energy. This means power sources that are available at any time and can be dispatched at the request of electric grid operators, including always-on energy sources such as hydroelectric, geothermal, nuclear, or natural gas with carbon capture.

Fourth, we need demand response. At times when supply simply cannot keep up with demand, we need to be able to reduce demand. This can be as simple as asking large industrial consumers to reduce their consumption. Or utilities can change consumption patterns by making power cheaper when it’s abundant and more expensive at times when it’s not. Smart appliances in homes can automatically delay running the dishwasher or drying clothes for a few hours until the utility signals that the supply of power is tight; in return for this, consumers get a break on their electricity bill.

Finally, we need energy storage. This could help the grid equalize supply and demand by storing power from wind and solar energy when there is excess supply and releasing it when there is excess demand. The price of batteries has been dropping rapidly and, as discussed below, we already see plans for more storage on the grid. Much research today is focusing on other technologies to store energy, including compressed airhydrogenpumped hydroelectric, and gravity energy.

The upshot of this is that we can largely run our economy on renewable energy. There are some edge cases where decarbonization might be hard (e.g., international airline flights), but this should not stop us from gathering the low-hanging fruit.

This leads me to the other piece of misinformation you’ll often hear: A renewable energy grid will be expensive.

There was a time when that was the case, but today the picture is quite different. Wind and solar are now as cheap as the cheapest fossil fuel power, if not cheaper. And these price comparisons typically do not include the costs of climate change, air pollution, and price variability from fossil fuels. Those costs represent an enormous subsidy for fossil fuels and, if you include them, fossil fuels become far more expensive than renewable energy.

In response to this, the market is decisively moving away from fossil fuels. In Texas, for example, 95 percent of the energy connections to the electrical grid planned for the next four years are for renewable energy (60 percent solar, 16 percent wind, 18 percent battery).

It’s great news that our electricity system is already switching over to renewable energy. But it’s not happening fast enough. On our present trajectory, we will continue to use fossil fuels well into this century, leading to warming of 3 degrees Celsius above pre-industrial temperatures by 2100, well above the target that the world has agreed upon, 1.5-2 degrees Celsius. Given that our present warming of 1.1 degrees Celsius is already causing severe and expensive impacts, 3 degrees Celsius would be a planetary disaster.

The transition has been sluggish because the price of fossil fuels is kept artificially low. Consumers and businesses do not pay the full cost of the climate, health, and other related costs of fossil fuel use. This could be largely solved by making consumers pay the full cost of their energy through a carbon tax or cap and trade system. If society had to pay the full costs of energy, fossil fuels would quickly disappear from the energy market.

The climate problem is therefore quite simple: Fossil fuels are terrible for humanity, and we can switch at relatively low cost to an economy largely powered by renewable energy. So why aren’t we doing that?

The blame, in my view, lies with economists. Not all economists, mind you, but a group of influential thinkers in the mid-20th century who pushed governments towards implementing an extreme view of free markets. They also said that the social responsibility of corporations was to make as much money as possible. One of the most influential of these thinkers, Milton Friedman, called this the Friedman Doctrine. It was immortalized by Oliver Stone in the movie Wall Street, when one of the main characters proudly declares, “Greed is good!”

via GIPHY

Beginning in the 1970s and 1980s, the United States saw government oversight shrink while corporations became laser-focused on profits. This deregulation effort delivered benefits like cheaper airline tickets for consumers. But the lack of government oversight combined with the imperative to make profits as large as possible also resulted in some terrible outcomes. These include climate change and the skyrocketing price of lifesaving drugs like insulin.

The fundamental problem is that free markets can’t solve environmental problems. Most environmental problems are externalities, or costs imposed on people who are not part of the transaction. Climate change is a classic externality—if you consume a gallon of gas or a kilowatt of electricity, the resulting carbon dioxide causes climate change everywhere, thereby imposing costs on everyone in the world. The costs of this climate change are not paid by the consumer, so this is a hidden subsidy of fossil fuels.

To corporations, externalities are terrific! If the goal of a corporation is to make as much money as possible, then it wants to push as many of the costs onto society as possible, which increases corporate profit. Because externalities benefit corporations, solving problems that arise from them, like climate change, requires government regulation. If the government is unwilling to regulate in some fashion, then climate change will never be fixed.

Following the Friedman Doctrine, corporations work hard to ensure that our government is not able to regulate. They funnel enormous quantities of money into the political process. This includes lobbying for preferred legislation and working to elect candidates who, once in office, return the favor by passing laws that support continued use of fossil fuels. For example, dozens of state legislatures have passed laws that criminalize protest around oil and gas infrastructure. In Texas, recent laws have forced the state’s investment funds to divest from institutions that boycott fossil fuels and prohibited Texas cities from exercising local control over drilling regulations, after the city of Denton banned fracking.

Fossil fuel corporations have also tried to stifle regulation by spending millions of dollars over the last few decades casting doubt on the science of climate change, despite their own researchers accurately assessing the risk. This closely paralleled what tobacco corporations did decades earlier. This shows the true problem with our version of free-market, profit-maximizing economics: Today’s economy does not create wealth that makes everyone better off, but rather generates enormous benefits for corporations while generating few benefits or even net harms for everyone else.

In the end, climate change is not a scientific or technical problem. The scientific community understands how fossil fuels cause climate change, and technology to solve the problem exists. Rather, climate change is a political problem. We need to return to the 1970s, a time when Republicans and Democrats overwhelmingly passed legislation forming the EPA. We need to understand that a world in which corporations care only about maximizing profits demands that the government protect the interest of the people.

Andrew Dessler

Andrew Dessler is a climate scientist who studies both the science and politics of climate change. He is a Professor of Atmospheric Sciences and… Read More

One Of The World’s Wealthiest Oil Exporters Is Becoming Unlivable

Advertisements

Trying to catch a bus at the Maliya station in Kuwait City can be unbearable in the summer.
About two-thirds of the city’s buses pass through the hub, and schedules are unreliable. Fumes from bumper-to-bumper traffic fill the air. Small shelters offer refuge to a handful of people, if they squeeze. Dozens end up standing in the sun, sometimes using umbrellas to shield themselves.

Here is the story as told by Fiona MacDonald (Bloomberg) as published by gCaptain on 16 January 2022.

The image above is for illustration and is of State Magazine.

Kuwait, One Of The World’s Wealthiest Oil Exporters Is Becoming Unlivable

“The Al Burqan Oil Field can be seen in this north-looking view. The country of Kuwait possesses about one-fifth of the world’s oil reserves. To the north of the Al Burqan Oil Field, Kuwait City is discernible. New pivot-irrigation fields (dark circular features) developed since the end of the Gulf War are visible to the west (left) of the city. Oil refineries and large tanker facilities are discernible along the Persian Gulf coast.” NASA Photo ID STS080-733-21

Global warming is smashing temperature records all over the world, but Kuwait — one of the hottest countries on the planet — is fast becoming unlivable. In 2016, thermometers hit 54C, the highest reading on Earth in the last 76 years. Last year, for the first time, they breached 50 degrees Celsius (122 Fahrenheit) in June, weeks ahead of usual peak weather. Parts of Kuwait could get as much as 4.5C hotter from 2071 to 2100 compared with the historical average, according to the Environment Public Authority, making large areas of the country uninhabitable.

For wildlife, it almost is. Dead birds appear on rooftops in the brutal summer months, unable to find shade or water. Vets are inundated with stray cats, brought in by people who’ve found them near death from heat exhaustion and dehydration. Even wild foxes are abandoning a desert that no longer blooms after the rains for what small patches of green remain in the city, where they’re treated as pests.

“This is why we are seeing less and less wildlife in Kuwait, it’s because most of them aren’t making it through the seasons,” said Tamara Qabazard, a Kuwaiti zoo and wildlife veterinarian. “Last year, we had three to four days at the end of July that were incredibly humid and very hot, and it was hard to even walk outside your house, and there was no wind. A lot of the animals started having respiratory problems.”

Unlike countries from Bangladesh to Brazil  that are struggling to balance environmental challenges with teeming populations and widespread poverty, Kuwait is OPEC’s number 4 oil-exporter. Home to the world’s third-largest sovereign wealth fund and just over 4.5 million people, it’s not a lack of resources that stands in the way of cutting greenhouse gases and adapting to a warmer planet, but rather political inaction.

Even Kuwait’s neighbors, also dependent on crude exports, have pledged to take stronger climate action. Saudi Arabia last year said it would target net-zero emissions by 2060. The United Arab Emirates has set a goal of 2050. Though they remain among the biggest producers of fossil fuels, both say they are working to diversify their economies and investing in renewables and cleaner energy. The next two United Nations climate conferences will take place in Egypt and the UAE, as Middle East governments acknowledge they also stand to lose from rising temperatures and sea levels.

Kuwait, by contrast, pledged at the COP26 summit in November to reduce greenhouse gas emissions 7.4% by 2035, a target that falls far short of the 45% reduction needed to meet the Paris Agreement’s stretch goal of limiting global warming to 1.5C by 2030. The nation’s $700 billion sovereign wealth fund invests with the specific aim of hedging against oil, but has said that returns remain a priority as it shifts to more sustainable investing.

“Compared with the rest of the Middle East, Kuwait lags in its climate action,” said Manal Shehabi, an academic visitor at Oxford University who studies the Gulf nations. In a region that’s far from doing enough to avoid catastrophic global warming, “climate pledges in Kuwait are [still] significantly lower.”

Sheikh Abdullah Al-Ahmed Al-Sabah, head of the EPA, told COP26 that his country was keen to support international initiatives to stabilize the climate. Kuwait also pledged to adopt a “national low carbon strategy” by mid-century, but it hasn’t said what this will involve and there is little evidence of action on the ground.

That prompted one Twitter user to post pictures of wilted palm trees, asking how his government had the nerve to show up.

Jassim Al-Awadhi is part of a younger generation of Kuwaitis increasingly worried about their country’s future. The 32-year-old former banker quit his job to push for a change that experts argue could be Kuwait’s key to addressing global warming: revamping attitudes toward transportation. His goal is to get Kuwaitis to embrace public transport, which today consists only of the buses that are mostly used by migrant workers with low-paying jobs who have no choice but to put up with the heat.

It’s an uphill struggle. Though Kuwait has among the world’s highest carbon-dioxide emissions per capita, the idea of ditching their cars is completely foreign to most residents in a country where petrol is cheaper than Coca Cola and cities are designed for automobiles.

The London School of Economics, which conducted the only comprehensive survey of climate opinions in Kuwait, found older residents remain skeptical of the urgency, with some speaking of a conspiracy to hobble Gulf economies. In a public consultation, everyone over 50-years-old opposed plans to build a metro network like those already operating in Riyadh and Dubai. And the private sector sees climate change as a problem that requires government leadership to solve.

“When I tell companies let’s do something, they say it’s not their business,’’ Al-Awadhi said. “They make me feel I’m the only one who has problems with transport.”

That’s partly because most Kuwaitis and wealthy residents are shielded from the effects of rising temperatures. Homes, shopping malls and cars are air-conditioned, and those who can afford it often spend summers in Europe. Yet, the heavy reliance on cooling systems also increases the use of fossil fuels, leading to ever hotter temperatures.

The situation is much worse for those who can’t escape the heat, mainly laborers from developing countries. Though the government prohibits peak afternoon outdoor work during the hottest summer months, migrant workers are often seen toiling in the sun. A study published in Science Direct last year found that on extremely hot days, the overall number of deaths doubles, but it triples for non-Kuwaiti men, more likely to take on low-paid work.

It’s a cycle that’s all too clear to Saleh Khaled Al-Misbah. Born in 1959, he remembers growing up when homes rarely had air conditioners, yet felt cool and shaded, even in the hottest months. As a child, he played outside through months of cooler weather and slept on the roof in the summers; it’s too hot for that now. Children spend most of the year indoors to protect them from either burning sun or hazardous pollution, something that’s contributed to deficiencies in vitamin D — which humans generate when exposed to the sun — and respiratory ailments.

Temperature changes in the 2040s and 2050s will have an increasingly negative impact on Kuwait’s creditworthiness, according to Fitch Ratings. Yet despite the growing risks, squabbling between the Gulf’s only elected parliament and a government appointed by the ruling family has made it difficult to push through reforms, on climate or anything else.

“The political deadlock in Kuwait just sucks the oxygen out of the air,” said Samia Alduaij, a Kuwaiti environmental consultant who works with the U.K.’s Centre for Environment, Fisheries and Aquaculture Science and UNDP. “This is a very rich country, with a very small population, so it could be so much better.”

So far, there’s been little progress on plans to produce 15% of Kuwait’s power from renewable sources by 2030, from a maximum of 1% now. Oil is so abundant that it’s burned to generate electricity, as well as fuel the 2 million cars on the road, contributing to air pollution. Some power plants have switched to gas, another fossil fuel that’s relatively cleaner but can leak methane, a powerful greenhouse gas. Consumption of electricity and water, heavily subsidized by the government, is among the world’s highest per capita, and it’s proven politically toxic to even hint at cutting those benefits.

“That obviously leads to a lot of waste,” said Tarek Sultan, vice chairman of Agility Public Warehousing Co. When fossil-fuel powered electricity “is subsidized, solar technologies that can provide viable solutions get priced out of the competition,” he said. 

Even if the world manages to cut emissions quickly enough to stave off catastrophic global warming, countries will have to adapt to more extreme weather. As it stands, experts say Kuwait’s plan is nowhere near enough to keep the country livable.

If it starts now, said Nadim Farajalla, director of the climate change and environment program at University of Beirut, a lot can be done in the coming decades, but that would need to include protection against rising sea levels, making cities greener and buildings less energy intensive. It also needs to focus on transport, a leading cause of CO2 emissions.

Khaled Mahdi, secretary general of Kuwait’s Supreme Council for Planning and Development, said the government’s adaptation plan is aligned with international policies. “We clearly identify roles and responsibilities, and all the challenges in the country,” he said, though he admitted that “implementation is the usual challenging issue.”

If the government is dragging its feet, young Kuwaitis like Al-Awadhi aren’t.

His advocacy group Kuwait Commute is starting small by campaigning for bus stop shelters to protect passengers from the sun. National Bank of Kuwait, the country’s biggest lender, recently sponsored a bus stop designed by three female graduates. Still, like much of the private sector, they remain outside the decision-making process.

“I think I’m finally making progress,” said Al-Awadhi, who hopes that getting more Kuwaitis to ride buses will fuel enough demand to improve the service. But “it has to be driven by the government. It’s the chicken before the egg.”

–With assistance from Akshat Rathi and Hayley Warren.

© 2022 Bloomberg L.P.

MENA region’s GDP to surge by over 3x by 2050

Advertisements

MENA region’s GDP to surge by over 3x by 2050 according to Gulf Capital White Paper as reported by SME10X . In effect, the oil and gas trade revenues allow considerable financial power and a strategic position on the international scene for those exporting countries but also a source of vulnerability for their economies, especially in the aftermath of not only this recent COP26 but to also the ensuing COPs Let us nevertheless look at this prediction of this white paper.

MENA region’s GDP to surge by over 3x by 2050

.

A New report quantifies unprecedented growth opportunities across “Ascending Asia” which is set to drive 40 percent of global consumption by 2040.

Gulf Capital has released a white paper, “Bridging West and East Asia: The Investment Case for Ascending Asia”, that outlines the significant future growth of the Asian economies and the growth in the intra-regional trade and investment flows between West Asia, including the GCC, and East Asia.

The study, jointly published by Gulf Capital and Dr Parag Khanna, Founder and Managing Partner of FutureMap, reveals that the MENA region is expected to increase its GDP by over 3x by 2050, the ASEAN region is expected to grow by 3.7x, and India by 5x. This turbo-charged growth is in sharp contrast to the projected slower growth of the European and US economies at only 1.5x and 1.8x respectively for the same period.

Within greater Asia, the GCC and Southeast Asia are two ascending regions with rising youth populations where demographic and technological shifts will generate a significant expansion of the services sectors. Across these societies, rising affluence and consumption will drive business expansion, corporate profits, and higher valuations. Longer-term reforms including capital account liberalization and accelerated privatization will unlock fresh investment inflows into new Asian listings.

Dr Karim El Solh, Co-Founder and Chief Executive Officer of Gulf Capital, said: “The unprecedented growth opportunities presented by the emergence of ‘Ascending Asia’ have never been greater. The strong macro-economic fundamentals, a growing middle class and youth population, increasing GDP per capita, rapid adoption of technology, and growing intra-regional trade and investment flows will only strengthen the case for the Asian economies. We are fortunate to be investing and operating across Ascending Asia from the GCC to the Near East and Southeast Asia, where we have acquired a large number of companies in the past.”

Additionally, East and West Asia’s deepening trade and investment networks indicate that capital, companies, and consumers will increasingly traverse the Indian Ocean and strengthen ties along the new Silk Roads, stitching the region into a whole greater than the sum of its parts.

El Solh concluded, “Against the backdrop of the evolving megatrends of deepening trade links, sizable FDI flows, greater political cooperation, and the fastest growing consumer sector, Gulf Capital is ideally poised to capitalize on this once in a generation cross-border opportunity. It is our firm belief that if investors want to capture rapid growth over the next three decades, they need significant exposure to the fastest growing industries across Ascending Asia.”

.

UAE must learn from UK’s COP26 when it takes climate leadership

Advertisements

It should not be any surprise to witness first-hand that the good destiny of the planet appears to be postponed from COP to COP because of the obvious preponderance of petrodollars over any agreement, even at the now well-proven cost of jeopardising the planet’s Climate. The UAE must learn from UK’s COP26 when it takes climate leadership by Jonathan Gornall who rightfully forehears “voices will be raised protesting that handing control of COP28 to the UAE is akin to asking a fox to beef up the security of a chicken coop”.

One of the world’s biggest producers of fossil fuels will be in charge of negotiations to wean the world from its addiction to fossil fuels

With hindsight, it seems incredible that, until now, ever since COP1 in 1995 the words “coal” and “fossil fuel” have failed to make the cut in the final reports of any of the Conferences of the Parties to the UN’s Framework Convention on Climate Change.

That would be like a report by the World Health Organization on the global response to Covid-19 failing to mention the SARS-CoV-2 virus – unthinkable.

As every schoolchild in the world surely knows, the climate-change catastrophe looming over the planet has been generated by the unfettered burning of fossil fuels – coal, oil and gas – since the dawn of the coal-powered Industrial Revolution in the 18th century.

The annual failure of COP delegates to acknowledge the fossilized elephant in the room has, of course, been the product not of ignorance, but of the myriad social and economic pressures, experienced by multiple countries at different stages of development.

Forget elephants, the animal present at every COP for the past quarter of a century has been a giant ostrich, with its head buried deep in the ground. At Glasgow, the ostrich was finally allowed to raise its head, albeit only for a brief peak at reality. Even then, attempts to overthrow King Coal were watered down by last-minute interventions from its loyal subjects, China and India.

What the world needs now, more than anything else, is compelling leadership.

One announcement to come out of Glasgow was that COP28 in 2023 would be staged in the United Arab Emirates, home to the UN-created International Renewable Energy Agency (IRENA). This isn’t the first time the COP roadshow has traveled to the Middle East – in 2012 COP18 was held in Doha – but a decade on the climate-change landscape has changed utterly.

Doha was not insignificant. It was one of a series of dull but necessary COPs that paved the way toward the Paris Agreement in 2015, and it was the first time that developing countries signed up to a legal obligation to reduce their emissions.

The Paris Agreement was to limit global warming to 1.5 degrees Celsius above pre-industrial levels. To achieve that, the world needs to cut global greenhouse-gas emissions by more than 26 billion metric tons every year between now and 2030. To say that the total emission-reduction pledges scraped together in Glasgow of just over 6 billion tons fell short is to understate the huge gap between ambition and commitment.

It highlights the monumental scale of the challenge for the country presiding over these conferences. That the UK’s COP26 president Alok Sharma was almost in tears as he announced the watered-down deal goes some way to illustrate the personal and institutional commitments required by the host.

The kind of leadership needed to rally the world’s nations and their disparate interests to commit to an agreement often appears beyond possibility. Then there is the task of making sure the outcomes and expectations of any COP event are stuck to.

The UK had to draw deep on its resources and global leadership experience just to make Glasgow happen. With more than 25,000 delegates descending on the city, the policing bill alone was estimated at the equivalent of more than US$300 million.

The pandemic brought big challenges to hosting the event, but it also gave Sharma’s team an extra year to prepare after COP26 was pushed back from 2020. The UK won the bid to host the event in September 2019, but Sharma was only appointed president in January 2020 after Prime Minister Boris Johnson fired his predecessor Claire Perry O’Neill.

The jostling showed the escalating importance placed on the herculean task of cajoling global powers into alignment on saving the planet.

While many have called the COP26 outcomes a failure, Sharma won praise for his balanced leadership that involved building relations with small island states most at risk from rising sea levels while handling tricky meetings with Chinese officials in Beijing.

It is some of these skillsets that the UAE will have to draw upon as it prepares to take the reins in 2023. The Emirates has been entrusted to host the event based on its existing commitments toward the environment and renewable energy, including investing heavily in the new sciences of carbon capture, utilization and storage (CCUS), and nuclear energy.

Yet the UAE has more to lose than many countries from the inevitable transition to sustainable fuels, but much more to gain than most in shaping the elements of tomorrow’s energy market – and, thanks to its oil and gas revenues, it has the necessary funds to invest in the future today.

But forging its own path is very different to consensus-building between nations with conflicting interests. What lessons can be learned from previous COP hosts and how the UAE can build on their efforts yet bring its own style of leadership is yet to be seen.

Doubtless many voices will be raised protesting that handing control of COP28 to the UAE is akin to asking a fox to beef up the security of a chicken coop. Fingers will also be pointed at comments this week from the group chief executive of Abu Dhabi National Oil Company (ADNOC) that “the oil and gas industry will have to invest over $600 billion every year … until 2030 … just to keep up with expected demand.”

But to express alarm at this is to misunderstand the nature of a global energy system undergoing dramatic change.

None of the world’s countries can “simply unplug” abruptly from fossil fuels. The world is recovering from the Covid-19 pandemic and demand for oil and gas is rocketing – in the process creating the essential wealth in the Persian Gulf region necessary to fund and drive the transition to renewables.

For the UAE and countries such as Saudi Arabia, much of the profit being drawn out of the earth now is being plowed directly into the type of research and development that ultimately will save the planet.

The UAE is working hard to curb its own domestic consumption of fossil fuels. Last month, it announced it was aiming for net-zero carbon emissions by 2050 – an ambitious target on a par with those of the UK, the US and the European Union.

How? Well, it turns out that oil was not the only economic blessing bestowed on the fossil-fuel-producing countries of the Middle East.

Sunlight is the resource that gives on giving and, in the Gulf, is available for the greatest part of the year. The UAE is already leading the way with domestic solar power plants and investing in solar technology. 

COP28 in 2023 will put one of the world’s biggest producers of fossil fuels in charge of negotiations to wean the world from its addiction to fossil fuels. It will put the UAE under a global spotlight that will require an exemplary level of leadership and diplomacy if the climate negotiations will continue to move forward.

And as the outcome of the UK meeting demonstrated, progress is incremental. 

.

Jonathan Gornall is a British journalist, formerly with The Times, who has lived and worked in the Middle East and is now based in the UK.

.