Global efforts on climate change must adopt flexible solutions and climate action must not become an economic burden on developing nations, Dr Sultan Al Jaber, the UAE's Minister of Industry and Advanced Technology and UAE Special Envoy for Climate Change, said on Saturday.
A “one-size-fits-all” approach will not work and developing nations require solutions through finance, technology, incubation, policy and regulations to tackle the challenge of climate change, he said during the Saudi Green Initiative (SGI) forum in Riyadh.
“We need to accept the fact that the developing world requires a completely different set of policies and incentives. We cannot allow for climate action to become an economic burden, especially on developing nations, so we need to develop all kinds of instruments,” Dr Al Jaber said.
“It's going to take a mindset that is progressive, open, inclusive and ensures that the economics stays central in this discussion.”
Dr Al Jaber, who is also the chief executive of the state-owned Abu Dhabi National Oil Company, emphasised the importance of oil and gas in meeting the world's energy requirements and said that the “world has sleepwalked into a supply crunch” after under-investing in hydrocarbons over the past seven to eight years.
“We must come to terms with the realities on the ground: 80 per cent of the total energy requirements today come from fossil fuel; 60 per cent is well-presented by oil and gas. We can't just come out of nowhere and speak of energy transition and ignore or underestimate the impact of oil and gas in helping meet global energy requirements,” he said.
The UAE is committed to lowering its carbon emissions but the energy transition will take time, Dr Al Jaber said. The country said it aims to reach net zero emissions by 2050.
“The lowest carbon emitter and lowest cost producer will be the last barrel standing but this is going to take time, we must accept the fact that an energy transition is simply a transition and it's going to take time,” Dr Al Jaber said. “We need to be mature and sober in carrying out this discussion.
“We need to shift gears, we need to go back to the drawing board. While we accept the advancement of a very aggressive, ambitious approach towards a greener future supported by an energy mix, we must also include oil and gas because that is going to be mainstream and the spinal cord of our ability to meet the global energy requirements of the future.”
Saudi Arabia’s Energy Minister Prince Abdulaziz bin Salman also said international co-operation on technology will be “the cheaper way” to implement an energy transition.
“The world cannot operate without hydrocarbons, fossil fuels, renewables, none of these will be the saver – it has to be a comprehensive solution,” the energy minister said.
The meeting global leaders at the Cop26 in Glasgow at the end of the month must be open and inclusive about what countries are doing to contribute to carbon reduction without being “facetious about what's in their tool kit”, Prince Abdulaziz said.
For a successful Cop26 meeting, “we need to answer the challenge and not challenge the answers”, Dr Al Jaber said, as he called for a more flexible approach to tackle climate change issues.
“We all see the writing on the wall, we need Cop26 to help shift the discussion to being practical, to being solution-oriented, to being determined towards providing a flexible way of conducting business. We cannot be stuck to the fact that this is a multilateral arrangement and we have to have a one-size-fits-all approach, because that won't work,” he said.
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Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
Key recommendations
- Fewer criminals put behind bars and more to serve sentences in the community, with short sentences scrapped and many inmates released earlier.
- Greater use of curfews and exclusion zones to deliver tougher supervision than ever on criminals.
- Explore wider powers for judges to punish offenders by blocking them from attending football matches, banning them from driving or travelling abroad through an expansion of ‘ancillary orders’.
- More Intensive Supervision Courts to tackle the root causes of crime such as alcohol and drug abuse – forcing repeat offenders to take part in tough treatment programmes or face prison.
