UAE clean energy company Masdar and US aerospace major Boeing have teamed up to help advance the sustainable aviation fuel (SAF) industry in the Emirates and globally, as the commercial aviation sector pushes forward with its goal of achieving net-zero emissions by 2050.
The companies will collaborate in the development and adoption of policies, including accounting principles, for SAF, which are expected to help the industry overcome geographical barriers as its use continues to increase, Abu Dhabi-based Masdar said on Thursday.
The growth of the SAF industry will enable job creation and "significant" business opportunities, as well as contribute to economic growth, it said.
The companies signed a preliminary agreement at the Adipec conference in Abu Dhabi.
“Global net-zero goals can only be achieved through international collaboration and innovation," said Mohammad El Ramahi, chief green hydrogen officer of Masdar.
"Together, we will advocate enabling policies to nurture this key market. Ahead of the UAE hosting Cop28 we will continue to leverage our combined knowledge, expertise and passion to support industry and create a more sustainable future for all.”
The Cop28 climate change conference is scheduled to be held in Dubai from November 30 to December 12 and is expected to be the most inclusive yet.
SAF refers to alternative fuels made from renewable sources, such as green hydrogen that are used to power aircraft.
The International Air Transport Association estimates that SAF could contribute to about 65 per cent of the reduction in emissions needed by the aviation industry to reach its net-zero emissions by the middle of the century.
Meanwhile, the International Civil Aviation Organisation says SAF can reduce carbon emissions over the fuel’s life cycle by up to 85 per cent in comparison with petroleum jet fuel.
However, its adoption is still in early stages due to small-scale production and the green fuel's higher cost, compared with conventional kerosene.
Producing the required quantities of SAF would need large areas of land and natural resources.
Air passengers will most likely have to foot the bill for switching to the cleaner fuel as the airline industry says its razor-thin profit margins means it has to pass on some of the cost to passengers, Iata said.
UAE industry majors have been active in supporting the SAF industry. On Tuesday, Adnoc's Ruwais refinery received the International Sustainability Carbon Certification to produce SAF, in a first for a company in the Middle East.
On Monday, Dubai's Emirates, the world's largest long-haul carrier, signed an agreement with Shell Aviation for the supply of more than 300,000 gallons of blended SAF for use at its hub in Dubai.
"Adopting SAF is going to be aviation's most powerful decarbonisation lever. Over a decade of collaboration between Boeing and the UAE in sustainable aviation is a testament to our shared goal of achieving net-zero emissions by 2050," Kuljit Ghata-Aura, president of Boeing Middle East, Turkey and Africa, said.
Earlier this year, at the Abu Dhabi Sustainability Week, Masdar also announced that its initiative focusing on green hydrogen to produce SAF is actively working with licensers to certify a new production pathway for SAF from methanol.
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Full list of Emmy 2020 nominations
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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.”
Real estate tokenisation project
Dubai launched the pilot phase of its real estate tokenisation project last month.
The initiative focuses on converting real estate assets into digital tokens recorded on blockchain technology and helps in streamlining the process of buying, selling and investing, the Dubai Land Department said.
Dubai’s real estate tokenisation market is projected to reach Dh60 billion ($16.33 billion) by 2033, representing 7 per cent of the emirate’s total property transactions, according to the DLD.