Green economy is the world's 21st-century 'logical solution', top Abu Dhabi official says

Public and private sectors need to work together to capitalise on green growth opportunities, Mohamed Al Shorafa tells Abu Dhabi Finance Week

Mohamed Al Shorafa, chairman of the Abu Dhabi Department of Economic Development speaking at the ADFW at ADGM on Thursday. Photo: Abu Dhabi Department of Economic Development.

The green economy is the 21st century’s “logical solution” and perfecting a dynamic regulatory environment moving forward is a must for its development, chairman of the Abu Dhabi Department of Economic Development (Added) has said.

“In Abu Dhabi, our recently announced Industrial Strategy, and soon-to-be unveiled economic strategy, will focus on how we integrate green and circular elements to drive growth and diversification in a responsible and calculated manner," Mohamed Al Shorafa told delegates at Abu Dhabi Finance Week in the capital on Thursday.

“We urge you all to jump on our bandwagon, collaborate with us to expedite our continued transformation agenda."

Driving green economies can prove to be the "vital interconnectivity link of the public and private sectors" as both sides can partner towards “influencing public policy and procedures required to harness sustainability” and capitalise on green growth opportunities, Mr Al Shorafa said.

Efforts to develop a green and more sustainable economy have gained renewed impetus as the world continues to emerge from the pandemic-driven slowdown.

The UAE, which is set to host Cop28 next November, is leading global efforts for sustainability.

The UAE and the US this month signed a strategic partnership to invest $100 billion to produce 100 gigawatts of clean energy globally by 2035.

As part of the partnership, the two countries are setting up an expert group to identify priority projects, remove potential hurdles and measure progress in achieving targets.

In September, a global alliance to build a coalition of countries with climate action and sustainable development as priorities was launched at the World Green Economy Summit in Dubai.

The UAE, the Arab world’s second-largest economy, has pledged to achieve net-zero carbon emissions by 2050 in line with the targets of the Paris Agreement.

At home, the UAE has rolled out several programmes to drive policy and regulatory transformation to achieve the net zero target. The country is investing Dh600 billion ($163.5 billion) to develop new renewable energy projects as part of efforts to achieve its ambitious climate action agenda.

The UAE economy, which made a strong rebound from the pandemic-driven slowdown in 2021, has picked up pace this year and is set to expand by 5.4 per cent in 2022, the UAE Central Bank estimates.

Delegates at Abu Dhabi Finance Week, where Mohamed Al Shorafa was speaking on Thursday. Victor Besa / The National

Emirates NBD, Dubai’s biggest lender, expects the economy to expand 7 per cent in 2022, setting up the country for its fastest annual expansion since 2011, when output grew by 6.9 per cent.

Development of the future and green economy is part of the government’s 50-year development agenda as it seeks to continue its diversification efforts and capitalise on new growth opportunities.

Regionally, countries in the six-member economic block of GCC can potentially add 3 to 6 extra percentage points of growth between now and 2030 if they pursue green growth opportunities, Issam Abousleiman, World Bank director for the GCC, told delegates.

The combined economic output of GCC countries is about $2 trillion. By 2050, if the Gulf states follow “business as usual”, it will reach $6 trillion. However, if they capture green growth opportunities, their aggregate economic output will rise to $13 trillion, he added.

There is climate funding gap of about $230 billion in the Middle East and North Africa region alone, which requires a “laser focus” on increasing the “access to sustainable finance”, with participation from the private sector and governments, Younis Al Khoori, Undersecretary at the UAE Ministry of Finance, told delegates on Thursday.

“The studies suggested that the green finance can help unlock opportunities of approximately $2 trillion in economic growth and more than 1 million jobs in the GCC alone,” he said.

For the world "to hopefully keep the temperature rise to no more than 1.5°C above pre-industrial levels, the consensus view is that it is going to cost between $5 trillion and $6 trillion every year between now and 2050", Chuka Umunna, head of ESG for Europe, Middle East and Africa at JP Morgan, told a panel.

"If you look for example, just take Europe between now and 2030, European Capital Markets Institute is forecasting that it will cost around $11 trillion to get Europe on the trajectory to a net zero."

However, it is not feasible to raise that sum of cash through the public sector alone.

There is "a massive gap" and the financial sector, especially banks such as JP Morgan, will have a big role to play, he said.

"This is why we've made some pretty major commitments, the biggest by any bank in the world, arguably, in this area, because we need to do our part," Mr Umunna said.

"This is in the interest of our shareholders."