The world is making progress on energy transition but not at the speed required to meet the goal of limiting global warming to 1.5°C above pre-industrial levels as per the Paris Agreement, a senior executive of the World Economic Forum has said.
Roberto Bocca, head of energy, materials and infrastructure and member of the executive committee of the World Economic Forum, gave an interview to The National.
He said: “There is progress [on energy transition] but it is still far too slow versus what we want to do."
Universal energy access, as well as energy security, are important as the world focuses on reducing emissions, he added.
“So are we achieving universal energy access? Not yet. Are we achieving energy security at a higher level? A little bit but not enough. And are we achieving the Paris goal? No, not yet, so I think it’s going slow but it has started, that is the good news., The bad news is the speed is not there yet.”
Investment in renewable energy technology reached a record of $1.3 trillion last year but that figure must rise to about $5 trillion annually to meet the key Paris accord goals, the Abu Dhabi-based agency said in its World Energy Transitions Outlook 2023 preview in March.
Renewable capacity must grow from about 3,000 gigawatts currently to more than 10,000 gigawatts by 2030, an average of 1,000 gigawatts annually, the report suggests.
Investment in renewable energy needs to double to more than $4 trillion by the end of the decade to meet net-zero emissions targets by 2050, the International Energy Agency said in its World Energy Outlook last year.
"Investments are definitely happening globally but more is needed," Mr Bocca said, highlighting the need to invest more in emerging economies for an equitable energy transition.
In November, the UAE and the US 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 will set up an expert group to identify priority projects.
They will also seek to “bridge the gap between developed and developing countries in the investment in and deployment of clean energy to ensure global efforts to reduce emissions do not falter”, the White House said at the time.
The two countries will also work together to prioritise commercial projects in developing and poor countries, as well as support them with technical and financial assistance.
"We always to have in mind that profitability is a key element," Mr Bocca said. "So how we can put in place those mechanisms that make the profitability happen? What is the role, for example, of the financial institutions, the multilateral financial institution in enabling those investments?
"Why will an investment in Germany cost 2 per cent in terms of capital costs, and the capital costs in another region, in emerging economies, 7 to 8 per cent? That gap is impeding investors to invest."
The UAE is way ahead of "many others in moving to the energy transition ... a testament to Masdar that was created 17 years ago", he said.
The UAE is investing Dh600 billion ($163.5 billion) in clean and renewable energy projects over the next three decades as it aims to achieve net-zero emissions by 2050. The country is building the world’s largest solar plant in the Al Dhafra region of Abu Dhabi with a capacity of 2 gigawatts, as well as the Mohammed bin Rashid Solar Park in Dubai with a 5 gigawatt capacity.
The UAE will also be hosting the Cop28 summit this year, with the event providing an opportunity "to take stock of what has happened since the Paris Agreement, to see where we are and where we are not and certainly, we are not on the right track on it", Mr Bocca added.
Paatal Lok season two
Directors: Avinash Arun, Prosit Roy
Stars: Jaideep Ahlawat, Ishwak Singh, Lc Sekhose, Merenla Imsong
Rating: 4.5/5
RESULT
Leeds United 1 Manchester City 1
Leeds: Rodrigo (59')
Man City: Sterling (17')
Man of the Match: Rodrigo Moreno (Leeds)
Mohammed bin Zayed Majlis
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.”
