Snow may have fallen in Ras Al Khaimah over the weekend but the Arctic is unusually warm. With temperatures almost 30°C above normal in some areas, sea-ice cover has fallen to record low levels. Dark seas instead of white ice absorb more sunlight, driving further global warming. Last year was already the hottest year on record worldwide. And human emissions of greenhouse gases are almost certainly responsible.
Meanwhile, progress on some of the main elements of climate policy is far short of what is needed. These include a binding global agreement to reduce emissions; sharp reductions in emissions; and dealing with the backlog of carbon dioxide already in the atmosphere.
April’s acclaimed Paris climate agreement, signed by 194 states including the UAE, is non-binding. Signatories are not committed to any consistent plan of action, but only those they themselves propose – and there is no enforcement mechanism. The US seems set to withdraw, or at best not to implement its commitments.
Even if all countries fulfil their Paris plans, the world will warm by 2.5°C to 3.1°C by 2100, better than the 4°C without climate policies but above the still-dangerous 2°C limit that Paris was meant to achieve.
On emissions cuts, there is much justifiable celebration in the renewables industry over recent progress in solar and wind power. These are now more competitive than coal or gas power generation in many areas, although backup remains a concern. Companies such as Tesla are also confident that electric cars, so far numbering just 1 million out of more than a billion vehicles globally, are about to take off.
Electricity generation creates one quarter of global emissions, with transport – which also includes planes and ships – contributing 14 per cent.
Industry, agriculture and forestry and the energy industry’s own consumption are the other big polluting sectors; they require other approaches beyond renewable energy and more efficiency. Industries could partly switch to clean electricity. But making cement, chemicals and steel unavoidably produces carbon dioxide. Capturing this at source and storing it underground or using it to make useful products or solid minerals is the only apparent solution. But many environmentalists oppose carbon capture and storage, and it receives just a fraction of the support that has gone to solar, wind and electric cars.
Even if emissions are cut sharply from now, the accumulated atmospheric legacy, and the momentum from continuing economic growth, mean temperatures will keep rising. So actively removing carbon dioxide from the atmosphere is essential, both to tackle this backlog and to mop up continuing emissions that are too dispersed to capture. Carbon dioxide can be removed by reforestation, by burning plant material in carbon capture-equipped power plants or by “artificial trees” that absorb the gas from the air.
Given this dangerous climatic picture, Gulf countries need to reduce their own emissions. Dubai and Abu Dhabi are making encouraging steps in removing wasteful energy subsidies and introducing solar power. Intelligent investment into research and deployment of new energy technologies can help to build a clean and diverse future economy.
GCC states can play a unique role in carbon capture given their favourable combination of geology and industry. The Adnoc-Masdar joint venture Al Reyadah is a pioneer. But from 21 large-scale carbon capture plants operating or in construction worldwide today, we need thousands by mid-century. Both of these, and actively removing carbon dioxide from the atmosphere, are essential to preserve the region’s fossil fuel endowment in the global energy mix.
The Gulf states need to prepare for nasty climate surprises – heatwaves, floods or droughts in their neighbours – whipping up the storm of turbulent regional politics. The Arctic may be far from the UAE, but the arm of climate change has grown long.
Robin Mills is the chief executive of Qamar Energy and author of The Myth of the Oil Crisis.
business@thenational.ae
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A State of Passion
Directors: Carol Mansour and Muna Khalidi
Stars: Dr Ghassan Abu-Sittah
Rating: 4/5
More on Quran memorisation:
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.”
Electoral College Victory
Trump has so far secured 295 Electoral College votes, according to the Associated Press, exceeding the 270 needed to win. Only Nevada and Arizona remain to be called, and both swing states are leaning Republican. Trump swept all five remaining swing states, North Carolina, Georgia, Pennsylvania, Michigan and Wisconsin, sealing his path to victory and giving him a strong mandate.
Popular Vote Tally
The count is ongoing, but Trump currently leads with nearly 51 per cent of the popular vote to Harris’s 47.6 per cent. Trump has over 72.2 million votes, while Harris trails with approximately 67.4 million.
THE SPECS
Touareg Highline
Engine: 3.0-litre, V6
Transmission: 8-speed automatic
Power: 340hp
Torque: 450Nm
Price: Dh239,312
