The UK's transport emissions fell less than hoped as motorists switched to larger vehicles, scientists said. PA
The UK's transport emissions fell less than hoped as motorists switched to larger vehicles, scientists said. PA
The UK's transport emissions fell less than hoped as motorists switched to larger vehicles, scientists said. PA
The UK's transport emissions fell less than hoped as motorists switched to larger vehicles, scientists said. PA

Britain told not to relax despite 'fluke' climate progress


Tim Stickings
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Britain has beaten a climate target by 15 per cent – but it is no time to relax, ministers have been told.

The UK’s greenhouse gas emissions were comfortably within its “carbon budget” in the five years to 2022.

The budget is a cap on how much CO2 the UK can produce without falling behind in the race to net zero by 2050.

However, Britain’s climate change committee warned ministers not to treat the unused carbon budget as extra leeway in years to come.

In a letter to Graham Stuart, the minister in charge of net zero, it said the 15 per cent surplus was down to “predominantly external factors”.

These included lower transport emissions and reduced economic activity during the Covid-19 pandemic, it said.

“The path ahead is tougher and we risk losing momentum if future legal targets are loosened on a technicality,” said committee chairman Piers Forster.

“The UK is already substantially off track for 2030 and the government must resist the temptation to take their foot off the accelerator.”

Graham Stuart, the UK minister in charge of net zero, is beingurged not to loosen Britain's climate targets. Khushnum Bhandari / The National
Graham Stuart, the UK minister in charge of net zero, is beingurged not to loosen Britain's climate targets. Khushnum Bhandari / The National

A key improvement came from cleaner electricity, with Britain turning its back on coal power faster than had been predicted.

It helped Britain produce only 2,141 megatonnes of CO2 or equivalent in the five-year period, when 2,544 had been calculated in the carbon budget.

The targets become steeper as time goes on, with emissions meant to fall again to 1,950 megatonnes by 2027.

Britain must hand in a new five-year climate plan by 2025, taking into account the global battle plan agreed at the Cop28 negotiations in Dubai.

Despite the overall surplus there was a “lack of progress” in cutting emissions from cars and making heating more efficient, the committee said.

A shift to larger cars partly cancelled out a move to electric vehicles, which proceeded more slowly than hoped.

Reduced travel demand during the pandemic accounted for about 10 per cent of the emissions cuts.

Britain has pledged to reach net zero emissions by 2050 as part of a worldwide push to limit the warming of the planet to 1.5°C above pre-industrial levels.

Mr Stuart, who represented the UK at the Cop28 talks in the UAE, had taken soundings on whether the surplus could be carried forward.

Prime Minister Rishi Sunak has cited Britain’s progress towards net zero as justification for scaling back some green policies.

But the committee’s letter, signed by Prof Forster, said its “unequivocal advice” was that the next five-year budget should not be loosened.

“We need to build on our success to date by accelerating, not slowing down, emissions reductions in all sectors outside electricity supply,” it said.

Faster-than-expected progress on phasing out coal power helped Britain beat its carbon budget. Getty Images
Faster-than-expected progress on phasing out coal power helped Britain beat its carbon budget. Getty Images

Politicians are also being urged to consider the economic benefits of net zero, regarded as an overperforming sector in a weak UK business landscape.

Simon Cran-McGreehin, an analyst at the Energy and Climate Intelligence Unit, said relaxing targets would risk investment in the green sector.

“Beating the previous carbon budget was a fluke, with the pandemic and the gas crisis reducing energy demand and masking the UK’s slow progress on insulating homes and building out onshore wind,” he said.

“The net zero economy grew 9 per cent in the past year. If targets were effectively lowered, what signal does that send to global investors and where does it leave the UK’s energy security?”.

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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.”

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Updated: February 28, 2024, 11:18 AM