A new framework for climate finance needs to be comprehensive and unlock a “supercharged” stream of private capital, Cop28 President-designate Dr Sultan Al Jaber has said.
His remarks came during a meeting of the The Independent High-Level Expert Group on Climate Finance, who gathered at Abu Dhabi Global Market on Tuesday and Wednesday to discuss setting up a new framework for international climate finance.
The fresh road map will include addressing debt distress in vulnerable countries, and the role of the private sector in delivering increased finance.
The attendees said that private finance flows need to grow faster to meet the $2.4 trillion in total investment estimated to be required annually by 2030 to address climate change in emerging markets and developing economies.
"For too long, climate finance has divided the international community and held back progress in tackling climate change and supporting countries most impacted by it,” said Dr Al Jaber, who is also the Minister of Industry and Advanced Technology.
“But climate finance is the issue that lies at the core of the Cop28 agenda because finance is how we transform goals into reality,” he said.
Cop28 is scheduled to be held in Dubai from November 30 to December 12, and is expected to be the most inclusive Cop conference yet.
The Cop28 presidency has named fixing climate finance one of its four priority action pillars, alongside fast-tracking the energy transition, ensuring full inclusivity, and addressing lives and livelihoods.
“All forms of finance must be made more available, more accessible, and more affordable. [Multilateral development banks] must be adequately capitalised and provide much more concessional finance to lower risk and bring more private capital to the table,” Dr Al Jaber said.
The climate finance framework will be designed to guide all institutions, including UN agencies, the International Monetary Fund and the World Bank.
All the attendees agreed that the primary focus of their work would be to rapidly increase international climate finance between now and the end of the decade to support emerging markets and developing economies.
“The IMF is committed to ensuring climate policy support and finance are reaching those most in need ... We look forward to partnering with all stakeholders in the lead up to Cop28 and working to drive stronger partnerships between the public and private sector for climate success," said Kristalina Georgieva, managing director of the fund.
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, according to the International Energy Agency.
The IEA’s stated policies scenario (Steps), which is based on the latest policy settings worldwide, expects clean energy investment to rise to slightly more than $2 trillion by 2030.
Developing countries are facing a massive investment shortfall in the renewables sector and require debt relief to create fiscal space that supports clean energy transition to meet their climate and sustainable development goals, according to the UN Conference on Trade and Development.
They require about $1.7 trillion per year in the clean energy sector but only managed to attract foreign direct investment worth $544 billion in 2022, the Unctad said in its World Investment Report last month.
"We are all in no doubt of the urgency of the challenges, of the scale of the problems that we must tackle, and of the global action necessary to rise to these challenges," said Nicholas Stern, co-chair of the IHLEG.
Dr Vera Songwe, co-chair of the IHLEG, added: "Over the last few months every corner of the world has been hit by a climate event. We must act fast, collectively and at scale to turn these climate disruptions into a growth opportunity for people and planet."
WHAT FANS WILL LOVE ABOUT RUSSIA
FANS WILL LOVE
Uber is ridiculously cheap and, as Diego Saez discovered, mush safer. A 45-minute taxi from Pulova airport to Saint Petersburg’s Nevsky Prospect can cost as little as 500 roubles (Dh30).
FANS WILL LOATHE
Uber policy in Russia is that they can start the fare as soon as they arrive at the pick-up point — and oftentimes they start it even before arriving, or worse never arrive yet charge you anyway.
FANS WILL LOVE
It’s amazing how active Russians are on social media and your accounts will surge should you post while in the country. Throw in a few Cyrillic hashtags and watch your account numbers rocket.
FANS WILL LOATHE
With cold soups, bland dumplings and dried fish, Russian cuisine is not to everybody’s tastebuds. Fortunately, there are plenty Georgian restaurants to choose from, which are both excellent and economical.
FANS WILL LOVE
The World Cup will take place during St Petersburg's White Nights Festival, which means perpetual daylight in a city that genuinely never sleeps. (Think toddlers walking the streets with their grandmothers at 4am.)
FANS WILL LOATHE
The walk from Krestovsky Ostrov metro station to Saint Petersburg Arena on a rainy day makes you wonder why some of the $1.7 billion was not spent on a weather-protected walkway.
Dirham Stretcher tips for having a baby in the UAE
Selma Abdelhamid, the group's moderator, offers her guide to guide the cost of having a young family:
• Buy second hand stuff
They grow so fast. Don't get a second hand car seat though, unless you 100 per cent know it's not expired and hasn't been in an accident.
• Get a health card and vaccinate your child for free at government health centres
Ms Ma says she discovered this after spending thousands on vaccinations at private clinics.
• Join mum and baby coffee mornings provided by clinics, babysitting companies or nurseries.
Before joining baby classes ask for a free trial session. This way you will know if it's for you or not. You'll be surprised how great some classes are and how bad others are.
• Once baby is ready for solids, cook at home
Take the food with you in reusable pouches or jars. You'll save a fortune and you'll know exactly what you're feeding your child.
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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.”
