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How parties react to the latest version of the global stocktake text will be “decisive” over the next two days as pressure grows to agree a deal before the summit's scheduled end on Tuesday.
Language on phasing out fossil fuels remains in the text that was published on Friday night but there are now five options on the critical issue, with one simply stating “no text”.
However, the text has now paragraphs rather than bullet points to show how it is evolving.
Ministers are expected to discuss it on Saturday in a series of bilateral meetings with an informal plenary scheduled by the Cop28 Presidency for 8pm. A high-level ministerial meeting is also to take place.
Five options on fossil fuels in the stocktake text:
Option 1: A phase-out of fossil fuels in line with best available science
Option 2: Phasing out of fossil fuels in line with best available science, the Intergovernmental Panel on Climate Change’s 1.5ºC pathways and the principles and provisions of the Paris Agreement;
Option 3: A phase-out of unabated fossil fuels recognising the need for a peak in their consumption in this decade and underlining the importance for the energy sector to be predominantly free of fossil fuels well ahead of 2050
Option 4: Phasing out unabated fossil fuels and to rapidly reducing their use so as to achieve net-zero CO2 in energy systems by or around midcentury;
Option 5: No text
“These building blocks give us what we need to construct a global action plan centred on phasing out fossil fuels with renewable energy, and scaling up finance for developing countries,” said Tom Evans, climate change expert at think tank E3G.
“The architects of ambition now must assemble. They can defend and refine the strongest options on the table and push back on the weak proposals peppered throughout the paper. The next 48 hours will be decisive.”
The draft text of the stocktake also includes options on coal, with one calling for “a rapid phase-out of unabated coal power this decade and an immediate cessation of the permitting of new unabated coal power generation, recognising that the IPCC suggests a pathway involving a reduction of unabated coal use by 75 per cent from 2019 levels by 2030” with the second option having no text.
“The draft text on the global stocktake includes clear recognition that current pledges for action by countries are collectively inadequate to avoid dangerous climate change,” said Bob Ward, policy director at the Grantham Institute for Climate Change at the London School of Economics.
“However the text also still includes many sections where there are one or more options, showing that there is still quite a lot of disagreement between countries,” he said.
“For instance, the text about the future levels of fossil fuel use has five options. Countries will need to work hard over the next few days to reach agreement on the text without resorting to the weakest language and the lowest ambition.”
The latest draft of the stocktake shows how the battle lines are being drawn with days to go before Cop28 ends. There is still significant amounts of work for ministers to do to put clear language into the draft.
More than 100 countries have said they want a phasing out of fossil fuels. Hard talks lie ahead, as countries such as Russia and Saudi Arabia have resisted such language.
Some negotiating blocs, such as the Alliance of Small Island States, have also made calls during Cop28 for clear decisions on phasing out fossil fuels.
According to E3G, the positive aspects of the draft text include the fact that “phase down” of fossil fuels is mentioned with stronger language on ending fossil fuel subsidies; calls for more ambitious nationally determined contributions, and strong political action to deliver this to Cop30.
But it said the concerning parts were the mention of “transitional” fuels which is usually another word for gas, and language on abatement is still there.
Dr Sultan Al Jaber, Cop28 President, on Friday urged parties to step out of their comfort zones to deliver a good outcome to the summit.
“The next few days have the potential to deliver a paradigm shift – to put the most vulnerable at the centre of climate action,” he said.
Ministerial pairs are also looking at gaps in the talks to identify where progress is needed.
“Let’s get this job done,” Dr Al Jaber said.
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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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