Irena chief resists UAE project



The head of the Abu Dhabi-based International Renewable Energy Agency (Irena) yesterday challenged a UAE-backed proposal to use UN funding to support the capturing and burying of carbon pollution. The so-called carbon-capture-and-storage (CCS) projects have been hailed by Opec countries, coal firms and many experts as necessary in the effort to cut global carbon emissions, but environmental groups and others say they are not feasible in the short term.

Hélène Pelosse, the director-general of Irena, is in the latter group. She has urged climate-change negotiators meeting this week to block efforts to classify CCS and nuclear power as clean-energy methods under the UN-led funding programme known as the Clean Development Mechanism (CDM). "The Clean Development Mechanism is not called clean out of any reason," she said in a statement. "Only 100 per cent renewable energy is clean."

CCS technology "is nothing but a Fata Morgana, technically feasible on a larger scale not before 2020", she said, referring to an Italian legend symbolising a mirage. There is an additional motivation for those who back CCS. The Clean Development Mechanism allows firms in developing countries to sell credits to their counterparts in industrialised nations for every ton of carbon they keep out of the atmosphere. The richer firms buy the credits to help meet emission limits set by the Kyoto Protocol on climate change. If CCS were brought under that umbrella, it would provide a welcome source of revenue to countries that pursue it.

The UAE, which plans to invest billions of dollars in carbon-capture projects through Masdar, the Abu Dhabi clean energy company, has lobbied heavily to include CCS technology in the financing framework of a new treaty to replace Kyoto, which expires in 2012. Such a change, officials say, would help make the technology viable on a commercial scale. The UAE is also expected to invest billions of dollars to build nuclear power plants to increase the proportion of electricity generated by low-carbon sources.

Sam Nader, the director of Masdar's carbon-management unit, confirmed yesterday that the company had not changed its position on CCS and would push to make funding available for the technology at the climate-change talks in December. "We'll be lobbying for it, as part of the UAE delegation to the Copenhagen talks," he said. Masdar expects carbon-credit sales to make up a large portion of the company's revenues.

The bid to include CCS in the carbon market has met with strong support from other oil producers and coal companies, which say the technology will allow the world to continue burning fossil fuels without harming the environment. Ms Pelosse issued her statement in response to a recommendation by the International Energy Agency, the Paris-based group of energy consuming countries, that CCS and nuclear projects be included in the CDM.

cstanton@thenational.ae

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States of Passion by Nihad Sirees,
Pushkin Press

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.”

Name: Brendalle Belaza

From: Crossing Rubber, Philippines

Arrived in the UAE: 2007

Favourite place in Abu Dhabi: NYUAD campus

Favourite photography style: Street photography

Favourite book: Harry Potter