The UAE announced on Thursday an ambitious strategic initiative to reduce carbon emissions by 2050.
The plan will mean Dh600 billion being invested in clean and renewable energy sources in the next three decades.
It comes in a crucial year in the fight to protect the planet, with the UAE building momentum ahead of the Cop26 climate talks in the UK next month.
Sheikh Mohammed bin Rashid, Vice President and Ruler of Dubai, said the country would “play its global role in combating climate change".
He said the UAE development model will take into account the net zero goal and that all institutions would work as one team towards it.
Sheikh Mohamed bin Zayed, Crown Prince of Abu Dhabi and Deputy Supreme Commander of the Armed Forces, said: “The UAE’s Net Zero 2050 Strategic Initiative announced today is consistent with the long-standing vision of the UAE and its people to make a significant contribution to global sustainability efforts, while supporting economic and human development both at home and around the world.”
The UAE net zero announcement comes ahead of the crucial Cop26 climate conference in Glasgow next month, which has been described as the most important summit since the Paris Agreement in 2015.
The UAE “net zero by 2050 strategic initiative” aligns with the Paris deal. Agreed to in 2015 and signed by 195 countries including the UAE, the objective of the Paris deal is to limit the global average temperature increase to 1.5°C above pre-industrial levels.
Cop26 represents the first time that countries are expected to commit to enhanced pledges to cut emissions since the Paris accord was signed.
UN secretary general, Antonio Guterres, welcomed the UAE’s pledge.
“We very much welcome this very important announcement and the secretary general looks forward to the UAE submitting as soon as possible a new nationally determined contribution in line with this ambitious goal that the government set for itself,” his spokesman, Stephane Dujarric said. “We encourage other states in the Gulf to follow this example, especially ahead of the Cop-26 climate talks in Glasgow.”
The UAE's initiative, meanwhile, takes into consideration key economic sectors in the country and supports their efforts to benefit from green growth opportunities. Federal and local government authorities will develop plans to introduce the measures to reduce emissions, while also ensuring economic growth.
“Our announcement … is consistent with our drive to diversify and build a knowledge-based economy, adopt the principles of a green and circular economy, protect the environment, attract foreign direct investment and develop competencies in future growth areas,” said Mariam Al Mheiri, Minister of Climate Change and Environment and Minister of State for Food Security.
"Fantastic news that the UAE has become the first Gulf country to commit to Net Zero emissions by 2050," he said.
"This is a significant step in tackling climate change and I hope more countries commit to Net Zero ahead of Cop26."
Alok Sharma, president of the Cop26 summit, due to be held in Scotland later this month said of the UAE pledge: "I am delighted the UAE has announced it will reach net zero carbon by 2050.
"As the first net zero-carbon commitment in the Gulf, this is an historic announcement," Mr Sharma said.
"I look to others in the region to also announce ambitious climate action commitments ahead of Cop26."
Dr Sultan Al Jaber, UAE Special Envoy for Climate Change, said the announcement epitomises the vision of the UAE's leadership and drives sustainable development.
“The UAE [net zero] strategic initiative is an open invitation to the world to collaborate with the UAE in developing practical solutions, boosting multilateralism and creating opportunities for sustainable socio-economic development,” said Dr Al Jaber.
The Ministry of Climate Change and Environment will lead efforts to execute the plan. It will entail close co-operation with civil society, foreign governments and international organisations, including the International Renewable Energy Agency, which has its headquarters in the UAE.
The UAE has long been committed to protecting the environment and embracing clean energy. The country began financing clean energy projects more than 15 years ago, and has invested more than $40 billion in the sector to date.
The UAE also enjoys the world’s lowest-cost solar power and is home to three of the largest solar facilities in the world. It is also the first Arab country to develop a peaceful nuclear energy programme.
Authorities are also addressing the fact that agriculture is responsible for about a quarter of global carbon emissions. It is leading efforts to drive innovation in agritech, in particular by reducing water and energy use in farming.
The move was also welcomed by the chairman of the Abu Dhabi Department of Energy.
“The announcement of the UAE net zero by 2050 strategic initiative is a significant milestone that reflects long-term dedication to sustainable economic development and to the tenets of the 2015 Paris Agreement on Climate Change,” said Awaidha Al Marar.
“In just five years Abu Dhabi will be producing almost 55 per cent of its electricity from clean sources, halving the CO2 emissions associated with the power sector,” he said.
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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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