Cop26 delegates were locked in a linguistic battle on Friday as they pored over pages of contentious texts on how to save the planet from rising temperatures.
Negotiators missed a 6pm deadline to wrap up the talks as they tussled over phrases such as “unabated” coal, “inefficient” fossil fuel subsidies and whether countries should be “urged” or “requested” to take action.
The bigger picture in Glasgow – the challenge of stopping catastrophic climate change – remained unresolved as the 12-day summit stretched into overtime.
Summit president Alok Sharma planned to hold further rounds of talks with delegates before presenting the final texts for approval.
The agreements will show how far they have reached consensus on phasing out fossil fuels and meeting the financial costs of climate change.
New draft texts released around dawn on Friday were described as a bit weaker than the previous versions, largely based on interpretations that the language calling on countries to have another go at their climate plans by next year was watered down.
A closely watched line on fossil fuels and coal survived the revisions – though it was tweaked after resistance from some countries, including China. The proposal now is to phase out “unabated” coal.
That allows for some wiggle room and falls short of the Cop26 goal to “consign coal to history”.
For experts the "unabated" term generally means burning the fossil fuel without using any emission-reduction technologies, such as carbon capture and storage.
John Kerry, the US climate envoy, welcomed the latest draft text on “unabated” coal use, and also a reference that “inefficient” subsidies be phased out – instead of all of the incentives offered by states.
“That language must stay,” he said. “We’re not talking about all, we’re talking about eliminating. We’re talking about the capacity for capture, if you can do it.”
EU climate policy chief Frans Timmermans said the summit needed to "finally turn the page on coal".
"Let’s leave Glasgow with a strong action on coal power and subsidies for fossil fuels, because without these concrete steps, our targets will be utterly meaningless," he said.
2100
The previous draft stated that countries recognise limiting global warming “to 1.5°C by 2100 requires rapid, deep and sustained reductions in global greenhouse gas emissions”. The new version omits “2100”.
Felix Schenuit, a visiting fellow with Berlin-based foreign policy think tank SWP Europe, said the shift in the text is significant.
It closes a backdoor that would have allowed the world to heat beyond 1.5°C in the next few decades, before dropping back to that level by 2100 by sucking up carbon dioxide from the atmosphere.
“Politically, the new version is more ambitious wording,” Mr Schenuit said.
Raising ambition
One of the common phrases in Glasgow is that delegates must “raise their ambition”, a term that is rarely heard outside of the UN climate negotiations.
Fifty countries most vulnerable to climate change said the new draft did .not go far enough to compel nations to come back with tougher pledges to cut emissions.
“We are not happy with the annual ambition raising being relegated to a round-table of ministers and only focused on mitigation, and being open-ended rather than until, for example, 2025,” a spokesman for the group of countries said.
Cop negotiators are long used to squabbles over tiny details of every text, and the Glasgow summit has been no different to its predecessors.
Requests and urges
The new draft that dropped on Friday morning additionally “requests” countries come back with new carbon-cutting pledges next year. That replaces the word “urges” in a previous draft.
Now people are trying to work out which word is stronger.
Usually in UN-speak, “urges” is the trump word. But an official style guide by the United Nations Framework Convention on Climate Change suggested the reverse is true.
Cop26 president the UK consulted UN lawyers in New York and was that “requests” is the stronger demand.
It is these battles that are destined to stretch the two-week summit into “overtime” as it nears its end.
Skewed figures
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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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