27 NOV 2019
Creating a future through sustainable financing
A mix of community awareness and public policy reform have made sustainability a focal point for international banking and the broader industrial and commercial settings of most economies. Environmental, social and governance (ESG) factors have become prime considerations for business, and the business bottom line is no longer composed of mere financial considerations. There is a growing international consensus that sustainability considerations must be at the forefront of all decision making, as our medium to long term wellbeing depends on a healthy environment supported by sustainable economic and social development.
Climate change has been described as the key challenge of our time. It’s the cause of rising temperature, land and sea erosion and salinity. To combat this, governments are raising awareness of initiatives launched by the United Nations (UN) such as the Sustainable Development Goals (SDG) and Paris Agreement which seeks to limit warming to 1.5 C. While some advanced economies are closer to meeting these requirements set by the UN, emerging and developing countries  are facing a funding gap that require support from banks and the private sector. Whilst 90 percent of the SDG financing needs are covering in developed nations, only 60 percent of the investment needs are addressed in emerging and developing regions (and as low as 10 percent in parts of Africa).
Looking closer to home, it is estimated that climate threats could impact the UAE’s GDP by up to 24 percent . China is predicted to face the biggest costs in absolute terms, whilst coastal communities in Sub-Saharan Africa are already being washed away, losing up to 30-35 metres of land each year.
As investors and companies continue to realise the vast implications which climate change presents, they also began taking the environment into consideration when making business decisions. Because of this, the term “sustainable investing” has garnered traction across the globe. We are now seeing many initiatives being launched worldwide in support of the UN ESG’s.
Globally, various frameworks have been introduced in the green financing field, such as the Climate Bond Initiative, the European Commission’s Sustainable Blue Economy Finance Principles and the WWF’s Blue Finance Principles. Last year Standard Chartered issued the world’s first blue bond, on behalf of The Republic of Seychelles, and raised US$15 million from impact investors to finance the expansion and transition of its marine protected areas, improve governance of priority fisheries and develop its blue economy. 
In the Middle East and North Africa region alone, there have been investments of US$163 billion in clean energy . Changing demographic needs are driving demand for infrastructure investment. The UAE energy sector is moving from hydrocarbon-based towards a diverse mix of energy sources – propelled by growing demands from rapid urbanisation in the country, oil market volatility, and greater momentum for sustainable growth. Last year Standard Chartered structured the financing for the largest renewables deal in the Gulf region for DEWA. The project is also the largest Green Belt and Road solar project and uses landmark technology which will allow Dubai to utilise solar power at a world record tariff around the clock.
Sustainability is a key driver of financial sector innovation, and is being steered by financial imperatives whereby the borrower is incentivised to become more sustainable by receiving discounted financial terms. We recently launched the world’s first Sustainable Deposit, dedicated to financing sustainable assets in developing countries aligned to the United Nations’ SDGs, allowing investors access to dynamic markets and giving them an opportunity to put their money into a vehicle that addresses some of the world’s key long-term social and environmental threats.
Liquidity raised by the Deposit will be used to finance SMEs in developing countries, support microfinance and provide funds for a variety of sustainable projects. Indeed, the industry is seeing a sharp rise in the development of products that positively impact the environment such as social and green bonds. Additionally, according to Moody’s Investors Service, global green bond issuances are forecast to increase by 20 percent, reaching US$200 billion in 2019 . In 2018, the Middle East witnessed the first green loan worth US$2 billion with an Islamic format that links pricing to environmental performance, which Standard Chartered assisted with extending its maturity.
With awareness on the UN’s SDGs at an all-time high, and demand from investors increasingly looking for options that help make our world more sustainable, financial institutions are uniquely placed to create positive impact. Driven by the fact that finance touches every aspect of the economic cycle, there are huge opportunities for banks to shift more of their balance sheets into sustainable projects to support economic and social development for the future wellbeing of the planet.
By Sunil Kaushal, Regional CEO, Africa & the Middle East, Standard Chartered
15 JAN 2020
The Decade of Energy Transformation Lies Ahead of us
As we enter a new decade, IRENA Director-General Francesco La Camera suggests the 2020s will be the golden age of renewables
The 2010s will be remembered as the decade when renewable energy went from the marginal to the mainstream. Cost reductions and the growing climate crisis have propelled renewable energy sources into the social and political discourse in almost every country on earth. Of all the major power generation technologies – traditional or renewable – solar accounts for the largest share of additional capacity over the last 10 years.
Encouraging as this progress might be, the hard work is ahead of us. Our actions in the 2020s will define the long-term future of our economies, our people and our planet. Any chance we have of mitigating the climate crisis and achieiving sustainable development by mid-century, lies in the policies, investments and emission reductions made this decade. And this critical period of action begins in Abu Dhabi at the 10th IRENA Assembly during Abu Dhabi Sustainability Week.
The 2020s are set to be the decade that redefines our socioeconomic system. If successful, we will have unleashed 10 breathtaking years of energy system transformation putting us well on the way to generating nearly nine tenths of electricity from renewables by 2050. The hard work starts now to ensure that by the end of this decade renewables contribute half of all power generation globally.
It could also be the decade in which demand for both coal and oil peaks, where we see 157 million electric vehicles on our roads, and when the last person on earth without reliable and affordable access to electricity is enjoying the benefits of its productive uses. It’s possible. To ensure this happens, however, we must urgently address two key things. Investment and policy.
Planned energy investments are currently misdirected and should pivot to low-carbon technologies. By our calculations more than USD 18 trillion of energy investments by 2050 are fossil fuel related, including exploration and production of gas, oil and coal. At best, these investments risk stranding trillions of dollars of assets in uneconomical fuels in just a few years. At worst, they threaten to blow the world’s carbon budget this decade, and with it any hope of a climate safe future.
To hold rising temperatures in the 10 years ahead of us, annual investments in renewable energy must rise from today’s USD 330 billion to nearly USD 750 billion per year. Redirecting capital into more socially and economically beneficial low-carbon technologies, is imperative and must start now. It is also the most economic climate action pathway. Inaction will cost up to 7 times more than the capital needed to transform the energy system.
The Gulf Corporation Council (GCC) countries are taking up the renewable energy race and have everything to gain from moving quickly into a leadership position on future energy. Conservative estimates suggest that by 2030 the region could save more than 350 million barrels of oil equivalent and create close to a quarter of a million new jobs by executing current plans. Solar and wind resources are rich and attractive, and policies have made it cheaper to generate power from renewables than from any other source. Moving from oil, gas pipelines and coal shipments to solar panels and wind turbines strengthens energy security, supports energy independence and builds prosperity for all, not just for the few.
There is no question we are moving in the right direction. In the last decade renewable power generation capacity has doubled and its growth has consistently outpaced fossil fuels since 2012. A third of global power generation capacity today is renewable. This is the result of investments of around USD 3 trillion over the last 10 years including large hydro. In the decade of transformation ahead of us however, the next three trillion dollars of renewable investments should take around four years.
Policies must align with the opportunity and reflect the necessity. Under current policies, the peak production of fossil fuels happens somewhere between 2030 and 2035, dramatically out of step with the Paris Agreement which requires a peak in 2020 and a steady, continuous decline from that point. Furthermore, renewable energy targets in nationally determined contributions (NDCs) lag market progress. By 2030 NDCs should target double the amount of renewable capacity, they do today.
It is no longer a question of direction, but of speed. With policy support, smart investment decision-making and clear recognition of the benefits associated with a renewables-based energy system, the speed of transformation ahead of us could rival the that of any in the post-industrial age. Anything short of this, risks everything.
15 JAN 2020
Rethinking energy mix is the need of the hour
By His Excellency Engineer Awaidha Murshed Al Marar, Chairman of the Abu Dhabi Department of Energy
With an investment of US$163 billion in energy mix the UAE aims to achieve 50 per cent clean energy capacity by 2050
As the world grapples with climate change and growing environmental concerns, we see an unprecedented need to shift from conventional energy sources to renewables. The time is ripe to make the energy transition and as a nation committed to the Paris Agreement, we are moving towards a sustainable future by optimising conventional energy sources and investing in low carbon energy sources such as solar and nuclear power.
Clean energy is the cornerstone of sustainability and drives the UAE’s narrative to achieve a carbon-free future. The UAE has set out national targets to achieve 50 per cent clean energy capacity and to decarbonise the power and water sectors by 70 per cent in the next three decades as part of the UAE Energy Strategy 2050. For total power generation capacity by 2050, the strategy outlines targets of 44 per cent renewable energy; 38 per cent natural gas; 12 per cent ‘clean coal’; and 6 per cent nuclear energy, thereby improving energy efficiency by 40 per cent in all sectors.
While driving the development of a cleaner energy mix, we need to ensure a reliable and secure supply of power to meet the ever-growing energy needs and also create an energy value chain that is economically viable. We believe that leveraging and optimising our natural resources such as solar irradiation, will go a long way in supporting non-petroleum dependent industries.
To this end, Abu Dhabi’s latest solar PV plant made a significant power contribution in 2019 to capacity mix bringing the Emirate closer to its 7% renewables target for 2020. Not only did the solar plant position the emirate on the global map as a leader in photovoltaic energy in terms of renewable capacity, but it also generated power at a record low cost of just 2.94 US cents per kilowatt/hour.
Thereby, furthering our goal of creating economically viable solutions.
Another milestone in the clean energy segment is the Barakah Nuclear Energy Plant in Abu Dhabi, which is nearing completion. Once operational it will offer nuclear power for electricity generation, in line with the UAE’s strategy for peaceful uses of nuclear power.
Yet another revolutionary step in moving away from fossil fuels will be a rollout of electric vehicles (EVs). The move will also involve creating a reliable infrastructure around the same, complete with EV charging stations and regulatory aligned business model. We are currently finalizing a specific policy around EV’s to ensure a large-scale deployment of electric cars takes place without any glitches.
More recently, hydrogen is gaining traction globally as a clean alternative and substitute for natural gas. We see huge potential in ‘green’ hydrogen from surplus solar PV generation, and ‘blue’ hydrogen from natural gas as a sustainable fuel of the future.
While formulating policies and goals, we are mindful of the importance of mobilising community in achieving sustainability and promoting social well-being by creating a cleaner, healthier living environment. Raising awareness about judicious use of energy is also a key element in furthering the cause of reducing carbon footprint. Focusing on small, incremental shifts towards demand side efficiency and developing skills of young professionals who will lead the charge of a greener energy system in the future are top on our agenda.
Underlying these policies and goals is our drive towards a digital economy. Across every touch point in Abu Dhabi’s energy value chain there is deep focus on integrated digitisation, which serves in boosting sector efficiencies and reducing environmental footprint. Digitisation serves as a key to addressing sectoral challenges as well as creating new benchmarks for a sustainable energy future. I see digitisation as a vehicle to achieve the UAE Energy Strategy 2050 targets as well as playing pivotal role in establishing a more diversified economy.
Thanks to a visionary strategy, the UAE is well on its way to becoming a significant global partner in mitigating climate change and harnessing social, economical and health benefits of a more sustainable environment.
29 DEC 2019
Need to Know: Top 10 Facts about Abu Dhabi Sustainability Week
By Her Excellency Mariam Almheiri, Minister of State for Food Security
The ability for a country to act sustainably is a determinant of its successful development. In the context of food security, sustainability means enabling all citizens and residents to have physical and economic access to sufficient, safe and nutritious food for an active and healthy life at affordable prices at all times, including emergencies and crises.
My role as Minister of State for Food Security sees me tasked with ensuring that the UAE is able to deliver food sustainably across the food supply chain - from harvest to the table - to feed the UAE’s growing population, which is expected to add another million or so people over the next 20 years. When you take the UAE’s adverse crop growing conditions into account - its poor soil quality, shrinking levels of groundwater, lack of arable land, and low annual rainfall - it is not difficult to see that this represents something of a challenge.
Thanks to the UAE leadership placing a priority on forging firm and friendly relations with other governments, the UAE has created strong import supply chains that deliver 90% of its total food. Although these have placed the country comfortably at 21st place on the Global Food Security Index, it means that it remains vulnerable to global supply chain disruptions.
To reduce the UAE’s heavy reliance on food imports, my colleagues and I launched the National Food Security Strategy in November 2018. Through its various pillars, the strategy aims to take the UAE from its current 21st place in the Global Food Security Index to being in the top 10 by 2021 and number one by 2051. In devising the strategy, we were acutely aware that its success would depend on our ability to create meaningful partnerships and to involve the community.
Initiating the strategy in the first few months meant finding suitable partners to help get it off the ground. A key pillar is enabling technology-based domestic food production, which has a target of increasing domestic yield by 30% by 2021. One of the first things we did was to remove perceived barriers to adopting technology in this sector. In doing so, we engaged with private sector stakeholders to create 10 new initiatives in 100 days.
Now successfully launched, my office is giving a stronger focus on involving the community – local and global – in our efforts to advance food security. In effect, we are making the community our partners towards our goals. In September this year, we announced, in partnership with Tamkeen, an Abu Dhabi-based company mandated to deliver projects to meet the UAE’s vision of knowledge-based development, the FoodTech Challenge – a global competition that aims to identify and implement sustainable and technology-driven solutions across the food value chain that enhance the UAE’s food security and self-sufficiency at the national, community, and household levels. Launched by His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice President and Prime Minister of the UAE and ruler of Dubai, the challenge is open to all and invites the youth, entrepreneurs and innovators to find solutions across the food value chain to identified challenges in the UAE with a shared prize pool of USD one million for four winners – the largest ever offered for a food technology challenge - winners will receive a host of benefits that include the offer to participate in a six-month business incubation programme by the Catalyst in Abu Dhabi to translate their ideas into actual projects and connection with international investors.
With respect to creating a healthy population, the Food Security Office and the National Program for Happiness and Wellbeing launched the Nutrition Labelling Policy in September this year. This policy sees the adoption of a traffic light system for healthy and less healthy foods based on their ingredients and nutritional content. Red, yellow and green labels indicate sugar, salt and fat content, with the policy based on the results of a field study carried out by the Community Design for Wellbeing Initiative – another important partner who is helping us meet our goals.
Abu Dhabi Sustainability Week (ADSW) is essential to this concept of partnership. Masdar City is already an important ally in our efforts to create an advanced Agritech sector through its initiatives that include the shipping container vertical farming project, aquaculture farming scheme and the ‘Bustani’ Smart Home Farming Showcase. Each year ADSW further raises awareness of the importance of sustainability in all spheres, including food security, and we wish this year’s programme every success.