With the next two COPs based in the Middle East and North Africa, Luma Saqqaf explains the region’s climate challenges and opportunities. And why the world is watching.
With the Middle East and North Africa about to host the next two COPs, climate mitigation in the region is about to come under a lot of scrutiny. It’s about time, say critics. Much of MENA, they argue, has been too slow in getting behind net zero commitments.
But this is not strictly true. While all countries in the region have submitted Nationally Determined Contributions (NDC) climate plans, levels of commitment in fact vary significantly. Host of next year’s COP28, the UAE, for example, is leading the charge and the country looks set to reach net zero by 2050. This is in sharp contrast to this year’s host, Egypt, which is only promising emission reductions on the condition of $246 billion financing by 2030.
This disparity can be explained by the wealth of both nations. The UAE is the fifth-largest economy of the Middle East, while Egypt is classed as a middle income country struggling with a series of development challenges.
But the wider picture of the region shows a more complex picture.
MENA is a region of deep contrasts. It is home to some of the world’s least developed countries such as Yemen and Sudan. Nine out of ten of the world’s most water-scarce countries are in the Middle East. Drought is forcing farmers off their land, and rising summer temperatures are creating impossible living conditions. Yet it is also home to the oil-rich: countries which are responsible for one third of the world’s global oil production.
These challenges and contradictions echo the exact problems the world is now facing when it comes to climate change mitigation.
Egypt has urged November’s meeting to be the first ‘COP of practicalities’. While previous COPs have been about finding agreement and consensus, Egypt wants the agenda to be about pragmatism and action. Against a backdrop of Ukraine and an ensuing energy crisis, a global recession and soaring temperatures affecting food and water security, tackling climate change is no longer something that the world can afford to ignore.
But it boils down to money. Since the signing of the Paris Agreement in 2015, advanced economies have pledged $100 billion annually towards climate solutions. But experts are arguing this is just a drop in the ocean of what is needed. The MENA region alone requires investment levels of around $600bn to scale up its NDC commitments by 2030, an extra $230bn if you add Sustainable Development Goals (SDGs) (making the figure $1.8-2 trillion). Right now, public money is simply not enough to plug the shortfall.
The obvious solution is to turn to the private sector. While private money is not a substitute for public finance, it is vital in working in tandem with public investment in helping climate change mitigation. Reports by the Climate Policy Initiative, the International Energy Agency (IEA) and the Intergovernmental Panel of Climate Change (IPCC) show that clean energy investments must increase between three and five times. Investment needs to rise to US$4trn by 2030 – and 70% of that must come from the private sector.
And this is where, ironically, the wealthier oil producers in the Middle East are in a good place to act. While this is a bitter pill for some environmentalists to swallow, it’s these governments which have long been proactive in funding ambitious projects: The UAE and Saudi Arabia, for example, have invested billions into solar farms around the world, and the Saudi Green Initiative aims to boost renewables to half of the country’s energy mix. Sovereign wealth funds of the Gulf Cooperation Council (GCC), the league of the 6 oil producing countries in the gulf: Saudi, UAE, Oman, Qatar, Bahrain and Kuwait, amount to over $3 trillion in combined assets and are at the forefront of integrating sustainability and diversifying national wealth away from oil.
Now these countries urgently need to turn their attention to smoothing the way for sustainable finance to encourage private investment. To do this, governments need to fine tune their sustainable finance systems and help create clearer ESG regulations and frameworks. That way they can speed up on helping businesses with ESG strategy and implementation, making sure they align with national priorities.
If governments act now and are successful in unlocking the private finance key, sustainable finance could add rocket fuel to the Middle East’s climate efforts, turning them into leaders of climate mitigation.
The world is watching what happens next.
About the Author
Luma Saqqaf is CEO of Ajyal Sustainability Consulting, advising corporations, financial institutions, regulators and financial markets in MENA on sustainable finance issues and regulations.
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