Germany's climate envoy Jennifer Morgan has lauded the UAE for thinking big around the diversification of its economy. AFP
Germany's climate envoy Jennifer Morgan has lauded the UAE for thinking big around the diversification of its economy. AFP
Germany's climate envoy Jennifer Morgan has lauded the UAE for thinking big around the diversification of its economy. AFP
Germany's climate envoy Jennifer Morgan has lauded the UAE for thinking big around the diversification of its economy. AFP

Cop28’s big task will be slashing emissions, German climate envoy says


Indranil Ghosh
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The world's climate-change advocates are banking on the Cop28 summit in Dubai to deliver what delegates failed to achieve at the Cairo conference last year, Germany’s special envoy for international climate action said.

Cop27 was challenging,” Jennifer Morgan told The National in an interview in Abu Dhabi. “The frustrating part was that we did not make much progress at all on actually reducing emissions. That is a big task for the Cop this year.”

The Emirates, which is set to host the leading forum for climate discussion at Expo City in November, has recognised for a long time the solutions and the opportunities that can arise out of shifting from a totally fossil fuel-based economy to one driven by renewable energy, Ms Morgan said.

Her remarks came a day before she met Dr Sultan Al Jaber, the UAE's Minister of Industry and Advanced Technology and Cop28 President-designate, earlier this month.

“The UAE has been thinking for a long time [about] the diversification of their economy,” said Ms Morgan, who is on her first visit outside Europe in her capacity as climate envoy. “And they think big.”

The UAE and Germany are working together to boost their partnership on green initiatives and also studying ways to work with other countries to scale up their efforts on renewable energy, she said.

Apart from hosting Cop28, the UAE announced 2023 as the Year of Sustainability and is well-placed to drive consensus on solutions to slash emissions and ensure the goal of limiting global warming to 1.5 degrees Celsius above pre-industrial levels by 2030 remains within reach.

At the Munich Security Conference in February, Dr Al Jaber said his main priority would be to keep the plans to hit that target alive.

“I have no intention whatsoever of deviating from the 1.5ºC goal,” he said. “Keeping 1.5ºC alive is a top priority and it will cut across everything I do.”

As the first country in the Middle East to sign and ratify the Paris Agreement and announce a Net Zero by 2050 initiative, the UAE is in an ideal position to steer an innovative and collaborative approach to sustainable development.

“The sense I have is that they are very serious about driving forward to that net-zero goal,” Ms Morgan said.

The UAE and the region are particularly vulnerable to the impact of climate change, so the aim this year will be to have a transformational Cop summit that can help the world to move forward.

Those and other energy and climate issues will feature in the Petersburg Climate Dialogue in May, a forum Germany hosts with the incoming Cop presidency every year to initiate the wider discussions at Cop.

Loss and damage

Started by former German Chancellor Angela Merkel in 2010, the Petersberg Dialogue serves as a platform to build political consensus to resolve differences in negotiations.

While several issues remained unresolved at Cop27, the forum did provide some breakthroughs, said Ms Morgan, who “co-facilitated” the negotiations on loss and damage.

The phrase, according to the UN, refers to the negative consequences arising from the risks of climate change, including rising sea levels, lasting heatwaves, desertification, the acidification of the sea and extreme events such as bushfires, the extinction of species and crop failure.

  • At the UAE Government Meeting in November 2022, Sheikh Mohammed bin Rashid said the hosting of Cop28 will be the UAE's biggest event next year. Photos: Wam
    At the UAE Government Meeting in November 2022, Sheikh Mohammed bin Rashid said the hosting of Cop28 will be the UAE's biggest event next year. Photos: Wam
  • Cop28 will be the first time countries will assess the progress of the 2015 Paris climate accord to limit global warming.
    Cop28 will be the first time countries will assess the progress of the 2015 Paris climate accord to limit global warming.
  • The global event, which will take place at Expo City Dubai, will welcome more than 140 heads of state and government and 80,000 participants.
    The global event, which will take place at Expo City Dubai, will welcome more than 140 heads of state and government and 80,000 participants.
  • Dr Sultan Al Jaber, Minister of Industry and Advanced Technology, Special Envoy for Climate Change and chairman of Masdar, gave a presentation at the meeting outlining what will be involved in hosting one of the largest global events of the year.
    Dr Sultan Al Jaber, Minister of Industry and Advanced Technology, Special Envoy for Climate Change and chairman of Masdar, gave a presentation at the meeting outlining what will be involved in hosting one of the largest global events of the year.

One breakthrough at Cop27 was the establishment of a loss and damage fund that will provide financial support to nations most vulnerable to climate change.

While the pledge has been made, the fund’s size, sources and governance will be negotiated this year, Ms Morgan said.

“The most vulnerable countries had been working for 30 years to see how they were going to get the support for loss and damage. On that issue, it was a success,” she said.

Some nations such as Denmark, Belgium, Germany and Scotland, as well as the EU, have made symbolic funding commitments to cover loss and damage.

The UN estimates that the loss and damage from climate change could cost developing nations as much as $580 billion a year by 2030 and up to $1.8 trillion in 2050.

“The fund will support the most vulnerable countries to address loss and damage, and exactly what that means will be negotiated,” Ms Morgan said.

Another big task for this year’s Cop28 summit will be to assess how each country can raise its own emissions reduction target and how finance can be arranged to help developing countries achieve the global goal of halving emissions by 2030.

“That didn’t get the attention or the leadership last year but it needs to happen this year,” she said.

Germany is in the midst of a transition away from fossil fuels and has set a date to phase out coal. The nation already generates about half of its electricity from renewable sources, and plans to raise that to 80 per cent by 2030.

“We are decarbonising our entire economy and we are making good progress on that,” Ms Morgan said. “That’s also a priority of the Cop President.”

Effects of war

The Ukraine-Russia conflict has stressed the importance of phasing out fossil fuels, particularly from Russia, which Germany has achieved completely, Ms Morgan said.

More than half of Germany’s gas was imported from Russia before the war began. However, all imports of gas, oil and coal from Russia have since been halted.

Germany is now looking to Norway, the Netherlands and a number of other countries for gas imports and has passed a law to scale up the use of renewable energy to 80 per cent by 2030.

“The war has taught us that … renewable energy and energy efficiency is the way to go and it is in our interest to scale that up,” she said.

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.”

Updated: February 21, 2023, 11:12 AM