This first appeared in Economy Middle East.
The planet is in a perilous position. Figures released in the lead-up to COP28 from PwC’s Net Zero Economy Index present a stark reality: to cap global warming at 1.5°C above pre-industrial levels, an annual global decarbonization rate of 17.2 percent is essential. From 2000 to 2022, the world achieved an average decarbonization rate of just 1.4 percent, and last year, managed only 2.4 percent.
This was the backdrop when we commenced COP28, held here in Dubai at the end of last year. Expectations were low and there was much international cynicism that progress could be made in the UAE, particularly under the presidency of a major national oil company’s CEO.
Much of this controversy was misguided. I first came across Dr. Sultan Al-Jaber back in 2008, some 15 years ago, at Masdar, where he was pioneering a sustainable new city, advocating for carbon capture and storage and carbon trading, and helping to set up the International Renewable Energy Agency (IRENA). All stakeholders need to be at the table to make progress including the oil and gas industry, the private sector, small island nations, youth, etc. The UAE presidency got this right.
COP28 surpasses expectations
COP28 exceeded all expectations. A combination of the UAE’s energy – pardon the pun – can-do attitude, catalytic financing and the ability to convene, influence and gain agreement between north, south, east and west delivered the “UAE Consensus” with many landmark achievements. Although much hard work stands before us, and much more is required, COP28 sets a fresh new impetus in the fight against climate change.
Notably, and perhaps surprisingly from a UAE COP, fossil fuels featured in the closing declaration for the first time, with an agreement for nations to “transition away from fossil fuels.” Similar firsts included agreement on a Loss and Damage fund to compensate developing nations impacted most by climate change, a catalytic UAE Climate Fund of $30 billion designed to crowd in a further $250 billion of funding, agreements to triple global renewable energy capacity and to double energy efficiency, along with progress made on nature, oceans, health, and food and agriculture.
Middle East at the center of climate change
On the global climate change and green economy stage, our region has the most to lose, a pivotal role to play on energy transition and, potentially, the opportunity to create world leading competitive advantage.
The Middle East will be one of the most impacted by climate change. Some 1.5°C or more of global warming will have a magnifying impact on our region, which already experiences extreme heat, water insecurity and has many low-lying areas. Our region, as a key player in the oil and gas industry, lies at the heart of the old global energy system. Both abundant sunshine and physical space, however, also make the region a key global player in the new renewable energy system.
Opportunities opened
The region already produces the lowest cost solar energy in the world. This cost advantage is opening up significant opportunities for the Middle East in green fuels such as hydrogen, green manufacturing such as green steel, and in the emerging area of converting energy to food through the process of precision fermentation.
The region also has over $2 trillion of planned infrastructure projects, which drive opportunities to innovate on sustainable destinations, influence global supply chains and drive a circular economy. NEOM, for example, is targeting a zero-waste future, and the use of sustainable materials.
The region is also pioneering nature-based solutions, particularly in the potential for mangroves to both sequester carbon and to act as a natural barrier to rising sea levels, as evidenced by the launch of the Saudi Green Initiative, one of the world’s most ambitious sustainable programs, including plans to plant 10 billion trees across the Kingdom. Overall, the region has the potential to develop global competitive advantage across many renewable dimensions.
Climate-technology solutions
Our region is also pioneering a range of climate-technology solutions. Again, there was some cynicism when we launched our PwC Middle East Climate-Tech Future 50 initiative at COP27 in Sharm el Sheikh in Egypt – skepticism that we might not be able to find enough climate tech innovators who had founded genuinely homegrown businesses. Yet the response was overwhelming. More than 200 companies with visionary entrepreneurs behind them operating in our region came forward to tell us their stories of innovation and discovery – and stand today as an essential catalyst needed to realize the region’s commitments.
Consider Distant Imagery’s innovative collaboration with the Abu Dhabi National Oil Company in drone-planting 2.5 million mangrove seedlings across Abu Dhabi. This strategic move not only aids carbon sequestration but also nurtures biodiversity. Equally impressive is Plastus, a Saudi-based biotech firm revolutionizing the conversion of organic waste into biodegradable bioplastics, thus significantly reducing both food waste and plastic pollution.
Climate finance
The region also has an important catalytic role to play in climate finance through our sovereign wealth funds who can provide patient capital to support long-term, capital intensive renewable energy programs in both the developed and developing world.
Case in point is our work with Masdar to highlight the untapped potential for renewable energy in West Africa – we detail this in our report titled “Accelerating renewable energy investment in West Africa.” Some 220 million people in West Africa do not have access to power. There is renewable energy potential of 2,000 GW from solar, wind and hydro-power in this part of the world, but funding for renewables and transmission of $540 billion is required by 2050. Impactful investments, such as Masdar’s Parc Eolien Taiba N’Diaye wind farm in Senegal, provides clean energy to millions and helps position Senegal as a potential green energy hub for neighboring nations. Similarly, the UAE’s commitment to developing solar projects in Zambia, with a goal to generate an additional 2,000 MW of electricity, showcases the region’s dedication to alleviating power crises beyond its immediate borders.
Read: Regional perspectives on green finance and COP28’s impact on the economy
COP28 and climate change
Finally, our region also has the advantage of youth with over 55 percent of the population under 30. Generation Z, growing up amid climate concerns, exemplifies a strong commitment to sustainability, while Generation Alpha, the first to entirely experience the 21st century, faces a future marked by climate change. Our youth, as demonstrated in our recent PwC Middle East Hopes and Fears survey, are keen to embrace green skills (61 percent) and are much more positive about the possibilities of artificial intelligence (46 percent) than their global counterparts. Equipped with climate education and awareness programs, they are being primed to lead with innovation, resilience and adaptability.
Our region is at the epicenter of the global fight against climate change. Already a global energy leader, the region is now a global player in new energy, green fuels, green manufacturing, sustainable destinations, nature-based solutions, climate finance and climate technology. COP28 added a further role – as global convenor for climate progress – and provides a strong legacy. It’s an important role, and there is much to do.
Strategy Leader, PwC Middle East
