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Sustainability Drive For Institutions & Economies In Middle East | |
| Sumita Pawar |
The report says that economies and institutions in the Middle East are putting more and more importance on being sustainable.This may seem contradictory, as the region produces over 25% of the world’s oil, has four of the top five oil-producing member countries of OPEC+ (the Organisation of Petroleum Exporting Countries plus Russia and several others who align with OPEC), and has one of the largest exporters of liquefied natural gas in Qatar.
Both oil and gas reserves in the region are substantial. However, regional countries acknowledge they cannot rely on hydrocarbons indefinitely, and most have introduced diversification and sustainability strategies.
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The United Arab Emirates (UAE), which will host the UN's COP28 climate change conference in 2023, is putting more and more emphasis on sustainability in the region.
As highlighted in the report, the Gulf Cooperation Council (GCC) countries aim to decrease the use of fossil fuels for generating electricity and intend to raise the capacity of renewable energy to meet local electricity demand.
Plans also include increasing the participation of the private sector and reducing the role of the public sector. In addition, participants believe that the climate agenda could provide opportunities to further diversify GCC economies in growth sectors, such as the oil and gas industry, for the energy transition.
"There is an excellent and timely opportunity to further diversify the economy, using a green growth strategy, and play a leading role in the global transition to low-carbon economies," says Issam Abousleiman, World Bank regional director for the GCC, the Middle East, and North Africa (MENA).
"The region could use the green growth transition to focus policies on developing green technologies that would reverse trends in productivity and enable the region to grow faster."
The GCC countries’ total GDP was estimated at around $2 trillion in 2022. According to the World Bank, their combined GDP could grow to an expected $6 trillion by 2050 if they operate as usual. However, suppose the GCC countries implemented a green growth strategy that would help accelerate their economic diversification. In that case, the World Bank says their GDP could potentially grow by 2050 to over $13 trillion.
The report further mentions that increasing private sector investment will be necessary to boost sustainability and the energy transition. Green finance is critical for new investments in renewable energy, sustainable transport, and water management.
Head of the Global Capital Finance division at PIF, Fahad AlSaif, says, "PIF’s second green bond issuance underlines the role PIF is playing in supporting Saudi Arabia’s green agenda as well as diversifying the local economy and unlocking new and sustainable sectors. PIF has a specific Green Finance Framework with a sustainable investment programme including projects in renewable energy, clean transportation, energy efficiency, pollution prevention, green buildings, and sustainable water management."