UAE requires Dh2.5t investment to transition to net-zero

The UAE will require Dh2.5 trillion to transition to net-zero, a target the nation is committed to achieving by 2050, making the Emirates the first Middle East and North Africa nation to do so, according to a projection made by Standard Chartered in its study.

The study, which looks at the transition financing gap for emerging markets and how to close it, found that if the finance, the UAE needs to transition to net zero, is provided by developed markets, the UAE household spending could increase by around Dh2 trillion compared to self-financing.

Coinciding with 50 years since the country’s founding, the UAE announced in October 2021 its ambitious plan for net-zero emissions by 2050 that would require Dh600 billion in investment in renewable energy. The initiative aligns with the Principles of the 50 — the UAE’s roadmap for accelerating national economic development to mark the country’s golden jubilee year, as the nation enters a new 50-year cycle of growth. The major economic opportunities offered by the path to net-zero directly support a vision to develop the Emirates into the most dynamic economy in the world.

“The UAE is well-positioned to capitalise on the major economic opportunities offered by the path to net-zero. Reaching this objective would require a strong focus on ensuring economic prosperity throughout the transition process in addition to a great deal of investment,” said Rola Abu Manneh, chief executive officer of Standard Chartered UAE.

“The public and financial sectors need to come together to help facilitate the flow of investment into net-zero. Failure to deliver transition finance could mean climate goals are missed, therefore triggering an environmental catastrophe,” said Manneh.

While the UAE requires an investment of around Dh2.5 trillion to transition to net zero, the study titled, “Just in Time: Financing a just transition to net-zero,” reveals that emerging markets as a whole need to invest an additional Dh350 trillion — a sum higher than annual global GDP — to transition to net zero in time to meet long-term global warming targets. This is on top of the capital already allocated by governments under their current climate policies.

Private investors can contribute over Dh300 trillion of the Dh350 trillion that is required — underscoring the urgent need for financial institutions to fulfill green and transition finance pledges.

— issacjohn@khaleejtimes.com