Climate change: What is the GCC's role in this equation
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Climate change: What is the GCC’s role in this equation

Climate change: What is the GCC’s role in this equation

The region needs to capitalise on the economic benefits of the sustainable energy industry

For the United Nation’s 26th Climate Change Conference (COP26), countries were asked to come to the event with innovative plans that address growing threats around extreme weather events, economic instability, and climate refugees.

Many are sceptical about whether COP26 will have a meaningful impact; Industrialised countries have come under heavy criticism for committing to broad and inefficient pledges that don’t rise to the seriousness of the occasion. In order to mitigate the most serious impact of climate change, each country’s commitments must intentionally draw on their unique position and resources.

As wealthy, stable, investor-friendly economies, the GCC needs to capitalise on the economic benefits of the sustainable energy industry and provide support for the wider region.

The GCC is uniquely positioned to lead through:

1. High-yield natural resources
Famous for their hydrocarbon reservoirs, the GCC has abundant access to other natural resources, most notably solar energy. Sitting in the centre of the global sunbelt, the GCC has some of the highest solar exposures in the world. Large areas of flat land are readily available for constructing large-scale areas with solar panels; plants in the region can expect an impressive 1,750 to 1,930 hours of full-load operation annually.

The lack of historic urgency has delayed the region’s transition to sustainable energy, but with an annual 8 per cent increase in electricity demand – meaning capacity needs to double every decade  – the need to rapidly transition cannot be ignored. Renewable sector FDI into emerging regions saw a 40 per cent increase between 2014 and 2019, a trend consistent with growth in the Middle East. Renewable energy generation is becoming more cost effective and the GCC has an opportunity to seize that is too great to miss.

2. Ambitious diversification plans 
There are around 30 real estate mega projects in progress in the GCC, with investment totaling $1 trillion. The growing excitement surrounding these epic projects can be easily justified, but with buildings contributing 17.5 per cent of global greenhouse gas emissions, the GCC should adopt circular economy practices at the foundation of their economic diversification and infrastructure plans. Some projects are already progressing in this space, such as:

  • On Saudi’s West Coast, Neom’s The Line and the Red Sea Project are two giga projects which are expected to be powered 100 per cent by clean energy.
  • FIFA World Cup Qatar 2022: Stadiums are built using sustainable building standards, committing to achieve a minimum 4-star certification for the design and construction management.
  • Expo 2020 Dubai: Renewable energy systems were installed with a total capacity of 5.5 MW on permanent buildings. 90 per cent of materials have been procured in line with the sustainable materials guidelines.

3. Strong regional alliances
The highly anticipated Middle East Green Initiative Summit took place recently, aimed at accelerating knowledge sharing, driving green investment, strengthening regional alliances, and fostering climate diplomacy. All evidence points to one reality: a united GCC is an effective GCC.

Two primary opportunities stand out for the region:

  • An increase in green jobs: The GCC’s renewable energy targets could create an average of 140,000 direct jobs annually. For giga projects to succeed, there will be increased demand for skilled labour.
  • Region specific challenges: Intensive investment in R&D can be disseminated across the wider Middle East and can act as blueprints that address region-specific challenges for countries that are not able to invest similar R&D funding.

The region needs to act fast as carbon emissions are rising, and the opportunity cost of inaction is too great to be ignored:

Not only are valuable opportunities ripe for the taking, but there is too much at stake if the GCC doesn’t act soon – the most pressing regional issues include:

1. Water scarcity: It isn’t hard to imagine that 14 of the 33 ‘most likely water-stressed countries’ in 2040 are in the Middle East. The GCC relies on desalination plants for their water supplies, but the majority of the plants remain energy-intensive. While the population has almost doubled in recent decades, the water reserves have severely depleted.

2. Food security: The GCC doesn’t have significant control over their food sources and relies on high levels of imports. Approximately 85 per cent of the region’s food is imported. Achieving food security is built into national priorities but the challenge will not get easier as climate change impacts crop production worldwide.

3. Lost investment opportunities: Companies are increasingly basing their investment decisions on sustainability. BlackRock, the world’s biggest asset manager who has more than $7 trillion under management, announced it will exit all investments considered to have a “high sustainability risk”.

Conclusion
The cost of transitioning to sustainable energy will be paid either now or in the decades to come – the only question is how much will the cost be? Government entities in the GCC are already demonstrating remarkable growth in capitalising on their unique position to secure a strong and sustainable future not only for themselves but also for their neighbours in the wider Middle East.

Noha Aldhahri is a consultant at OCO Global

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