Opinion

What a difference a year makes.  Over the past twelve months, half of the Gulf’s countries have declared a net zero carbon target date (the UAE in 2050, Bahrain and Saudi Arabia by 2060). Last year, Saudi Arabia launched the Saudi and Middle East Green Initiatives, two ambitious programmes that seek to reduce carbon emissions, increase forestation, and protect both natural land and sea habitats.

Since 2021, the number of Saudi sustainability-related projects have rapidly increased; only this month, the Kingdom announced a regional carbon market entity (this followed a national carbon market set up in 2021), which was followed by Saudi Aramco’s unveiling of a US$1.5 billion sustainability fund.

These steps should be viewed from two perspectives. The first is livability and public health; owing to climate change, the region is warming twice as fast as the rest of the world. Summer temperatures can regularly exceed fifty degrees Celsius, impacting quality of life. The second is economics; the energy industry is the cornerstone of the region’s economy. And yet, globally, the sector is gradually transitioning towards renewables and hydrogen as an alternative fuel source.

While some analysts may look to the two Conference of Parties that are set to take place in the Middle East (COP27 in Egypt, COP28 in the UAE) as the catalyst for this transformation, the sustainability push was baked into the Kingdom’s strategic transformation project, Vision2030. Launched in 2016, Vision2030 includes numerous references to sustainability, including in areas such as “policy development and investment to planning and infrastructure”. Several of the Kingdom’s signature development projects are built around a specific notion of sustainability, including the tourism-focused Red Sea Global and the futuristic smart city NEOM which has floated ideas such as net zero transportation.

While sustainability has been very much driven by the government (much in line with the rest of the region), there has been a growing effort to get business involved too. The country’s stock exchange has been working with listed companies, of which there are over two hundred with a total market cap exceeding nine trillion Saudi Riyals as of the end of 2020, to help and encourage them to report on the environmental, societal and governance (ESG) progress they are making. Given the interest in ESG-related issues, especially among investors, it makes sense for the region’s largest stock exchange to promote ESG reporting.

Using its financial resources to drive change, the Public Investment Fund is financing projects in a host of areas, including renewables, alternative energy, electric vehicles, infrastructure development, and waste and energy consumption. This is helping to drive change, at a faster pace. An example is the establishment of the Saudi Investment Recycling Company (SIRC), which will focus in achieving a key sustainability goal by removing approximately 94 percent of municipal solid waste from landfills throughout the country by 2035.

While the pace of change is welcome, the third group that is key to sustainability success is the public. Awareness for sustainability issues throughout much of the Middle East is lower than in other regions, in particular Europe and North America. Slowly but surely, the public must be seen as a part of the solution, and given opportunities to support change through increased education, awareness and participation in sustainability-related initiatives such as material recycling and reuse activities.

Given the events of the last six years, including both the initiatives that have been rolled out as well as the achievements to date as well as those envisioned in the future, it may be time to ask if it is time that the Kingdom’s progress towards becoming a greener, more sustainable country is recognized more widely. One of the world’s largest producers of hydrocarbons is realizing that its future wellbeing is dependent on green innovation and green jobs. That in itself is a shift in thinking which should be applauded.

By: Alex Malouf, Executive Director, Corporate Communications and Public Relations at Ceer, The First Saudi Electric Vehicle Brand

As global temperatures continue to rise, businesses cannot afford to maintain the current trajectory in their operations. Efforts to reduce greenhouse gas emissions need to step up to ensure that the global temperature increase is below 2C by 2030 and ideally closer to 1.5C — the goal set in the Paris Agreement reached in 2015, according to a new report from the United Nations Framework Convention on Climate Change. More than 3.3 billion people are estimated to be severely impacted by climate change events in the coming few years as per the findings from the Intergovernmental Panel on Climate Change (IPCC).

To mitigate the effects of climate change, carbon management is key for every business to support governments in meeting climate targets set locally, regionally and globally. These plans allow a company to understand and manage the tangible impacts that operating their business has on the environment around it and reduce those impacts to the lowest possible amount. With the UAE’s recent update to their second Nationally Determined Contribution, in response to the Glasgow Climate Pact that called for more aggressive emission reduction targets, saw them increase their 2030 reduction target to 31% (from 23.5%) against a business-as-usual scenario. The call for the private sector to take action is surely imminent. After all, can we rely on the foresight of individual business owners to triumph over the comfort and security of business-as-usual continuity, without the introduction of legislation, mandates and penalties?

The UAE and MENA region have been increasingly put under the glare of the global ESG spotlight since their ambitious climate targets and bold clean energy investments started making international headlines. As wealthy oil-rich states, the pressure to green their economy and transition to a non-oil dependent economy has surged massive interest and investments in renewable energy and circular economy solutions. In 2021, the UAE announced plans to invest over 160 billion dollars in clean energy sources over the next 30 years. Legislation has slowly followed suit. While the MENA region maintains its voluntary status on the carbon markets, meaning it is not governed by law to cap carbon emissions like its Annex I counterparts such as Canada, Germany and Switzerland, ESG laws for certain groups of companies are slowly coming in to play. In 2020 to 2021 the Abu Dhabi Stock Exchange and Dubai Financial Markets both announced ESG reporting guidelines for listed companies, followed by a new decree from their federal regulators, the Securities and Commodities Authority (SCA), that annual ESG disclosure through an annual report was now mandatory for all listed companies. This could come in response to increasing pressure from investors all over the world looking for a strong ESG position in a company as a sign of reduced risk and increased longevity for their investment (as transparency about a company’s material ESG issues, such as its efforts to decarbonise its operations and supply chain, is becoming an essential part of a company’s equity story) or it could be a sign of things to come, and support the hypothesis that the legislation is coming. And soon.

With the UAE hosting COP28 next year, it will once again take a central position on the global ESG stage. Another opportunity to showcase its innovation, commitment, and willingness for change for the preservation of its environment. It’s an opportunity for every business in the region to follow suit. Measure, manage and disclose your carbon emissions. Identify the emission leaks in your business and establish how to reduce them to their absolute minimum. Not only does it protect the environment, it also saves you money. Afterall, carbon costs money. Every emission released into the atmosphere has an associated dollar cost to it, be it through the purchase and consumption of electricity, or the purchase and use of paper and toner in your printers. Reducing emissions always results in reducing operational costs. So, start today and manage your carbon; measure it, reduce it, and report on your performance. Hold yourself accountable and encourage your suppliers and your peers to do the same; let’s all follow this nation’s leaders and be a part of the greatest march to net zero.

By: Dahlia Haleem, Co-Founder and Partner at elementsix

Western governments are now rushing to develop strategies for advancing the clean-energy transition without becoming overly dependent on China for critical minerals. But their plans fail to acknowledge a major potential obstacle: the fraught local politics of opening up new mines and industrial facilities.

LONDON – The West’s dependence on China for so-called critical minerals once worried only a handful of experts and policy wonks. Now, the anxiety has gone mainstream, capturing headlines and becoming the subject of a BBC documentary series. But we have yet to answer adequately the most important question: What should we do about it?

There is no denying the risks that lie ahead. As Europe has learned over the last several months, it is not prudent to rely on a hostile state to deliver essential commodities. But the solution to today’s energy crisis – to accelerate the transition to renewable sources – threatens to replicate the current situation in a different guise, because it increases our dependence on minerals like cobalt, nickel, graphite, lithium, and copper.

From electric batteries to wind turbines and expanded electricity grids, such minerals are essential to the clean-energy transition. The World Bank has estimated that their production may need to increase by some 500% by 2050 to support global climate goals.

Just as Russia is a major source of fossil fuels, China dominates the processing of many of these critical minerals. It refines some 60-70% of the world’s lithium, nickel, and cobalt. And it has made major investments in the world’s richest deposits of these resources, from cobalt in the Democratic Republic of the Congo to nickel in Indonesia, meaning that it controls a growing share of the mines from which they are sourced.

Western governments are now rushing to develop strategies for advancing the energy transition without becoming overly dependent on China for critical minerals. In the United States, the recently passed Inflation Reduction Act includes big incentives for electric-vehicle manufacturers to source critical minerals from reliable partners. The United Kingdom has unveiled a “critical minerals strategy,” which includes efforts to expand its domestic capabilities in the sector. The European Union and Australia are pushing ahead with similar initiatives.

All of these governments regard increased recycling of metals as part of the answer. But they also recognize that it can contribute only so much for the time being. So, their strategies all include a focus on swiftly developing more mines and processing facilities for critical minerals, either domestically or in “friendly” countries.

But these strategies fail to acknowledge fully a major barrier: the fraught local politics of opening new mines and industrial facilities. In rich countries, “not in my backyard” activism, opposition by indigenous and environmental groups, and complex planning processes mean that just getting permission to develop large-scale new mines can take decades, if it comes at all.

In lower-income countries, mine development also often faces fierce local opposition, which is compounded by widespread suspicion of large Western-owned mining firms. In rich and poor countries alike, countless proposed new mines for critical minerals – for example, in the US, Peru, Portugal, and Serbia – have recently been blocked or delayed as a result of such resistance.

To be sure, this activism reflects well on the vibrancy of local democracy in Western-aligned countries. But the risk remains that if the West cannot access the raw materials the energy transition demands from friendly countries at a reasonable price, it will end up, yet again, at the mercy of a hostile regime. Concerns that China could “weaponize” its dominance over these minerals, as Russia has with natural gas, are now widespread in policy circles.

Unless the problem is tackled soon, Western governments could end up having to take emergency measures that run roughshod over local concerns – for example, opening up domestic mines and facilities as a matter of national security. They would also likely find themselves trying to strongarm developing countries into expanding production, again disregarding local sentiment. This has been the sad pattern of energy and resource geopolitics for a century or more.

Avoiding this outcome will require rapid progress toward a new “grand bargain” between mine operators and local stakeholders.

To this end, an ambitious program focused on resetting relations between the two sides must urgently be launched, spanning all mineral-rich, Western-aligned countries.

Mining companies, supported by Western governments, need to ensure that new operations bring greater local economic benefits and are more sensitive to local needs. They also need to implement more credible, visible controls on the environmental and health risks that mines can create. In developing countries, mining companies must demonstrate that they perform far better than Chinese firms on these fronts. Western miners are already involved in numerous good-practice environmental and social initiatives, but these need to be ramped up as a strategic priority.

In exchange for these efforts, local regulators must streamline and accelerate permitting processes, and local communities and activists must accept the need to support well-designed projects. Green-minded campaigners will surely recognize the importance of heading off a major threat to the energy transition; but old habits die hard, and resistance to large companies pursuing major projects like mines is, for some, ingrained. Governments can help here, stepping in to mediate disputes between companies and communities.

Some might argue that this is a painful remedy for a problem that has yet to appear. But the dangers posed by dependence on China for critical mineral supplies are now all too obvious. Unlocking swifter mine development closer to home offers the best way forward – and it will require some radical new approaches.