The UAE will require 2.5 trillion dirhams ($671.1 billion) in investments to transition to carbon neutrality (net zero), according to a report by Standard Chartered. While private investors can help address the huge finance gap, the report noted that encouraging investments in emerging markets can be a difficult task.
Carbon neutrality is a state of net-zero carbon dioxide emissions. This can be achieved by balancing emissions of carbon dioxide with its removal or by eliminating emissions from society.
While private investors can help address the huge finance gap, the report noted that encouraging investments in emerging markets can be a difficult task. “The world’s top 300 investment firms with total assets under management of more than $50 trillion have just 2 percent, 3 percent and 5 percent of their investments in the Middle East, Africa and South America, respectively,” the report said.
To meet the global warming targets, the report said “greater collaboration” is required in strategy, policy and financing. “More importantly, banks need to live up to the pledges made during COP26 if ordinary households are to avoid bearing the costs of their market’s transition to net-zero,” the report said.
If the required funding comes from developed markets, the report noted that household spending could increase. In the UAE, the increase could be around 2 trillion dirhams. If countries in the emerging markets opt for self-financing, without the contribution of developed markets, household consumption in these markets could fall by five percent on average each year.