These are today’s new from Dubai.
Metro.
Something not unique to UAE, most Middle Eastern countries have Friday and Saturday as weekends. Like today. On top of the National holiday tomorrow. We don’t recall having taking a metro so crowded. We assume it also relates to the extra load of COP28 delegates. Yesterday in a press conference, Alexander Saier from UNFCCC informed the numbers of delegates, observers, media and staff: 104 thousand temp population around. (Now I realize that free metro passes, are not only a courtesy. Just imagine the lines at ticket boots). Future COP organisers, “mid the gap”.
Before we start
Today we spent less than one hour at COP’s venue.
Instead, we accepted an invitation from the Wall Street Journal for a parallel event, the Journal House at COP28, nicely organized for networking in a gorgeous space with view to the Vida Yacht Club Dubai. So, if you do not like much finance, maybe you should skip the next topic and jump straight to Before we close the day, were we added some references. On the other hand, you may reconsider and read our The day as it relates to views and insights by John Kerry and Mark Carney. If you do not recall who they are, keep reading.
The day.
Vida Yacht Club Dubai is an impressive venue, with a marina surrounded by high-raise buildings, yachts and traditional Arabian Dhow cruise boats coming and going. In that scenery, the following panel discussions, interviewed by Ken Brown, Bureau Chief, Climate and Financial Enterprise of The Wall Street Journal.
Climate and Investing by Mark Carney.
Mark Carney is currently chairman of Brookfield Asset Management. He has a sequence of senior public and private sector financial roles, among them former governor of the Bank of England, Bank of Canada and chair of the Financial Stability Board. He was finance advisor for the UK presidency of the COP26 in Glasgow, when he helped launch the Glasgow Financial Alliance for Net Zero (GFANZ).
He basically discussed the road to investment opportunities in the energy transition, which requires data availability (“we need measurements”, maybe Bloomberg, ISSB), data access and action.
In terms of action:
he recalled that in Glasgow no participating bank was already measuring its carbon footprint.
renewables represent a huge potential.
hard to abate sector need special financial support.
financial support also so much needed at the developing World.
a key one, mentioned by Prince Charles yesterday at COP28 Business & Philanthropy Climate Forum: blended finance.
Carney also mentioned the US$ 30 billion ALTÉRRA fund announced by UAE, an equity type of investment. This fund aims to mobilising much more institutional and private capital into climate action. A US$ 5 billion portion will go to a Transformation Fund - “first losses” according to Carney - “dedicated to incentivize investment flows to developing countries to address critical climate investment needs in the Global South”, according to the press release.
Brookfield also prepares its own multi-billion dollars fund.
All these new arrangements in global finance obviously challenge the existing multilateral system. World Bank was mentioned. On one hand, with “hard to change” traditional structures, on the other hand, with a new performance target: sustainable finance … and emissions reductions (in the “hard industry, not tech”).
About IRA, “good to be a friend from United States”. It’s a pragmatic new industrial policy (in spite of being referred to as a climate policy).
Payback time. He also mentioned that there are a few oil and gas companies already “working on the transition, spending 7-8% of capital in the transition”.
Concluding, some of his own words:
“We will all benefit from the efficiencies that come from the IRA.”
“I believe in the time value of carbon.”
“Recognition that the carbon markets, the carbon offset markets, has to work. With integrity.”
But “at 8 dollars per ton it will not work, considering the parallel situation of the stranded assets of coal, oil and gas.”
“Zero methane by 2030”.
“Hydrogen”.
“Finance is a catalyst. But like in chemistry, we need the right conditions.”
“What’s next? Action.”
Climate Goals and Global Cooperation by John Kerry.
John Kerry is a top diplomat and climate envoy from the United States. He was also Secretary of State of Barack Obama. He turns 80 in a few days and is still very active, both public and private sectors.
John started answering a question on China. “China is aware of the climate crisis”. On the other hand needs to enhance its NDC. “Let’s see how to do more with them”. (there will be bilateral meeting at COP28). “One think that gives me hope is that they are not static”.
About IRA for United States, “an extraordinary economic opportunity. Bigger than the Industrial Revolution. Every industrial perspectives is new. And no politician will dare to go back”.
Methane. “Huge problem. And grows over time. Leakage, venting and flaring”. A Methane Summit with China and another one with the European Union on the pipeline. “One of the biggest things that will come out this COP. Already spoke with the Sultan Ahmed Al-Jaber".
“The evidences that Mother Earth is giving us every day started to scare even the scientists. We may have passed the tipping point with regards to North and South poles, the permafrost and coral reefs”.
World Bank. “Structure is there. We need to help. They need to lend more. Blended finance”.
Voluntary Carbon market. “New announcement coming. Very high in integrity level. We have to find a way to get the private sector in. No government is capable. Price points will be changed with new techniques and technologies. Maybe hydrogen. Fission. Other”.
By the way, “no country is doing enough. Not enough CCS, not enough hydrogen … it is all about speeding and deployment of technology that we already have”
Demand. Quoted several known companies compromised to promote better products, from an environmental perspective.
When asked about unabated fossil fuels (reference to using coal, oil and gas without substantial efforts to reduce the emissions produced throughout their life cycle), replied: “I am guided by the science”. Do nothing because “the other” is not doing is not the way. Mind the Global Stocktake coming. “Unabated is no excuse”. “Maybe CCUS too expensive. I do not know. But market place will decide that well”.
Although we already indicate his quotes, here the two last ones:
“We have much more ability now with Artificial Intelligence. To be ahead of the curve”.
“This is not a sacrifice. There is a better quality of life on the other side of this transition”.
Before we close the day.
“Adaptation Finance Summit for Africa: Doubling Down for a Climate Resilient Africa”. That was the only event that we participated today at COP28. See some notes in the next part People and paparazzi.
We personally meet Suzanne Lynch, from the Washington portal POLITICO. As we like and admire the way she writes. Obviously to complement with ours, here is a link for you to subscribe to her daily posts as well (it worked for us).
People and paparazzi
Bill Gates came to sit a few rows in front of us (we were there first) preparing his announcement$ related to Africa, voicing out the need to work together (like mankind already did with regard to vaccines), concerns with children malnutrition and saying: “No reason to double productivity of larger farmers without helping the small ones first”. He was then chatting with Mark Rutte from The Netherlands, that a few moments later doubled commitment$ made in Glasgow (“honoured”). The Dutch Primer Minister concluded “Actions speak louder than words. Action builds trust.” And U.K. Foreign Secretary, David Cameron - once again - came by to shake hands with them. Other than that, when walking at COP’s venue you have more and more to be alert not to be ran over by entourages of presidents and authorities.
Our key takeaway
Connect demand with supply. People’s climate needs first. A bottom-up approach. More commercial lending (and less adaptation finance). Banks might not be at the best position to change the business model, specially at the developed countries (sic Egypt’s CIB banker at today’s WSJ Journal House). Last but not least, take note: methane.
