“The Role of Arab Business in the Transition to Low Carbon Economy”

Student Group: 

The graphic shows global energy subsidies in 2010 according to the International Energy Agency (IEA). With fossil-fuel consumption subsidies at $409 billion and renewable energy subsidies at only $66 billion, this state of artificial competitivity creates an imbalance in the market values of the two energy sources. Phasing out fossil fuel subsidies would have associated economic benefits, in addition to inducing necessary global emissions reductions.

The above graphic was presented by Andrew Steer, President of the World Resources Institute, at a special panel discussion at the UNFCCC COP18 summit in Doha. This event was hosted by the Arab Forum for Environmental Development, or AFED, and titled “The Role of Arab Business in the Transition to Low Carbon Economy.”

The event was moderated by Najib Saab, who is head of the Arab Forum for Environment and Development.

On the panel with Dr. Steer, His Excellency Rashed Ahmad Bin-Fahad contributed a politician’s perspective to the discussion as Minister of Environment and Water in the United Arab Emirates. Representing the corporate sector were Raji Hattar of multinational Aramex, Alain Saliba of Kharafi National (Kuwait), and Michael Nates of ACWA Power (Saudi Arabia).

These three men were among the 120 corporate leaders from the Middle East and North African region who met at the 2007 summit organized by AFED. There, they pledged to reduce the consumption of energy and water in their organizational operations 20% by 2012. Five years on, Najib Saab now asked them to describe the diverse ways in which they had progressed beyond the pledge and into general sustainability.

Najib Saab summarized and repeatedly referenced the brand-new AFED report, Ecological Footprint of Arab Countries. Based on current rates, the report predicts that by the end of the century, the region will see “average yields of rain-fed agriculture […] decline by 20 percent overall, aggravating the risks of food and water shortages.” This comprehensive report also deals with issues such as food security and renewable energy, making policy recommendations for governments; it partly attributes “the high level of energy consumption […] and the inefficiency of use” to high rates of fuel subsidies. Although lifting such subsidies could spark unrest, maintaining them could drive governments bankrupt.

As a panelist, Michael Nates of ACWA Power put forward a bold concept of a different system of electricity payments that managed costs in such a way as to minimize subsidies and support renewable sources of energy.

The panel lauded the recent announcement by the Saudi Arabian government that it seeks $109 billion in investmests in solar energy, a massive and fully unprecedented business venture. This is all the more noteworthy in context; last year, investments in solar only totaled $136 billion, worldwide. The Director-General of the International Renewable Energy Agency (IRENA), Adnan Amin, has said he sees this expenditure as a “game-changer,” a move made not out of “generosity for the planet” but out of “absolute business sense.”

In this vein, the panel brought up a notable example of Arab business achievement, the Ouarzazate Independent Power Producer in Ouarzazate, Morocco. When built, Ouarzazate IPP will be the largest concentrated solar power plant in the world. The consortium that won the bid for the $1 billion contract is to be led by ACWA Power.

On the whole, the panel discussion set an upbeat tone uncharacteristic of a climate conference. Using proof of profitability in sustainable investments, the panel placed its hope in market forces as potential drivers of the gargantuan leap forward that the world must make to overcome the ever-increasing emissions gap.

This event was the topic of a documentary in a series by the Doha Film Institute on COP18.