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Glasgow Climate World Summit: There is no Planet B



Glasgow Climate World Summit: There is no Planet B
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In November, the world’s attention will be focused on the proceedings and outcomes of the United Nations COP26 International Panel on Climate Change (IPCC) meeting in Glasgow. We will be told, as we have been repeatedly by the IPCC, that this is the last-ditch attempt to save the planet and perhaps humanity from the catastrophic consequences of global warming and climate change (GW&CC) through the increasing accumulation of greenhouse gases (GHGs) in our atmosphere. Alok Sharma, the British cabinet minister currently serving as president of COP 26 calls it a “turning point” point for humanity.

To that end, the world will be encouraged to abandon all fossil fuel-based energy generation, which for years has represented more that 80 percent of global energy consumption. The gathering in Glasgow will also enthusiastically and appropriately, welcome the increases of alternative energy sources in many countries, especially wind and solar, which currently provide about four percent of global energy consumption. Unfortunately, such alternative sources of energy are projected to remain modest compared to coal, natural gas and oil. This trend is compounded by rising energy demands in developing countries where fossil fuels remain a dependency.

Even developed countries such as Canada will not be able to meet the targets voluntarily set at COP21 in Paris. On October 6th the Globe and Mail reported: “Canada is on pace to fall well short of its emissions goals, according to a new government-funded report that says the country’s current strategies will reduce its greenhouse gas output by only 16 percent, relative to 2005 levels, by 2030 — a far cry from the 40-percent cut that Prime Minister Justin Trudeau has promised.”

Ironically, the UK government (host of COP26) is permitting the first deep coal mine in 30 years to be created in Cumbria with most of the extracted coal to be exported to Europe. This underlines another misunderstanding perhaps widely held, namely, the atmosphere pays no attention to the source of GHG emissions. A ton of carbon absorbed in the atmosphere from Beijing has the same global impact as one emitted from Montreal.

The gap between climate diplomacy at COP meetings and the national energy policy decisions implemented between them has fostered cynicism about the value of targets that are undermined as much by hypocrisy as by chemistry.

Columbia Professor James Hansen, known as the “father of climate change awareness”, told the Guardian in 2015 that the talks that culminated in a deal at COP21 were just “worthless words”. Speaking as the final draft of the deal was published, Hansen said: “It’s just b******t for them to say: ‘We’ll have a 2C warming target and then try to do a little better every five years.’ It’s just worthless words. There is no action, just promises. As long as fossil fuels appear to be the cheapest fuels out there, they will be continued to be burned.” Hansen has never been an irrational alarmist and his record of climate change prediction to date has been remarkably good.

With no sanctions and no carbon pricing agreed upon in Paris, is it realistic to assume that the world, with total primary energy consumption more than 80 percent dependent on fossil fuels in 2020, will restructure our societies and infrastructures in time to prevent CO2 atmospheric concentrations from passing the possible “tipping point” of 450 parts per million (ppm)? At the time of the Kyoto Protocol in 1997, concentrations were about 367 ppm. They have now passed 400 ppm and continue to rise.

As the Secretary General of the Organisation for Economic Cooperation and Development (OECD), I introduced Sustainable Development (SD) to the group’s work program in 1997 and created the OECD Round Table on SD that same year. While SD embraces a wide range of environmental, social and governance objectives (often referred to as Environmental, Social and Governance, or ESG), all SD is only possible within a healthy biosphere that enhances and protects the world’s natural capital composed of the air, the water, the soil and the biodiversity of our millions of viable cohabitants.  I did so because the 1972 UN meeting in Stockholm, the Brundtland UN report “Our Common Future”, the RIO Earth Summit in 1992 where the UNFCCC was created, plus the regular IPCC reports pointed to a climate change crisis in the near future.

Many argue that it is still not too late to embark upon ambitious environmental programs to ensure that GHGs decline before CO2 accumulations in the atmosphere exceed 450 ppm. This is the level the scientific consensus tells us will keep global mean temperatures from increasing above pre-industrial levels by more than 2° C with concomitant disastrous climate change far outstripping our global capacity to reduce fossil fuel emissions or adapt to a very different world. It is too late unless COP26 is courageous enough to introduce new technologies with have yet to be rigorously tested.

No alternative – no Plan B

Where is Plan B? There is none. We are simply re-embarking on the well-trodden path of consistent failure. Perhaps as a last resort, atmospheric geoengineering known as Solar Radiation Management (SRM) will be considered, at least at an experimental level to determine whether we might have a useful fire extinguisher at hand when there is a consensus that rising above 2 degrees C is inevitable.

The challenge is that, based on the last few decades of trying to come to grips with GW&CC by a few brave countries (e.g. consider Germany’s extraordinary increase to 44 percent wind- and solar-generated renewable electricity-generating capacity by the end of 2015, that still only provides about 8 percent of Germany’s total primary energy consumption), none of our alternative solution technologies, as presently configured, is capable of being scaled-up to make a significant dent in the overwhelming use of inexpensive and very convenient fossil fuels (gas, oil and coal).  As strongly emphasized by the US-EIA in its May 2016 report, the massive growth of population in the developing countries, and their fast-rising standards of living and expectations are forecast to sustain the use of fossil fuels globally at very high levels for decades.

As these projections were made since the Paris COP21 targets, how can one not be skeptical about keeping CO2 accumulations below 450 ppm? In the absence of herculean efforts of unprecedented research and development to find “breakthrough” solutions/alternatives, and extraordinary global cooperation and coordination, it is too late. The process under United Nations Framework Convention on Climate Change (UNFCCC) has delivered agreements, but only minimal results. COP21 in Paris has maintained that dismal record of underachievement.

John Maynard Keynes suggested that the master economist should examine the present in light of the past for the purposes of the future. So should we in looking at our history of fighting climate change. Some engaged in the climate change debate are surprised to learn that science has known of the characteristics of CO2 and its greenhouse effect on our planet for more than a century. What have we done about it?

As early as 1896, a Swedish scientist, Svante Arrhenius (Nobel Prize for chemistry, 1903) identified the warming effects of the CO2 emitted by burning coal. Alarm bells rang at the Stockholm UN Environmental Conference in 1972 — more than 40 years ago. Concern was expressed about emissions, but their measurement and impact were not yet broadly understood until the UN creation of the IPCC in 1988.

Those alarm bells grew louder after the UN Brundtland Report Our Common Future in 1987, helped to spur action with the Montreal Protocol on GHGs reached in 1987 and implemented in 1989, and mobilized political will at the UN Rio Earth Conference in 1992, where the climate change convention was adopted.

The UN General Assembly in Special Session met in New York in 1997, where we listened to statements from world leaders and others (including me) about the importance of reducing emissions. That meeting was followed by the UN Kyoto conference, where the Kyoto Protocol was adopted.

It was agreed that Annex 1 countries (37 developed) would reduce their emissions during two commitment periods on average by 5.2 per cent below their respective 1990 levels. Canada’s commitment was a six percent decrease by 2012 compared to 1990. By 2008, Canada’s emissions had increased by 24.1 per cent over 1990 and Canada withdrew from the protocol.

We have witnessed governments across the globe tailor their policies to their short-term political imperatives rather than to long-term challenges such as climate change.

For many years, we witnessed a parade of alternative energy advocates producing “possible” scenarios for reducing GHG emissions. Wind, solar, energy efficiency, tidal, geothermal and others make up that list. All great ideas, but they ignored the technical, political and economic challenges of their effective integration and weaning ourselves and our economies away from fossil fuels while meeting the world’s energy requirements in light of the short time for action. To say those challenges are daunting would be a great understatement. In 2020, total world wind and solar energy consumption amounted to less than four percent of global primary energy consumption.

The present policy paralysis illustrates our incapacity to come to grips with global warming and its impact on climate change despite the human and economic toll of the weather aberrations we witness on a daily basis.

Hopefully, as the realization takes hold that the 450 ppm threshold will be passed, an international consensus will emerge and adaptation measures will be brought forward to address some of the most damaging early consequences. If nuclear continues to be rejected as a global solution, then in the absence of some yet to be discovered “breakthrough” technological developments, a Plan B must also examine solar radiation management (SRM or atmospheric geoengineering) and perhaps a broader utilization of carbon capture and sequestration (CCS).

There are now calls from serious sources to a least engage in testing SRM to determine whether it could serve as a lifeboat of last resort. Serious environmentalists like Bill Gates and Richard Branson are apparently interested in climate engineering, or geoengineering. Some experts, such as Canadian Professor David Keith at Harvard, Granger Morgan and Ken Caldeira at Carnegie Mellon and others are striving to determine whether SRM could be a potential lifeboat should the failure to arrest and reduce CO2 emissions continue, as it has for decades.

A non-technical explanation SRM might be simply the following. By spreading aerosols with reflective particles in the atmosphere one could alter the albedo, i.e. the reflective capacity of the earth, thereby lessening the amount of radiation that penetrates to the earth’s surface, and as a result, lessen the heat that is trapped under the CO2 blanket. The measured reduction in the earth’s temperature resulting from the spread of volcanic ash after eruptions suggests that this would be effective and relatively inexpensive. It would not be a permanent answer and would have to be renewed periodically. The concept is well explained in a recent book by David Keith, A Case for Climate Engineering, published by MIT.

Unfortunately, there is considerable resistance to the concept, which seems to find two areas of opposition. First, we see the dedicated environmentalists who believe that exploring this technology may detract from mitigation efforts of those seeking to arrest and reduce GHG emissions, especially CO2. Second, there are some fearful of even limited testing, which they claim could result in unintended consequences, and who remain convinced that there will be technological breakthroughs that will make geoengineering of the atmosphere unnecessary. Surely it is irresponsible for this generation not to have a Plan B.

Note this comment from Gates on Keith’s book:

“The negative effects of climate change will disproportionately impact the world’s poor. David Keith’s candid and thoughtful book lays out a compelling argument about the need for serious research on geoengineering and for a robust policy discussion on its possible use”

What better place to have such a robust discussion amongst experts than at COP 26 in Glasgow?

*Under the title “COP26 Glasgow and the Lack of a Plan B” the early version of this text appeared in the Canadian Policy Magazine. Courtesy of the author and publisher.



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A Labour Government Should not Frighten the Horses




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The UK general election is likely to mean changes, but Gulf citizens need not be too worried.

By James Drummond

If the tension was killing you, now you know. If it wasn’t, then be aware that a general election in the United Kingdom will be held on July 4 – less than six weeks away.

For the hapless Rishi Sunak, it looks like a case of “If it were done when ’tis done, then ’twere well it were done quickly.” Polls indicate that after 14 years of conservatism, real or imagined, voters are likely to elect a new Labour government.

What does this mean for us here in the Gulf?

The six Gulf states are certainly exposed to Britain. The extent of GCC holdings in the UK is enormous, ranging from Qatari ownership of the Shard building in London, stakes in the Sainsburys supermarket chain and Barclays bank, to Sheikh Mohammed bin Rashid’s Godolphin stables in Suffolk.

Manchester City and Newcastle United football clubs are owned by Emirati and Saudi interests, respectively. Kuwait’s wealth is managed by the Kuwait Investment Office near St Pauls Cathedral.

Labour has been careful to detail very few policies (or hostages to fortune, as its strategists may see it), but last week, David Lammy, the likely new foreign secretary, outlined a further campaign against dirty money.

Britain is a “corruption services centre”, while London is a “hotbed of kleptocracy”, Mr Lammy said. He said that he wanted to reward whistleblowers and clamp down on “enablers” of financial crime.

Given the paucity of public announcements, Lammy’s speech is significant, because it implies that the incoming government is likely to act. Fighting financial crime is relatively uncontroversial and attracts cross-party support – although in the UK’s case with limited success.

British politicians have made similarly grandiose statements before. But after Russia’s invasion of Ukraine, London has moved particularly against Russian dirty money, and sanctioned individuals. It finally introduced an obligation mandating the disclosure of beneficial owners of property.

Overseas trusts are also now required to disclose their ultimate beneficial owners, and there is now greater transparency when registering entities at Companies House.

This seems to have had only limited effect, however. Last week Andrew Mitchell, the deputy foreign secretary, cited estimates that 40 percent of the world’s dirty money still passes through London.

Spotlight on Corruption, a non-governmental organisation, wrote in October last year that “major reform is needed to how lawyers and accountants, the property sector and company formation agents are regulated for money laundering.” Lammy may choose to take further action against these and other professionals.

Other so-called enablers include retired politicians, some of them in the House of Lords, who work as advisors to unsavoury actors. Labour could move to tighten disclosure, although several of its senior former members are likely to lobby against further transparency.

It is also possible that Labour will go further in taxing expatriates. In its limited public commitments, the party has promised to clamp down on “tax dodgers”.

Those with property in the UK already pay tax on rental income they receive, and worldwide assets are subject to Britain’s inheritance tax. Some Gulf Arab families with UK property have been caught by inheritance tax.

A government led by Sir Keir Starmer, the Labour leader, could go further, as the US does, in taxing worldwide income of its citizens, more than 200,000 of whom live in the UAE alone. The argument is that if you have the privilege of carrying the passport, you have an obligation to pay tax.

Another question surrounds nationalisation. Labour is committed to re-nationalising the railways for one, although the infrastructure is already under central government control.

But another target may – may – be England’s water supply network, which was privatised in 1989. Shareholders in various of the rump companies include the Qatar Investment Authority and Adia of the UAE.

The water companies have been the subject of a vociferous campaign, for allegedly paying their shareholders high dividends while neglecting maintenance and investment. It is possible that an incoming Labour government will nationalise the industry.

All that said, the primacy of the rule of law and respect for property rights remain strong in Britain.

Barratt, a mass housebuilder, reported earlier this week that London remains the top choice among world cities for UAE investors looking to buy overseas. The holdings of Gulf states and rights of Gulf citizens in the UK remain secure, even with a Labour government.

James Drummond is Editor-in-Chief of the AGBi

Courtesy: The AGBI.Com

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Kuwait’s Political Crisis Adds to Economic Uncertainty




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Kuwait’s latest standoff is deeply concerning for both the near and long term, writes Andrew Cunningham

The decision by Kuwaiti emir Sheikh Mishal Al-Ahmad to dissolve the country’s recently elected parliament just days before its inaugural session on May 14 presents overseas investors and Kuwaiti citizens with more uncertainty.

The situation raises concerns about the country’s economic prospects over both the short and long term.

Disputes and stand-offs between Kuwait’s emirs and its boisterous parliament are nothing new. Parliament has been dissolved, and the constitution suspended, numerous times over the past 40 years. The country has held four elections in the past four years.

Squabbling between the two sides is rooted in political disagreements and this most recent outbreak is no different.

A major factor behind the latest dissolution is believed to have been parliament’s objection to Sheikh Mishal’s choice of crown prince. Although the crown prince is nominated by the emir, the appointment has to be ratified by the parliament.

But these political, and sometimes personal, disputes have real consequences for Kuwait’s economy and financial system and, ultimately, for the long-term welfare of its citizens.

Kuwait is a prosperous country. If we take a snapshot today, we see it producing nearly 2.5 million barrels of oil per day (bpd), and there are plans under way to increase production capacity to 4 million bpd by 2035.

State foreign reserves are around $930 billion, according to National Bank of Kuwait, the country’s largest bank. With a population of a little over 4 million, its GDP per capita is one of the highest in the world.

Squabbling between the two sides is rooted in political disagreements and this most recent outbreak is no different.

A major factor behind the latest dissolution is believed to have been parliament’s objection to Sheikh Mishal’s choice of crown prince. Although the crown prince is nominated by the emir, the appointment has to be ratified by the parliament.

But these political, and sometimes personal, disputes have real consequences for Kuwait’s economy and financial system and, ultimately, for the long-term welfare of its citizens.

Kuwait is a prosperous country. If we take a snapshot today, we see it producing nearly 2.5 million barrels of oil per day (bpd), and there are plans under way to increase production capacity to 4 million bpd by 2035.

State foreign reserves are around $930 billion, according to National Bank of Kuwait, the country’s largest bank. With a population of a little over 4 million, its GDP per capita is one of the highest in the world.

In March this year, rating agency Fitch described Kuwait’s fiscal and external balance sheets as among the strongest of any of the governments it rates.

But when we look at long-term trends, the picture is more complex and less secure.

Kuwaiti government spending remains overwhelmingly dependent on oil and gas revenues. The government has made almost no progress, over many decades, in diversifying the economy away from oil, or in reducing the huge burden of government salaries and welfare payments.

Oil and gas revenues currently account for nearly 70 percent of total income and, according to IMF projections, will continue to do so for the rest of the decade.

These revenues have served the country well in the past, despite the volatility of oil prices, but such overwhelming dependence looks foolhardy when consumers worldwide are striving to reduce consumption of oil and gas and investors and energy firms have pivoted towards renewables.

Nearly all of the Kuwaiti government’s non-oil and gas revenue arises from overseas investments and from dividends from state-owned companies. Tax revenues account for less than 1 percent of total government income.

Looking beyond the fiscal imperative to diversify the economy is the need to provide employment opportunities for Kuwaiti citizens.

No less than 84 percent of the Kuwaiti workforce was employed by the government at the end of 2022. It is hardly surprising that nearly half of government expenditure is allocated to the salaries of public employees.

Pressure for social spending will increase in the years ahead. A World Bank report, published last year, showed that levels of obesity and Type 2 diabetes were higher in Kuwait than in any of the other GCC countries and nearly double the average in OECD countries.

Partly as a result of this, the World Bank estimated that Kuwait’s old age dependency ratio – the number of people over 65 years old in relation to those of working age – will be nearly double that of its neighbours by 2040.

Kuwait is also a country that is being significantly affected, even today, by climate change. Temperatures during the summer can exceed 50 degrees, making Kuwait one of the hottest places on earth.

These are difficult and complex challenges, both economic and social, but they are hardly unique to Kuwait. That they are, in some cases, more acute in Kuwait than elsewhere is due to decades’ long procrastination and political paralysis.

The government’s General Reserve Fund, which held most of its liquid assets, was entirely depleted in September 2020, according to Kuwait’s own ministry of finance. With AA ratings, the obvious solution was to borrow money – Kuwait’s debt-to-GDP ratio is less than 5 percent. Yet the parliament has still not passed a so-called ‘Liquidity Law‘ that would allow modest issuance of foreign currency debt.

The parliament also held up the introduction of Value Added Tax (VAT), making Kuwait one of two of the six GCC countries not to fulfil a joint commitment to implement a minimum VAT of 5 percent.

Over the past four years, all three of the big international credit rating agencies have downgraded the government of Kuwait.

In their rating reports, all agencies cited a dysfunctional and slow-moving political environment that was reducing the country’s financial flexibility and delaying much needed economic and financial reform.

Politics matters.

It is unrealistic to think that after decades of enmity the ruling family and the parliament will soon form a harmonious working relationship.

But they do need to find some common ground that will enable them to start addressing fundamental economic and social issues while the country still has large financial reserves and strong credit ratings.

Time is running out.

Andrew Cunningham writes and consults on risk and governance in Middle East and sharia-compliant banking systems

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ICD and JSC Ziraat Bank Collaborate to Boost Uzbekistan’s Private Sector




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At the 3rd Tashkent Investment Forum, the Islamic Corporation for the Development of the Private Sector (ICD) and JSC Ziraat Bank Uzbekistan took a significant step forward in their partnership to empower small and medium-sized enterprises (SMEs) and foster economic growth in Uzbekistan. The forum, held in the capital city of Uzbekistan, brought together key stakeholders from the public and private sectors to discuss investment opportunities and economic development strategies for the region. The collaboration between the Islamic Corporation for the Development of the Private Sector (ICD) and JSC Ziraat Bank Uzbekistan is aimed at boosting the private sector in Uzbekistan.

During the forum, ICD and JSC Ziraat Bank Uzbekistan formalized an expression of intent to collaborate on various initiatives aimed at supporting SMEs. One of the key elements of this collaboration is the provision of a Line of Financing (LoF) facility by ICD to JSC Ziraat Bank Uzbekistan. This LoF facility will enable the bank to fund private sector projects as an agent of ICD, thereby providing SMEs with access to the necessary capital to initiate and grow their businesses.

The partnership between ICD and JSC Ziraat Bank Uzbekistan is expected to have a significant impact on the SME landscape in Uzbekistan. By equipping entrepreneurs with the resources they need to succeed, this collaboration will not only support the growth of individual businesses but also contribute to the overall economic development of the country. SMEs play a crucial role in driving economic growth, creating jobs, and fostering innovation, and this partnership will help strengthen the SME ecosystem in Uzbekistan.

JSC Ziraat Bank Uzbekistan, as a strategic partner for ICD, brings a wealth of experience and expertise to the table. As a prominent commercial bank with foreign capital, JSC Ziraat Bank Uzbekistan has a strong track record of supporting SMEs and promoting economic development. The bank’s partnership with ICD further underscores its commitment to advancing the private sector in Uzbekistan and its dedication to supporting the country’s economic growth.

ICD, for its part, is a leading multilateral development financial institution that focuses on supporting the economic development of its member countries through the provision of finance and advisory services to private sector enterprises. By partnering with JSC Ziraat Bank Uzbekistan, ICD is furthering its mission of promoting economic development and fostering entrepreneurship in Uzbekistan and across the Islamic world.

The LoF facility provided by ICD to JSC Ziraat Bank Uzbekistan is just one example of the many initiatives that the two entities are undertaking to support SMEs in Uzbekistan. In addition to providing financial support, the partnership between ICD and JSC Ziraat Bank Uzbekistan will also include capacity-building initiatives and technical assistance programs to help SMEs succeed in today’s competitive business environment.

Overall, the partnership between ICD and JSC Ziraat Bank Uzbekistan represents a significant step forward in supporting SMEs and fostering economic growth in Uzbekistan. By working together, these two institutions are helping to create a more vibrant and dynamic private sector in Uzbekistan, which will ultimately benefit the country’s economy and its people. The collaboration between the Islamic Corporation for the Development of the Private Sector (ICD) and JSC Ziraat Bank Uzbekistan is expected to have a far-reaching impact on the private sector in Uzbekistan.

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