It’s hard to believe that the UAE was once a parched desert with a tiny town where now luxurious hotels, shopping malls, and skyscrapers dominate.
The nation is now regarded as a symbol of prosperity and humanity’s triumph over nature.
Before the discovery of oil, the UAE had a subsistence economy, with households depending on natural resources like pearl diving and agriculture to meet their basic requirements.
Oil was discovered in Abu Dhabi in the early 1960s, prompting UAE officials to demand immediate unification in 1971. The discovery of the ‘black gold’ ushered in a new age of trade and radically transformed the country.Climate change – A double edge sword for UAE
The UAE is susceptible to climate change’s physical effects, such as rising temperatures, unexpected extreme weather, and sea-level rises. At the same time, its economy, which is dependent primarily on oil and gas exports, is vulnerable to mitigation and adaptation policies to reduce global fossil fuel use.
For these reasons, even though oil and gas exports will continue to be a significant source of revenue for the foreseeable future, the UAE has decided to define, restructure, and implement economic diversification policies that consider renewable energies a viable path to weaning the country off fossil fuel dependency.Sustainable initiatives
The UAE has a history of setting records, whether it’s for the world’s tallest building, the most luxurious hotels, or the city of Masdar in Abu Dhabi, which is the world’s first city to have a zero-carbon footprint, zero waste, and is car-free. The city is still under construction, but it is expected to house 40 to 50 thousand people over a six-kilometre span.
For UAE residents, the prospect of a dozen unmanned aerial vehicles (UAVs) flying above their heads with delivery packages and swooping down on their doorsteps to bring groceries, food, or medications is not far off.
Another interesting initiative is Abu Dhabi’s rollout of self-driving taxis as a part of its trial project on Yas Island that will include three electric and two hybrid self-driving vehicles. These ground-breaking initiatives are in support of Sheikh Mohamed bin Zayed Al Nahyan’s Vision 2050 to cut carbon emissions and promote the use of sustainable green energy.A chance for a new narrative
The oil-dependent nation has completed a slew of green initiatives to aid the worldwide fight against climate change, and its efforts have not been unnoticed.
The UAE just won the bid to host the COP28 in 2023, demonstrating the country’s commitment to collaborating with the international community to expedite global efforts to address climate change and environmental protection while also ensuring a more prosperous future.
The UAE is known for setting landmarks, and hosting COP28 would be a masterstroke in the climate sphere for the Middle East, which is the world’s hottest, driest, and most water-scarce area, with temperatures forecasted to rise more than twice the global average by 2030. The Emirates’ choice to host the COP28 reflects strong leadership and a vision of how an oil-producing country can underline the need to go all-in on greening the planet.The smooth transition
The UAE has taken early measures to bid farewell to the last barrel of oil and strike a balance between economic progress and environmental protection.
The UAE Energy Strategy 2050 aspires to develop an energy mix that balances economic needs and environmental goals by combining renewable and clean energy sources. To fulfill rising energy demand and assure long-term economic growth, the UAE aims to invest AED600 billion through 2050.
The UAE is enthusiastic about hydrogen as a source of energy and has been developing a thorough plan to position itself as a clean fuel exporter and capitalize on its future possibilities.
As part of the UAE’s ongoing energy diversification efforts, ADNOC, Mubadala, and ADQ formed a partnership in January to build a hydrogen economy in the nation, focused on low-carbon green and blue hydrogen.Corporates upping ESG game
The term ‘sustainability’ has crept into our everyday lives. It’s also made its way into the financial realm, where it’s become one of the key motivators to change investor behaviour.
Analysts estimate that the global sustainable investments are growing profoundly and reached $35 trillion or 36 percent of the total assets under management in 2020.
Corporate America, too, has jumped on the sustainability bandwagon owing to growing shareholder concerns. For example, did you know McDonald’s Big Mac has a carbon footprint equivalent to driving a car for nearly eight miles? To make its brand more sustainable, McDonald’s is making significant efforts to introduce the meat-free McPlant burger to all stores. Additionally, the burger giant announced that it would reduce fossil fuel-based plastic in its Happy Meal toys by 90 percent by 2025.
The UAE, an international business hub, has joined Western counterparts mandating ESG reporting for UAE-listed companies; this comes when retail investors in the UAE have started to consider ESG factors while investing. These initiatives reflect the UAE’s overall mission to be an established global sustainability leader.Capitalising on the trend
The UAE has persistently strived to bring sustainability to the spotlight to fade the veil between the West and the Middle East; however, the alternative energy domain remains a niche investment in the region.
Tech companies worldwide are starting to embrace greener, more sustainable business models to be carbon negative, water positive, and waste-free.
Investors hoping to profit from this new market trend should keep a watch on the STOXX Global Climate Change Leaders Index, which was created to identify the world’s most sustainable companies. Apple, Bank of America, Microsoft, and Alphabet are among the STOXX Index’s heavyweights that may be added to a portfolio.
Apart from purchasing stocks in solar panel manufacturers, investors can consider Invesco Solar ETF (TAN) in the alternative energy space. The global repercussions of climate change are becoming more evident than ever, with unprecedented heatwaves, roaring wildfires, and catastrophic floods, making it critical to keep a small percentage of an investor’s portfolio in green assets.Source: