Dubai: The global agreement on climate change adopted in Paris last year will generate business opportunities worth more than $265 billion across the Middle East and North Africa (Mena) region according to a study by the International Finance Corporation (IFC), a member of the World Bank Group.
Large share of these investments will be in Egypt, Jordan, and Morocco and over a third of these will be for renewable-energy generation, while 55 per cent ($146 billion) is for climate-smart buildings, transportation, and waste management solutions.
Growing focus on renewables and energy efficiency is expected to open new investment opportunities across the Middle East. The UAE based Masdar has deployed over half a billion dollars invested in green projects with a portfolio of about 4.5GW [gigawatt] of renewable energy. Morocco and Jordan are seeking private investments in renewables and energy efficiency.
The IFC study showed that the Paris agreement has opened up nearly $23 trillion in opportunities for climate-smart investments across emerging markets between now and 2030.
Since the Paris Agreement was adopted in December 2015, a total of 189 countries have submitted national plans that target aggressive growth in climate solutions — including renewable energy, low-carbon cities, energy efficiency, sustainable forest management, and climate-smart agriculture. These plans offer a clear road map for investments that will target climate-resilient infrastructure and offset higher upfront costs through efficiency gains and fuel savings.
IFC’s study, based on the national climate-change commitments and underlying policies of 21 emerging-market economies, identifies sectors in each region where the potential for investment is greatest. This includes green buildings in East Asia and the Pacific — where China, Indonesia, the Philippines, and Vietnam show a climate-smart investment potential of $16 trillion.
Latin America and the Caribbean offer the next largest opportunity — particularly in sustainable transportation, where the potential for investment in Argentina, Brazil, Colombia, and Mexico is about $2.6 trillion. Opportunities in South Asia are mostly in climate-resilient infrastructure, where $2.5 trillion of opportunities exist in India and Bangladesh.
“There has never been a better time than now for climate-smart investing. “This reflects the dramatic reduction in the price of clean technologies and the rise of smart policies that are driving businesses to invest,” said IFC Executive Vice President Philippe Le Houérou.
The IFC report also finds that government action will be critical to take advantage in order to unlock the full scale of investment potential. It recommends that governments integrate national climate commitments into their development strategies and budget processes, strengthen the investment climate for climate-smart industries, and deploy public funds strategically to mobilise private capital — by reducing risk and providing project support.
As part of its initiatives the IFC as set ambitious goals. “IFC has pledged to increase our climate investments to a goal of $3.5 billion a year by 2020 and catalyse another $13 billion through other investors,” said Le Houérou.