Kuala Lumpur: Countries such as the UAE and Malaysia have shown the willingness to issue green sukuks, and advisers such as Climate Bonds Initiative hope to have at least one [issued] in 2016, the chief executive officer of the advisory firm told Gulf News.
“Dewa (Dubai Electricity and Water Authority) has said that they are considering issuing a green sukuk for clean energy,” said Sean Kidney, chief executive officer of Climate Bonds Initiative. The firm has a sukuk advisory group in the UAE, trying to promote issuance.
The world is heading for up to seven degrees of global warming, according to the International Energy Agency (IEA), which may make many of the parts of the earth uninhabitable, impacting the rich and the poor alike, and Kidney feels the solutions are investible without impacting the government budgets.
“The world is full of money and there’s no shortage of capital, we just have to get our government settings in place,” Kidney said, adding “green bonds are a way to make it simple for people to invest in them.”
“One of the reasons that I like this idea of green sukuk is that it marries the idea of protecting the environment, and it makes sure that our financial system is designed around a social cause and not around making money for billionaires in New York,” he said.
Currently, there is a $65.9 billion (Dh242 billion) of outstanding in labelled green bonds, with transport and energy remaining the dominant themes. The development banks and corporations contribute to the 80 per cent of the issuers. Kidney expects an issuance of another $50 billion bonds next year.
“We need to have the right kind of industrial planning and economic planning that provides transition to the green economy,” he added.
Dubai as an example
Saudi Arabia’s oil minister, Ali Al Nuaimi, had recently said that the largest exporter of crude oil wants to be a solar energy exporter, indicating the extent of the solar ambitions.
“The truth is that oil remains a finite resource,” Kidney said.
Climate Bonds Initiative considers Dubai as an example which has made considerable efforts in developing solar energy.
“The Gulf needs to follow Dubai’s economic model, rather than depend on fossil fuel, as quickly as possible,” Kidney said, adding, “use the wealth now to diversify your economy and diversify the risk”.
“We need to be aware that oil is a sunset industry and we need to quickly move [on with] the transition,” he added.