1、Closing the Climate Action Gap:Accelerating Decarbonization and the Energy Transition in MENAI N S I G H T R E P O R TO C T O B E R 2 0 2 3In collaboration with Bain&CompanyImages:Getty ImagesDisclaimer This document is published by the World Economic Forum as a contribution to a project,insight are

2、a or interaction.The findings,interpretations and conclusions expressed herein are a result of a collaborative process facilitated and endorsed by the World Economic Forum but whose results do not necessarily represent the views of the World Economic Forum,nor the entirety of its Members,Partners or

3、 other stakeholders.2023 World Economic Forum.All rights reserved.No part of this publication may be reproduced or transmitted in any form or by any means,including photocopying and recording,or by any information storage and retrieval system.ContentsPreface 3Foreword 4Executive summary 51 The MENA

4、regions climate emergency:from environmental risks to economic repercussions 61.1 The domino effect of rising temperatures 71.2 Rapidly growing emissions 81.3 The economic implications 81.4 The gap in climate action 91.5 The rise of climate concern among consumers 102 Key beliefs for the future anti

5、cipated risks and opportunities 112.1 Key risks 122.2 Key opportunities 143 A critical juncture:MENAs climate ambitions,corporate response and consumer awareness 153.1 MENAs net-zero ambitions and the imperative for increased action 163.2 Corporate climate action in MENA:the green shoots 183.3 Furth

6、er corporate climate action in MENA:a promising start but a long way to go 183.4 MENAs consumers expect companies to take bold action 214 MENAs path to sustainability:economic context andresource profile 224.1 MENAs economic and emissions complexity 234.2 MENAs role in the worlds energy mix is pivot

7、al 245 The road to sustainability:MENAs multifaceted approach to decarbonization 265.1 Technology-based solutions(TbS)offer the best abatement potential 275.2 MENAs TbS decarbonization mantra 285.3 Energy transition has tremendous potential for MENA 295.4 Decarbonization and energy transition opport

8、unities sectoral outlook 316 Stakeholder action:key strategies for sustainable transformation inMENA 356.1 Recommended policy action:catch up on emissions disclosures and target-setting 366.2 Recommended policy action:leapfrog on energy transition 386.3 Different critical priorities for GCC vs.non-G

9、CC MENA countries 406.4 Action for businesses:navigate the unique sustainability landscape in MENA 41Conclusion 43Contributors 44Endnotes 45Closing the Climate Action Gap:Accelerating Decarbonization and the Energy Transition in MENA2PrefaceFor the Middle East and North Africa(MENA)this is a decisiv

10、e moment in confronting climate change.As a region characterized by rising temperatures,prolonged droughts and increased water scarcity,MENA is more vulnerable than others to extreme weather events such as more frequent and severe heatwaves,sandstorms and flash floods,which have a potential to exace

11、rbate socioeconomic disparities and migrant crises.A major global supplier of energy,MENA holds tremendous potential to take the lead in initiating solutions.Realizing this opportunity will require urgency,ambition and collaboration.In this context,the World Economic Forum,together with Bain&Company

12、,has convened a diverse coalition of more than 40 progressive leaders from MENA,including policy-makers,business leaders,banks and industry experts,to form Leaders for a Sustainable Middle East and North Africa(LSM).With Egypt hosting COP27 in 2022 and the United Arab Emirates holding the upcoming C

13、OP28 in NovemberDecember 2023,this region-specific coalition recognized the unique opportunity at hand to harness the momentum to shape a regional sustainability agenda and meaningfully advance public-private cooperation for climate action in MENA.This report,developed with the input of LSM members

14、alongside primary research and a vast consumer survey,provides an in-depth analysis tailored to the MENA context.For the purposes of this report,we have focused the analysis on nine major MENA economies:Saudi Arabia,UAE,Egypt,Qatar,Kuwait,Morocco,Oman,Tunisia and Bahrain,given the challenges of data

15、 availability with stock market regulators.It assesses the current state of corporate climate action in the region and identifies targeted strategies to turn risksinto competitive advantages across sectors.While MENA countries have demonstrated a growing commitment to climate action through net-zero

16、 targets,action from the business community still lags behind that of global peers,and consumers still underestimate their regional vulnerabilities.Yet despite starting from behind,the region has the necessary conditions to leapfrog others on the sustainability journey and share a new model for bold

17、 and coordinated regional action that leaves no one behind on a path to greener growth.MENA holds the advantage in both conventional sources of energy given its low costs and low-emissions profile for hydrocarbon extraction and renewables energy generation noting its solar potential and vast swathes

18、 of available land.Successfully transitioning to a sustainable future will hinge on bold measures from policy-makers and companies,raising awareness and increasing the number of multistakeholder partnerships.This entails stepping up efforts on decarbonization and emission-related target-setting,and

19、taking bold steps to unlock value from energy transition.MENA is not a monolith,however major differences exist between the GCC(Gulf Cooperation Council)and non-GCC MENA countries and greater regional collaboration is needed to fully realize the opportunity arising from decarbonization and the energ

20、y transition.Together,strategic climate action can strengthen diversification,exports and employment across MENA.The time for climate ambition is now and the window for decisive action is narrow.Collective action can secure an equitable and prosperous future for the region and the planet.Closing the

21、 Climate Action Gap:Accelerating Decarbonization and the Energy Transition in MENAOctober 2023Closing the Climate Action Gap:Accelerating Decarbonization and the Energy Transition in MENA3ForewordIn many ways,the Middle East and North Africa(MENA)is a microcosm of the challenges and contradictions t

22、hat encompass the global fight against climate change.The regions contributions to the global economy are undeniable,but so too are the environmental issues it faces today.Rising temperatures,water scarcity and extreme weather events are already threatening the well-being and stability of the 500 mi

23、llion people who live there.The challenges facing MENA have been compounded by recent global shocks.Events such as the COVID-19 pandemic and the outbreak of wars have induced an unprecedented cost of living crisis by distorting the global supply chains for food,energy and other commodities,leaving m

24、any governments in the region with limited fiscal space.Balancing the immediate needs of providing relief to their populations with preparing for the problems that future generations will inherit has never been more onerous.Yet,even in the face of these formidable challenges,we must not take our eye

25、 off the greater issue of climate change as the long-term consequences of inaction could far outweigh the difficulties of taking bold steps today,especially when considering the most fragile states in the region.Addressing climate change in MENA is not solely a cost,it is also an opportunity.The wor

26、ld requires a multitrillion-dollar investment to stay on track for net-zero emissions,which presents a phenomenal growth opportunity for MENA in the global energy transition.Expediting the energy transition could transform the economy of the region and deliver a more sustainable,inclusive and circul

27、ar future backed bygreenergrowth.With two successive United Nations climate change conferences held in the region(Egypt held COP27 in 2022 and the United Arab Emirates is set to host the upcoming COP28 in NovemberDecember 2023),MENA has a powerful window of opportunity to shape the global climate di

28、scourse and mobilize the world towards inclusive and accountable climate action.This report,written in collaboration with first movers on climate action in the region,contains recommended policy options that address MENAs diverse needs and circumstances.It recognizes that one-size-fits-all approache

29、s to climate action are neither practical nor fair,and that any successful call to action must be grounded in respect for the sovereignty and development priorities ofeachnation.We hope that this report will foster dialogue,collaboration and innovation around a shared understanding of a regional sus

30、tainability agenda through which the MENA region can embark on a journey towards climate resilience and adaptation while delivering shared prosperity across the region.We invite all stakeholders from policy-makers and businesses to civil society and citizens to engage with the findings and recommend

31、ations presented here.Together,we can chart a course toward a more sustainable and resilient future for the Middle East and North Africa.Borge Brende President,World Economic Forum Ahmed Galal Ismail Chief Executive Officer,Majid Al Futtaim HoldingManny Maceda Chief Executive Officer,Bain&CoClosing

32、the Climate Action Gap:Accelerating Decarbonization and the Energy Transition in MENA4Executive summaryThe Middle East and North Africa is warming at twice the global average by 2050 it could be 4C warmer if it continues on the same trajectory.1 MENA is acutely prone to climate shocks water scarcity

33、,droughts,elevated pollution levels and chronic waste and the knock-on effects of climate change have the potential to compound deeper systemic issues that threaten human livelihoods and environmental liveability.While many of the largest economies in the region depend on hydrocarbon production for

34、growth,others suffer from widespread unemployment,fragile social fabrics and humanitarian crises as an effect of war.The fact that the impacts of climate change do not stop at national borders underscores the need for comprehensive action.MENAs commitment to the Paris Agreement,signed by all of its

35、major economies,provides the pivotal foundation for climate action.In the past two years,an estimated 60%of the regions emissions and GDP have come under net-zero pledges,and while this is a strong start,corporate climate leadership in MENA trails that of the regions global peers.With an instrumenta

36、l role in global energy flows the region contains almost half of global proven oil reserves and delivers around 30%of global oil production MENA has a clear responsibility to lead decarbonization efforts on conventional energy.Further,the regions key export markets,such as the European Union,China a

37、nd the United States,among others,are tightening emissions-related regulations.Thus,while decarbonization could be seen as an added cost or risk,it also provides a tremendous opportunity for MENA.Endowed with abundant access to solar and wind energy,coupled with extensive expanses of untapped land,M

38、ENA boasts a largely untapped potential for renewable energy and emerging energy vectors such as green hydrogen.In addition,the largest MENA economies also benefit from synergies from capital availability and bold and decisive governance,which can help accelerate the regions progress in the global e

39、nergy transition and position it as a global powerhouse exporting affordable clean energy.These bold pathways would facilitate MENAs transition to a decarbonized economy while also helping to meet the escalating international demand for low-carbon solutions.Moreover,sustainability action aligns well

40、 with the broader national objectives of MENA countries for economic diversification and localization,thus stimulating business growth.Therefore,for the MENA region,the pursuit of climate solutions is not just an environmental imperative but a strategic opportunity to drive decarbonization and gener

41、ate significant economic prospects for the foreseeable future.These prospects can enable MENA to establish a central leadership role in the global clean energy economy.Capturing this opportunity will require“Visionary Pragmatism”:visionary,because policy-makers and businesses need to move in lockste

42、p to stimulate future pathways and make strategic efforts in investment redirection,technology development,cultivation of talent and regional coordination;pragmatic,because given its lowest-cost and lowest-emissions position for conventional energy extraction and production globally and this applies

43、 particularly in the Gulf region it continues to play an important role in providing reliable and affordable energy to meet the growing energy needs of the world,especially those of the Global South,during the transition to net zero.Simultaneously,MENA has to catch up on decarbonization efforts thro

44、ugh science-based commitments,and policy-makers need to enact clear disclosure mandates/targets,facilitate the development of critical infrastructure and establish necessary enablers,including access to financing and training.Moreover,large state-owned enterprises can help further stimulate progress

45、 within their value chains.For states and firms ready to seize the moment,sustainability action unlocks doors to economic diversification,high-quality job creation and global leadership in sustainable technologies.With COP28 about to begin,the MENA region holds the key to jumpstarting change.The win

46、dow of opportunity is narrow,but the time to act is now.With united ambition and urgent implementation,MENA can build an equitable and resilient net-zero future,aligning its own interests with a sustainable path forward.Climate action is an economic opportunity for MENA,and could position it to lead

47、 the new clean energy economy.Closing the Climate Action Gap:Accelerating Decarbonization and the Energy Transition in MENA5of MENAs emissions and GDP have come under net-zero pledges60%The MENA regions climate emergency:from environmental risks to economic repercussions1Climate change threatens MEN

48、As environment and economy,escalating the need for urgent action and sustainable practices.Closing the Climate Action Gap:Accelerating Decarbonization and the Energy Transition in MENA6Climate change is the most significant challenge of the current generation,and its effects are particularly evident

49、 in MENA.The region has been heating up at twice the global average for the past four decades,2 and is projected to be 4C warmer by mid-century under the IPCC RCP8.5 scenario.3 Coupled with this,growing desertification,dropping water tables and increasing heatwaves threaten habitability across the r

50、egion.The looming climate emergency is more than a mere environmental concern;it has socioeconomic implications that challenge every aspect of peoples lives and livelihoods in MENA.The MENA regions particular vulnerability to climate change is evident in its current environmental stress points.A wor

51、rying 45%of agricultural land is already exposed to challenges such as salinity,soil nutrient depletion and erosion,4 while 60%of the population inhabits areas plagued by water stress5 almost double the global average.And the region is already experiencing high water stress:the average renewable wat

52、er resources in the region have dropped to about 800m3 per capita per year,6 less than one-seventh of the global average.Therefore,rising temperatures and water scarcity arguably represent the twin biggest climate challenges for MENAs economies.These susceptibilities create a precarious starting poi

53、nt,and the rising temperatures in MENA are set to trigger a severe domino effect on liveability.Extreme heat is projected to exacerbate existing problems,further reducing arable land and intensifying water stress,with the consequences expected to worsen as climate change continues.The knock-on effec

54、ts of these escalating conditions are alarming.Extreme weather events,including heatwaves,droughts and floods,are becoming more frequent and more intense.This is leading to longer and more intense heatwaves,which it is projected in some parts of MENA could last for one to two months(compared to the

55、current four to six days),with high temperatures exceeding 56C7 and further rises leading to a surge in climate-linked natural disasters.In 2022 alone,the region saw the displacement of 14 million people due to these catastrophic events.8 Water availability is projected to drop to as little as 547m3

56、 per capita per year by 2050.9 The confluence of these environmental factors creates a deeper challenge for the MENA region.If climate change remains unaddressed,this combination of conditions is likely to spur large-scale migration from the most affected areas in the coming decades,leading to furth

57、er social,economic and political upheaval.The severe implications are clear,and the need for urgent action is paramount.1.1 The domino effect of rising temperaturesClosing the Climate Action Gap:Accelerating Decarbonization and the Energy Transition in MENA7Despite the stark reality of climate threa

58、ts in the region,MENA countries emissions are growing at a rapid pace.While the overall contribution of MENA countries to global emissions might sound relatively small at around 8%,these emissions have tripled over the past three decades,with an alarming 21%growth in just the past decade;MENAs emiss

59、ion growth rate is almost equal to that of East Asia and Pacific,including China(growth of 22%),which is exceeded only by South Asia(growth of 34%).10This has resulted in a total per-capita emissions rate in 2019(8.6 mTCO2e)that is second only to North America(14.7 mTCO2e)and contrasts markedly with

60、 the fastest-growing region,South Asia,with around a sixth of MENAs rate(1.5mTCO2e).11Water stress is particularly pronounced in MENA,with environmental changes putting even greater pressure on an already arid region.The complex interplay among climate change,water resource management and greenhouse

61、 gas(GHG)emissions intensifies the challenges and calls for immediate,comprehensive solutions to address the unique vulnerabilities of the MENA region.These environmental changes have economic repercussions as well.Without significant climate action,a substantial share of the regions GDP is at risk.

62、This risk is further exacerbated by extreme events of global significance such as COVID-19.Estimates from organizations such as the WorldBank12 and Swiss Re13 predict that climatechange could slash MENA GDP by between4%and 21%by 2050 due to a lack ofclimate action.1.2 Rapidly growing emissions1.3 Th

63、e economic implicationsClosing the Climate Action Gap:Accelerating Decarbonization and the Energy Transition in MENA8MENA countries lag behind comparable countries in sustainability maturityFIGURE 1Covered MENA countriesNote:Seven MENA countries were considered for analysis as per data availability.

64、Source:Country-announced strategies and plans of actions,submitted NDCs,IEA,IRENA,IMF,WB,Solability,Climate Action Tracker,Bain analysisThe consequences of climate change are increasingly evident,and yet the region lags in climate action.An analysis was conducted for this report of the sustainabilit

65、y maturity of MENAs countries against comparable parts of the world on around 20 parameters,to gauge:Decarbonization and net zero ambition Roadmap to achieve net zero Implementation initiatives and the history of action in the past decade Financial and regulatory ecosystem to incentivize or enforce

66、actionMENAs countries were contrasted against other comparable nations based on:Similar GDP per capita and emissions per capita Similar size of overall economy Higher share of hydrocarbons as a percentage of GDP Overall,MENA countries are at the initial stages of sustainability maturity and lag behi

67、nd their global peers.The United Arab Emirates(UAE)leads other MENA markets as the roadmap to action is rapidly taking shape there.Rapid progress towards net zeroEcosystem maturing Well-defined sector targets that“rachet up”Clear plans for phasing out coal/oil from power High ESG awareness among bus

68、inesses(SBTi/CDP alignment)Functioning ESG credit market(e.g.ESG funds,green bonds)Progress visible on ground Demonstrated progress on 2030 NDCs target Evolved regulatory landscape(e.g.mandatory disclosures for some sectors,either carbon tax or ETS exists)Developing ESG awareness among consumers,som

69、e willingness to pay(e.g.adoption of EVs)Roadmap taking shape Stronger renewable policy,connection to grid and finance availability(RISE score)Developing regulatory landscape(e.g.carbon tax,voluntary disclosure)Emerging ESG in business ecosystem(CDP/SBTi alignment)Ambition crystallizing Net-zero ann

70、ouncement Renewable energy plans for power mix Plans for breakthrough techs(e.g.green H2)Started monitoring emissions of some sectors(ministry/separate body)Early green shoots Initial NDC submissions Isolated projects/policy announcements(renewable promotion,energy efficiency or breakthrough pathway

71、s)1.4 The gap in climate actionClosing the Climate Action Gap:Accelerating Decarbonization and the Energy Transition in MENA9MENA consumers attitudes to climate change threatFIGURE 2A primary survey of more than 2,000 respondents covering nine major economies in the region was conducted,in partnersh

72、ip with Bain&Company,in order to discover what consumers in MENA think about the challenges of climate change.While scientific evidence proves that temperatures in MENA are rising at twice the global average,and while 65%recognize climate change as a threat globally,only 45%perceive MENAsvulnerabili

73、ty.Further,concern about climate change is generally growing among MENA consumers about half of survey respondents show concern regarding climatechange.Fortunately,the share of climate change deniers is less than 1%,demonstrating openness among the population to engage with the issue and absence of

74、strong polarization on the issue.This is an encouraging sign that stakeholders have the chance to increase the publicsunderstanding of theissue through education and awareness-building measures.This lack of awareness translates to lower engagement with the issue,as is evident from the low awareness

75、of their countrys net-zero/emissions targets only a third of respondents are aware of their countrys commitment to emissions reduction or net zero,with higher awareness among the seniors compared to the youth.However,more than half of respondents believe their country is on a par with or ahead of gl

76、obal sustainability efforts,demonstrating a significant gap between perception of action and the reality.Finally,the survey confirms that consumers take note of the impact of climate change on physically noticeable phenomenon 70%have observed an increase in heatwaves and air pollution in the past 10

77、 years.Again,older cohorts show a 1015 percentage-point higher increase in perception.1.5 The rise of climate concern among consumers0%Climate change is a global threatClimate change isa threat to my family10%20%30%40%50%60%70%80%90%100%2,00939%26%26%28%13%8%21%24%33%14%8%26%20%9%6%MENA region is mo

78、re vulnerable1 Least concerned2 Somewhat concerned3 Neutral4 Concerned5 Highly concernedAgree/disagree on a scale of 15(%respondents)While 65%of MENA consumers recognize climate change as a threat globally,only 45%agree that MENA is more vulnerableSource:MENA consumer sustainability survey,2023(N=20

79、00)Closing the Climate Action Gap:Accelerating Decarbonization and the Energy Transition in MENA10Key beliefs for the future anticipated risks and opportunities2A tapestry of risks and opportunities underlies MENAs transition to more sustainable practices.Closing the Climate Action Gap:Accelerating

80、Decarbonization and the Energy Transition in MENA11The persistence of regional differencesThe challenge of climate action in MENA is,in part,a story of regional differences and socioeconomic disparities.Emission profiles and income levels vary across the region,correlating with a spectrum of needs a

81、nd responses to climate change.This variability is expected to persist into the near future and affect countries ability to deploy resources fortransformation.The transition towards clean energy further complicates regional dynamics.In this context,the Gulf Cooperation Council(GCC)countries,14 with

82、their substantial resources,possess a greater capacity to adapt their economies,enabling them to seize the opportunities presented by the global energy transition.On the other hand,smaller non-GCC economies face unique challenges due to financial constraints.These economies often grapple with Intern

83、ational Monetary Fund(IMF)loans,high unemployment rates and the burden of consumer subsidies.Unlike the GCC countries,they may lack the fiscal capacity to make direct investments in renewable energy projects.Instead,they must explore alternative avenues such as concessionary finance schemes,developm

84、ent aid or attracting foreign direct investment(FDI)to foster their clean energy initiatives.To maximize progress on both the climate and economic fronts,there is a clear imperative for increased regional collaboration.Such collaboration can help bridge economic disparities and ensure that all natio

85、ns within the MENA region can participate in and benefit from the clean energy transition.Yet,amid these climate and economic challenges,the entire MENA region faces the task of balancing the energy transition without stifling economic growth.This delicate equilibrium is particularly acute for non-G

86、CC countries,where the focus extends beyond mere growth to include economic development and poverty alleviation.Navigating these varied and complex challenges requires careful consideration of each countrys unique circumstances,framing the collective endeavour forclimate action within MENA.Business

87、disruption is possibleGlobally,businesses view climate-related issues as dominating long-term risks.Given the regions heightened susceptibility to climate change,businesses in MENA are confronted with a significant risk of disruption.15 Consumers notice,too:according to the MENA consumer sustainabil

88、ity survey conducted for this report,70%have observed an increase in noticeable signs such as air pollution and heatwaves.Adverse weather events,including floods,droughts and heatwaves,have the ability to wreak havoc on finely tuned regional supply chains.These chains,designed for efficiency,are int

89、egral links toglobaltrade.Recent history offers a tangible example of this threat,with the COVID-19 pandemic highlighting the vulnerability of global supply chains to natural disasters.The pandemic illustrated how quickly disruptions can occur and the subsequent,immediate impact on the ability of bu

90、sinesses to serve customers.An alarmingly high 85%of freight and logistics players experienced significant effects on operations,16 and 42%17 will change their supply chain strategy in the wake of the pandemic.MENA has arrived at a decisive moment in its economic and sustainability trajectory.As cli

91、mate change intensifies globally,the region not only faces enormous challenges but also has an opportunity to thrive in the new energy era.The region finds itself at a crossroads.Its business landscape faces disruption,but it also has the chance to build resilient,sustainable models.National economi

92、es could decline amid global shifts but can also deploy new sources of competitive advantage.This report envisions the ways in which this major change may disrupt economies and businesses that rely on the current status quo,and identifies the primary risks involved.Alongside the risks,this change al

93、so signifies budding opportunities for economic revitalization for the benefit of MENAspopulace.2.1 Key risksClosing the Climate Action Gap:Accelerating Decarbonization and the Energy Transition in MENA12Pressure to act set to increaseAcross MENA,governments are raising expectations and regulations

94、around climate action,in line with global trends.As authorities elevate their climate action expectations,the need for businesses to pivot towards sustainability has never been more pronounced.From Morocco to Oman,MENA countries are uniting in their commitment to climate targets and integrating clim

95、ate change considerations into their national strategies.This unity does not mask the diversity of the region,as GCC countries adopt more demanding approaches such as net-zero targets.A strategic reshaping is happening in several countries,positioning climate change as a fundamental pillar of their

96、future economies.The ongoing shift ushers in a new era marked by tightening norms and heightening expectations for businesses.Companies are now compelled to take action on multiple fronts.This includes setting emissions targets and actively reducing their carbon footprint,making substantial investme

97、nts in renewable energy,implementing energy-efficient measures,prioritizing responsible water management and conservation,and embracing green finance and investments.The scrutiny MENA businesses experience will intensify as they face increased expectations to adopt practices that align with governme

98、ntal targets.A reinvention is under way,requiring firms to make investments in sustainable technologies,cleaner production methods and stricter environmental standards and reporting to maintain their market standing.The transition will not be without cost.Both financial and human capital investments

99、 are required as businesses rise to meet these tougher norms.However,it is more than a matter of compliance or competition it is about securing a sustainable future for the region and the planet.Tightening regulations in export marketsMENAs export markets are facing intensified regulations that will

100、 affect the regions businesses.Some examples include:United States:Re-ratification of the Paris Agreement and the Inflation Reduction Act(IRA)could cut carbon emissions by 40%by 2030.18 With mandated GHG reporting and measures to increase high-carbon technology costs(e.g.methane emissions charges,ca

101、rbon cap-and-trade),the IRA also provides$300 billion in incentives to transition to clean energy.19 European Union:Under the Green Deal,the EU is committed to achieving a 55%emissions cut by 2030 and net zero by 2050.20 Measures such as the Carbon Border Adjustment Mechanism(CBAM)impose costs on ca

102、rbon-intensive imports,affecting specific sectors,while incentives reduce costs for greener technologies through tax credits and low-interest loans.China:Targeting carbon neutrality before 2060,21 China is also introducing policies geared towards emissions disclosures and reduction initiatives(curre

103、ntly voluntary).Alongside introducing the Emissions Trading System to increase high-carbon technology costs,China provides yearly subsidies and low-interest loans for green projects.These key regulatory markets are leading the way in legislative initiatives and investment for energy transition,affec

104、ting the MENA regions global business landscape.Tighter regulations in major markets underscore the need for MENA to align with global sustainability efforts and navigate these new policy landscapes.A strategic reshaping is happening in several countries,positioning climate change as a fundamental p

105、illar of their future economies.Closing the Climate Action Gap:Accelerating Decarbonization and the Energy Transition in MENA13Capitalizing on solar,wind and hydrogen opportunitiesAmid climate risks,opportunities are emerging that play directly to MENAs natural resource strengths.By capitalizing on

106、its endowments,the region can take the lead in high-potential markets including hydrogen,carbon capture and renewable exports.MENA possesses tremendous potential for renewable energy and green hydrogen production,given its abundant solar and wind resources and vast tracts of available land.The regio

107、n also has suitable geological formations to enable scaled carbon capture and storage(CCS)as well as blue hydrogen production.22Climate action allows MENA to simultaneously mitigate risks and realize economic gains by making the most of its natural advantages in emerging sectors.With strategic inves

108、tments,proactive policies and regional coordination,MENA can lead the global energy transition whilestrengtheningitseconomies.Climate action can have wider socioeconomic implications Climate action strongly complements MENAs broader economic goals,such as economic diversification and localization.Pu

109、rsuing sustainability aligns well with national visions to reduce oil dependence and develop new sectors and skills.In fact,the pursuit of climate action dovetails perfectly with plans that aim to diversify economies and promote green jobs,such as Saudi Arabias Vision 2030.The region can advance bro

110、ader economic objectives while pursuing climate-related goals.Clean energy investments create alternative revenue streams and decrease reliance on oil and gas in MENA nations gross domestic product(GDP).Expanding renewable power,hydrogen and their enabling infrastructure can directly strengthen and

111、diversify economies.Meanwhile,climate strategies can stimulate sustainable finance leadership in the region.The financing required for clean investments is fuelling the development of green financial tools and instruments in the region.In turn,this propels the growth of voluntary carbon markets,whic

112、h themselves generate economic opportunities.Perhaps most importantly,the shift to clean energy is opening up new avenues and the potential for local employment.Investments in clean energy not only create jobs across the value chain but also promote the development of local talent and skills through

113、 workforce training and education initiatives.Localization of supply chains further encourages the potential development of local manufacturing capabilities.All of this helps lay the groundwork for the development of human capital and the building of technical expertise within the region,and MENAs r

114、esponse to climate change could prove to be a significant catalyst for economic diversification,growth and job creation.2.2 Key opportunities Pursuing sustainability aligns well with nations visions to diversify their economies and develop new sectors and skills.14Closing the Climate Action Gap:Acce

115、lerating Decarbonization and the Energy Transition in MENAA critical juncture:MENAs climate ambitions,corporate response and consumer awareness3MENAs rising climate commitments reflect a pivotal shift,yet the data reveals a need for more ambitious and widespread action.Closing the Climate Action Gap

116、:Accelerating Decarbonization and the Energy Transition in MENA15Climate ambitions in MENAFIGURE 3Several countries in the MENA region are stepping up their commitments to combat climate change,reflecting a growing understanding of the risks it poses and the opportunities it presents.Over the past t

117、wo years,there has been a notable surge in countries net-zero announcements,which now cover an estimated 60%of the regions emissions(see Figure 3).This momentum marks a significant shift in the regions stance on climate action,with all nine countries having announced their nationally determined cont

118、ributions(NDCs).These national commitments are key to the regions transition towards a lower-carbon future.However,it is critical to consider their scope and impact.While the current NDCs cover a significant majority of the regions emissions,they fall short of tangible outcomes.Full compliance with

119、these NDCs would result in a 22%drop from 2030 business-as-usual(BAU)levels,but the emissions would still be higher by 14%from 2019 levels.Further,these targets have been labelled as insufficient by the Climate Action Tracker.23 Moreover,the NDCs of the major economies within MENA,which account for

120、approximately 70%of the regions total emissions,are expected to fall short of the goals set by the Paris Agreement.3.1 MENAs net-zero ambitions and the imperative for increased actionSaudi ArabiaShare of emissionsNet zero announcedNDC announced2030 NDC target vs.BAU37%-26%2060Egypt18%-16%UAE13%-27%2

121、050Kuwait8%-6%2060Qatar8%-25%Oman6%-9%2050Morocco5%-38%Bahrain3%-2060Tunisia2%0%All nine countries have announced NDCs and the majority have net-zero goalsNote:Analysis covers nine countries from MENA.Source:IMF,national NDCs and Climate Action Tracker,World Bank,Bain analysisClosing the Climate Act

122、ion Gap:Accelerating Decarbonization and the Energy Transition in MENA16 MENA region emissions targets rated insufficientFIGURE 4MENAKSAEgyptUAEQatarKuwaitMoroccoOmanTunisiaThe MENA region1 has set targets to reduce emissions by 22%compared to 2030 BAU emissionshowever,targets are rated as insuffici

123、ent as per the Climate Action Tracker2020192030 BAU2,70037%42%40%26%11%5%7%4%6%23%12%5%6%5%5%19%14%8%8%6%6%2030 NDC targets1,74425671,9942030 BAU vs.NDC(%)2019 vs.NDC(%)-26%24%-22%14%-16%39%-27%-14%-25%6%-6%-4%-38%-17%-9%7%0%21%Emissions(MT CO2)3006009001,2001,5001,8002,1002,400Bahrain excluded as n

124、o NDC target to BAU2%2%2%76%of MENAemissionsDomestic target3Fair share target4Saudi ArabiaHighly insufficientCritically insufficientEgyptHighly insufficientCritically insufficientUAEInsufficientCritically insufficientMoroccoAlmost sufficient1.5C compatible 4C34C23C 2CLess than 1.5C limitRating categ

125、ory based on expected temperature increaseNotes:1.Excludes Bahrain;2.Other MENA region countries have not been rated by the Climate Action Tracker;3.”Domestic target”rating aimed at feasible emission reduction pathways within each country to assess whether targets or policies are on track towards fu

126、ll decarbonization in line with the 1.5C warming limit;4.“Fair share target”rating system is based on what a countrys total contribution would need to be to make a fair contribution to implementing the Paris Agreement,supplemented by the countrys own analysis to close data gaps.Source:IMF,country ND

127、Cs and Climate Action Tracker,World Bank,Bain analysisClosing the Climate Action Gap:Accelerating Decarbonization and the Energy Transition in MENA17In the global drive towards sustainability,governments play a crucial role by creating policies,setting targets and facilitating discussions.However,th

128、e responsibility for delivering real change,the actionable transformation,often falls on the shoulders of the business community.Corporate action does not just supplement government efforts,it is the central pillar in the battle againstclimate change.In the MENA region,there are green shoots emergin

129、g for this leadership.A glance at the regions leading corporations such as Saudi Aramco,ADNOC,ETIHAD Airways,ACWA Power,Majid Al Futtaim and others illustrates a promising shift.Many of the largest companies have set ambitious net-zero targets seldom more aggressive than their national government ta

130、rgets showing that they recognize the urgency of climate action and are prepared to take meaningful steps to reduce their carbon footprint.However,the response from the business community as a whole is less than is required and lags behind action in other comparable regions of the world.In collabora

131、tion with Bain&Company,the World Economic Forum evaluated more than 200 publicly listed and private companies for their disclosures and sustainability measures across MENAs nine major economies.These companies constitute nearly 80%of the market cap of their countries stock exchanges and include the

132、largest privately owned companies from hard-to-abate sectors,such as energy,chemicals,steel,aluminium,aviation,cement and utilities,along with other sectors such as finance services,consumer products and telecom,among others.Encouraging signs of progress are reflected in the actions of some of the l

133、argest companies in the region.Companies such as Majid Al Futtaim,ADNOC and Etihad Airways(UAE),Agility(Kuwait)and Saudi Aramco,ACWA Power and SABIC(Saudi Arabia)have all implemented actions designed to reduce emissions,increase renewables or scale nascent low-carbon technologies such as green hydro

134、gen and sustainable aviation fuel.However,a closer look reveals that only 12%of businesses in the region have committed to net-zero targets.Even fewer,just 6%,have laid out clear roadmaps to achieve these goals,signalling an almost 50%drop-off in commitment.3.2 Corporate climate action in MENA:the g

135、reen shoots3.3 Further corporate climate action in MENA:a promising start but a long way to goClosing the Climate Action Gap:Accelerating Decarbonization and the Energy Transition in MENA18Corporate climate action across countriesFIGURE 5Two key metrics stand out prominently:the proportion of compan

136、ies disclosing their emissions through CDP and those aligning their targets with the Science-Based Targets initiative(SBTi).These metrics hold significant weight as they represent globally recognized frameworks for emissions disclosure and science-based target-setting,and are being quickly and widel

137、y adopted around the world.Globally,18,700 companies report their emissions to CDP,an almost twofold rise over 2020 numbers.24 Similarly,5,500 companies have set or are committed to setting SBTs,a 25-fold rise over five years(accessed June 2023).25 When the MENA region is compared to its counterpart

138、s around the globe,the disparity in climate action becomes even more striking.Businesses in the MENA region lag behind their peers in net-zero target-setting and compliance with initiatives such as CDP and SBTi.This wave of transparency and commitment to science-based targets represents a notable in

139、crease in global climate action,leaving MENA region businesses falling behind.10%4160%61%2140%1020%Note:Includes the following sectors:(1)energy and refining;(2)aviation;(3)consumer products,retail and logistics;(4)chemicals and fertilizers;(5)metals and mining;(6)construction materials and real est

140、ate;(7)finance services and investment groups including diversified industrial conglomerates;(8)telecom;and(9)utilities;data taken during OctoberNovember 2022.Source:Company annual and ESG reportsEmissions disclosures%Emission target setting%ESG reportsS1 and S2 emission disclosuresS3 emission discl

141、osuresCDP disclosuresNet-zero targetsDefined roadmapSBTi assessed/in process targetsAll MENA companies(203 companies)46%41%15%7%12%7%6%UAE(35 companies)80%83%40%11%29%17%11%KSA(34 companies)38%32%3%12%18%9%6%Qatar(28 companies)61%61%7%4%7%0%0%Kuwait(25 companies)48%40%20%4%4%4%12%Egypt(38 companies)

142、32%21%13%5%5%7%2%Morocco(27 companies)30%19%11%15%15%7%7%Bahrain,Oman and Tunisia(16 companies)25%19%0%0%0%0%0%Top 203 publicly listed and privately owned companies across thenine largest economies of the MENA regionClosing the Climate Action Gap:Accelerating Decarbonization and the Energy Transitio

143、n in MENA19Countries in MENA lag behind global peers in their CDP and SBTi disclosuresFIGURE 6Asking the members of the Leaders for a Sustainable MENA(LSM)group delivered the same verdict.They also concur that while their companies are ahead of the curve on sustainability performance at the regional

144、 level,they lag behind their global counterparts.One of the key reasons is the nascency of sustainability offices in MENA.Of the members surveyed,almost half have sustainability offices of less than five years old,and almost 15%have not yet established a sustainability office.These findings highligh

145、t the need for MENA businesses to not only commit to net-zero targets but also develop clear,comprehensive roadmaps to achieve these goals.At the same time,they underscore the importance of creating a supportive ecosystem,from regulations and technology to training and internal alignment,to facilita

146、te and accelerate corporate climate actioninthe region.0%MENA region7%12%6%10%20%30%40%50%60%70%80%90%100%China21%15%5%South-East Asia(major economies)21%37%7%India46%47%29%USA80%70%54%Canada68%63%21%UK93%85%65%CDP disclosuresNet-zero targetSBTi assessed targets/in processNumber of companies analyse

147、dMarket cap share of analysed companies%of companies from different regions,as per their disclosures and NZ ambitionSouth-East Asia average is low due to no CDP disclosures in Indonesia and Viet Nam while the average in Singapore,Malaysia and Thailand is higher with 32%CDP disclosures,59%net zero an

148、d 36%SBTi respectively.82%20370%15060%15070%7070%8370%7570%40Note:MENA countries considered in the analysis are KSA,UAE,Qatar,Kuwait,Morocco,Egypt,Bahrain,Oman and Tunisia.South-East Asia major economies include the average of top 25 companies by market cap for Singapore,Malaysia,Indonesia,Thailand,

149、Philippines and Viet Nam;data taken during OctoberNovember 2022.Source:CDP,Lit.Search,SBTi,Bain analysisClosing the Climate Action Gap:Accelerating Decarbonization and the Energy Transition in MENA20The consumer survey conducted for this paper with more than 2,000 respondents across the nine MENA co

150、untries asked who should bear the responsibility for delivering climate action.Respondents attributed the lowest responsibility to tackle climate change to consumers and looked to companies and governments to take the lead.Thus,policy-makers in the region can implement meaningful regulations that en

151、courage global and local corporations to embrace more sustainable practices.However,interestingly,MENA consumers,especially the young,demonstrate a willingness to pay the premium for more sustainable products.This willingness is even higher than the level noted in a similar consumer survey conducted

152、 by Bain&Company in the United States.Businesses should take notice of this higher willingness to pay and leverage it by offering sustainable product variants and making them more accessible and affordable in line with the challenges identified in the survey.3.4 MENAs consumers expect companies to t

153、ake bold actionIn a landscape where sustainability initiatives are still nascent,state-owned enterprises(SOEs)lead the way within the MENA business community.An analysis of the 20 largest state-owned enterprises(by emissions)contrasted their efforts with those of the overall business community in th

154、e region.Given their size,many of these companies constitute a sizable chunk of their national gross domestic product(GDP).That gives them an outsize influence on the direction of corporate sustainability action in the region for two reasons.First,raw numbers:a decisive drop in emissions from any on

155、e of these companies will have a notable impact on emissions from the region as a whole.Second,stature:Many of these SOEs are national champions and other companies often look to them for leadership and will follow their example.MENA SOEs offer a lens through which to assess the progress of companie

156、s in the region on climate change and the sustainability agenda.The results are stark they lead the overall business community on emission disclosures,target-setting and sustainability initiatives.26 In fact,all SOEs are actively working on emissions reduction initiatives compared to only half of me

157、mbers of the overall business community.This trend continues across other sustainability initiatives.Further,these SOEs are also exploring breakthrough pathways as a staggering half of them are developing either green/blue hydrogen or carbon capture,utilization and storage(CCUS)capabilities.However,

158、MENA SOEs canstill be much more ambitious when it comes to reporting and disclosures.Only 30%of this group have adopted a net-zero target,20%have set a roadmap for it and none has aligned the roadmap with SBTis.Similarly,only 5%have institutionalized CDP disclosures.MENAs SOEs can stimulate change i

159、n the broader ecosystem by taking select actions:Drive supplier action:SOEs can use environmental,social and corporate governance(ESG)-weighted procurement decisions to encourage suppliers to disclose,measure and reduce their emissions.Shape policy:By collaborating with governments to set reporting

160、requirements,SOEs can encourage sustainability commitments across the business community.Show leadership:SOEs can set ambitious net-zero targets,align roadmaps with best practices and inspire other regionalcompanies.Raise consumer awareness:They can use their reach to educate consumers about energy

161、conservation and promotesustainability.Capacity-building:SOEs can share best practices in sustainability reporting,methodologies and frameworks.Create partnerships:They can foster cross-border public-private partnerships and engage in platforms such as the Leaders for a Sustainable MENA initiative.B

162、OX 1A detailed investigation of state-owned enterprises A staggering half of SOEs are developing either clean hydrogen or carbon capture,utilization and storage(CCUS)capabilities.Closing the Climate Action Gap:Accelerating Decarbonization and the Energy Transition in MENA21MENAs path to sustainabili

163、ty:economic context andresource profile4Addressing sustainability in MENA requires tailored strategies and consideration of the economic context,emission profiles and resource availability.Closing the Climate Action Gap:Accelerating Decarbonization and the Energy Transition in MENA22The MENA region

164、is a striking example of complexity in the global journey towards decarbonization.The pathway to sustainability here must grapple with distinct factors that prevent a straightforward adoption of strategies employed elsewhere in the world.Regional disparity in MENA gives rise to unique decarbonizatio

165、n challenges.At the core of these challenges are the stark economic and emissions differences between GCC and non-GCC MENA countries.The two subgroups become distinct when viewed from the perspective of emissions intensity(emissions per capita)and resource availability(GDP per capita),as seen below.

166、4.1 MENAs economic and emissions complexityMENAs energy landscape:the interplay of economic complexity,global energy supply,and unique decarbonization challengesFIGURE 770%of MENA emissions30%of MENA emissions0.5India2GDP per capita on log scaleCO2 emissions(metric tons per capita)on log

167、scale1,0002,0005,00010,00020,00050,000100,000BangladeshPakistanViet NamEgyptTunisiaChileDenmarkUKSingaporeUSAFinlandSpainJapanSouth KoreaCanadaAustraliaGermanyMoroccoChinaMalaysiaRussiaOmanSaudi ArabiaBahrain3 gTCO2eQatarColombiaBrazilKuwaitUAESource:World Bank,Climate Action Tracker,Global carbon p

168、roject,IMF,UN population prospectsClosing the Climate Action Gap:Accelerating Decarbonization and the Energy Transition in MENA23The GCC countries have higher emissions intensity per capita,and greater resources to mitigate them overall they contribute to around 70%of MENAs emissions.27 The non-GCC

169、MENA countries constitute approximately 30%of MENA emissions,and have lower emissions intensity and GDP per capita.These non-GCC MENA countries contain around 70%of the regions population.This gives rise to different critical priorities for decarbonization and energy transition.The wealthier,high-em

170、ission GCC countries need to reduce the emissions intensity in hard-to-abate sectors,such as power and oil and gas,without affecting their populations quality of life and employment.They further need to ensure a just transition that retains energy competitiveness,given their high dependence on conve

171、ntional energy exports for fiscal and developmental expenditures.On the other hand,non-GCC MENA countries need to achieve decarbonization without creating barriers to economic growth and poverty alleviation.They could also benefit from the opportunities of energy transition,especially through trade

172、with Europe,and capture the upside for regional advancement.This divergence in priorities necessitates strategic actions tailored to each group.GCC nations must emphasize reducing emissions intensity in hard-to-abate sectors through energy efficiency and fuel switching,and promoting low-carbon techn

173、ologies,attracting talent,mobilizing capital and elevating consumer awareness for sustainable products.On the flip side,non-GCC countries must deploy sustainable technologies judiciously,protect consumers from escalating costs,attract low-cost sustainable finance and develop export frameworks for re

174、newable products.The decarbonization pathways for these two groups are not solely based on their socioeconomic status but hinge also on factors such as the cost of abatement and resource availability.Given its outsized role in global energy value chains MENA has around 50%of total proven oil reserve

175、s28 and contributes approximately 30%of annual production29 the region plays a pivotal role in the global energy trilemma,a critical fulcrum balancing the needs for affordability,sustainability and security in energy supply.Furthermore,the region is an optimal upstream production location for conven

176、tional energy the average cost of production is$715 per barrel,and average emissions are around 40 kgCO2 per barrel.30 Oil and gas production in GCC countries boasts one of the lowest emissions intensities globally.Their advantage is further accentuated by having the lowest cost of production worldw

177、ide.This uniquely advantageous position places MENA,including GCC,countries as the natural choice for supplying oil and gas(O&G)to the world,using their low-cost and low-emissions profile.While non-GCC countries have high emissions intensities,their low cost of production creates potential for decre

178、asing emissions,thereby making all MENA barrels the preferred choice over higher-cost,higher-emissions choices.Forecasts are that O&G will continue to play a crucial role in the global primary energy mix.Even the most ambitious net-zero scenarios hold that O&G will provide 1540%of the global energy

179、mix in 2050,amounting to around 2040 million barrels per day of oil demand(from the current figure of approximately 100 million barrels per day).The IEAs Announced Pledges Scenario(APS)and Stated Policy Scenarios(STEPS)peg the O&G share of global primary energy demand at 3247%,amounting to around 50

180、90 million barrels per day of oil demand by 2050.While it is challenging to predict future oil demand with certainty,MENAs significance is unmistakeable,owing to its lowest-cost and lowest-emissions position.MENA will continue to play a pivotal role in meeting the worldwide conventional energy deman

181、d,particularly from the Global South.4.2 MENAs role in the worlds energy mix is pivotal Strategic priorities on how to decarbonize diverge based on the emissions and economic profiles of countries in theregion.Closing the Climate Action Gap:Accelerating Decarbonization and the Energy Transition in M

182、ENA24Crude oil emissions and production costFIGURE 8GCC MENANon-GCC MENANorth AmericaEuropeOther AsiaLATAMAfrica150050100Avg:60Low emissionsLow costHigh emissionsLow costLow emissionsHigh costHigh emissionsHigh costAvg:19Cost of production($/bbl)Emissions intensity(kg CO2/bbl)010203040Global crude o

183、il production profile:emissions performance and cost of production of the top 21 countriesSaudi ArabiaKuwaitUAEQatarAngolaOmanNigeriaUnited StatesChinaBrazilMexicoRussiaLibyaIraqIranAlgeriaKazakhstanIndiaNorwayUnited KingdomCanadaAnnual production(2019)5,000 MbblGCC countries in MENA have the lowest

184、 emissions and lowest cost of production globallyNote:bbl=barrel.Source:Rystad Energy,Stanford/US Department of Energy25Closing the Climate Action Gap:Accelerating Decarbonization and the Energy Transition in MENAThe road to sustainability:MENAs multifaceted approach to decarbonization5MENAs natural

185、 ecology and resource availability necessitate reliance on technology-based decarbonization,but offer great potential for producing renewable energy,CCUS and clean hydrogen enabling it to take the lead in new energy pathways.Closing the Climate Action Gap:Accelerating Decarbonization and the Energy

186、Transition in MENA26TbS provide the maximum lifetime abatement potential per unit investment in MENA.31In the quest for sustainability,the path towards effective decarbonization is never a one-size-fits-all solution.Each regions must navigate its unique landscape,drawing on individual strengths and

187、addressing specific challenges.In this context,the MENA region offers a compelling case study,distinct from other areas of the world.The analysis conducted for this papercompared the abatement cost and abatement potentials of decarbonization pathways for two archetypal countries:one in the GCC and o

188、ne from North America/Europe.Archetypes were chosen with comparable energy exports,similar gross emissions and a significant share of global oil production but also with vastly different climates,topographies and natural resources,resulting in different choices for decarbonization.5.1 Technology-bas

189、ed solutions(TbS)offer the best abatement potentialAvoidance and removalFIGURE 9Significant advantageRelative advantageNeutralRelative disadvantageSignificant disadvantageRelative assessmentAbatement cost/lifetime emissions avoided:Resource availability:LowHighNotes:1.Lifetime abatement potential no

190、rmalized for investment(capital and operational expenditure)over lifetime of project;2.NbS:nature-based solution;3.TbS:technology-based solution;4.CCUS:carbon capture,utilization and storage;5.DAC:direct air capture.Source:IEA;Queens University;National Research Council Canada;EMBER Climate;literatu

191、re searchComparison of avoidance and removal pathways for Gulf Cooperation Council country parable North American/European energy exporter country as per emission abatement potential normalized for investment Carbon avoidance(emissions reduction)Carbon removal (residual emissions)TBS avoidanceNBS av

192、oidanceNbS removal2TbS removal3Illustrative solutionEnergy efficiency Solar energyCCUS4(hard-to-abate sector)Ecosystem protectionNew forest/afforestationDAC5GCC countryAbatement cost($/tCO2)Negative 203075N/A29250600Resource availabilityN/A(low tech readiness)Lifetime emissions abated per unit of in

193、vestment1(kgCO2/$)20451330N/A35N/AComparable NA/EU countryAbatement cost($/tCO2)Negative463580913250600Resource availabilityN/A(low tech readiness)Lifetime emissions abated per unit of investment(kgCO2/$)5201228N/A60N/AClosing the Climate Action Gap:Accelerating Decarbonization and the Energy Transi

194、tion in MENA27There are two key insights from this:1.Technology-based avoidance solutions are a better choice for regions such as MENA that lack natural carbon sinks,as currently removal strategies such as direct air capture(DAC)are cost-prohibitive.2.Given the higher cost of TbS-based removal,the M

195、ENA region must prioritize emissions avoidance and minimize emissions across thevaluechains.The analysis further estimated the lifetime abatement potential per unit of investment of these decarbonization pathways for these two archetype countries to normalize for the impact of operational life,capit

196、al and operational expenditure of thesepathways.There was a wide variation in lifetime abatement potential across the two archetypes:Afforestation and other nature-based solutions are more attractive for the North American/European energy producer archetype.There,each dollar of investment would resu

197、lt in a 70%higher lifetime abatement potential than the MENA archetype.In the MENA archetype,each unit of investment in solar energy would reduce emissions by twice as much as it would in a comparable North American/European country.This disparity is not merely a matter of choice but a reflection of

198、 the intrinsic attributes of the regions themselves.Therefore,the optimal decarbonization pathway in the MENA archetype is 33%more expensive than the North American/European archetype and will largely be driven by TbS.Furthermore,multiple TbS are required to advance decarbonization across variousind

199、ustries.However,it is important to account for the transition risk in scaling and commercializing many of these nascent technology-based pathways given their low technology readiness.In charting its sustainability path,MENAs optimal decarbonization strategy is multifaceted and largely driven by TbS.

200、This intricate pathway revolves around key levers:Consume less:Prioritizing energy efficiency and value chain carbon abatement:This is paramount for MENA.Reducing consumption is not merely a goal but a strategic necessity,given the higher cost of optimal decarbonization pathways in the region.Green

201、the supply:Deployment of renewable energy:Essential for decarbonizing the power mix,renewable energy is the cornerstone of MENAs green transition.Solar,wind and other renewable sources are integral to thetransformation.Investment in clean fuels:Clean hydrogen and sustainable aviation fuel(SAF)become

202、 pivotal in decarbonizing hard-to-abate industries,signifying a broader movement towards cleaner,innovative energy solutions.Manage the rest:Carbon removal strategies:Deployment of CCUS and development of DAC are central to managing residual emissions.Specific nature-based solutions(NbS):Potential i

203、nterventions include the cultivation of mangroves,maximizing the potential for CO2 removal while adding a vital ecological dimension to the technological approach.5.2 MENAs TbS decarbonization mantraClosing the Climate Action Gap:Accelerating Decarbonization and the Energy Transition in MENA28 MENA

204、receives 2226%of all solar energy striking the earth The cost of solar energy production in MENA has fallen to a fifth of global average 75%of MENA has average wind speeds that exceed the minimum threshold for utility-scale wind farms Wind speeds in countries such as Morocco,Egypt and Tunisia are am

205、ong the highest in the world MENA ranks among the cheapest hydrogen production locations in the world;with expected hydrogen production prices of$1.50/kgH2 in 20302035 It is attractive due to its proximity to strategic demand centres such as Europe and Asia and low-cost resource availability Experie

206、nce in infrastructure,and energy exports as well as the financial means to develop large-scale energy projects can be another strategic advantage There is good availability of natural storage sites for CO2 and point sources of CO2 emissions Current estimated storage capacity is 170Gt of CO2,which is

207、the highest in the world Overall costs are expected to reduce by 40%from 2025 to 2050 given excellent storage resource,operational experience of handling gas,lower labour cost and capital availability Renewables-driven green hydrogen could also unlock SAF production Existing petrochemical infrastruc

208、ture could be re-purposed for SAF MENA is in a strategic location as the region is home to four of the worlds top 10 airlines,providing a ready market 1 Solar and wind potential of MENA is highest in the world2 MENA can take early lead in the hydrogen race4 MENA would be competitive in global SAF in

209、dustry,given low-cost clean hydrogen3 CCUS will help mitigate emissions and aid in developing blue hydrogenMENAs natural resources have great potential for producing renewable energy,CCUS and clean hydrogen,and the confluence of synergies natural resources,finance and nimble and decisive governance

210、can enable the region to become a global leader in new energy pathways.Countries around the world,including UAE,Saudi Arabia,Bahrain and Oman from MENA,have announced bold net-zero ambitions to offset rising global temperatures.However,global energy demand continues to grow and is expected to reach

211、250 PWh by 2050 vs.170 PWh today(that is,to increase by around 50%).32 This growing energy demand together with the need to reverse the emissions trend present a“decoupling challenge”,which is at the heart of the global energy transition and the race to develop new energy pathways including renewabl

212、es,hydrogen and synthetic fuels such as SAF.MENAs natural endowment,which makes TbS-led decarbonization more expensive,also gives the region an outstanding renewable energy potential.Consider this:Solar potential:MENA receives 2226%of all solar energy striking the Earth.33 Wind potential:Wind condit

213、ions in 75%of the region are suitable for utility-scale wind farms.34 Available land:MENA has vast tracts of unused available land,suitable for ramping up renewable solar and wind production.Natural carbon storage sites:The region has an estimated storage capacity of 170 Gt CO2,one of the highest in

214、 the world.35 These factors also lead to a globally competitive production cost for green/blue hydrogen and synthetic fuels such as SAF(using point-source CO2capture).Consider this:Solar PV LCOE:As per the International Renewable Energy Agency(IRENA),the cost of producing solar energy in MENA is one

215、-fifth of the global average.36 Green hydrogen LCOH:Driven by the low renewables cost,the green hydrogen production cost could reach$1.5 per kg by 20302035 in MENA.375.3 Energy transition has tremendous potential for MENAMENA has tremendous natural endowments to unlock renewables,CCUS and blue/green

216、 Hydrogen potentialFIGURE 10Source:World Bank,IRENA,IEAClosing the Climate Action Gap:Accelerating Decarbonization and the Energy Transition in MENA29Further,in addition to these natural resources,MENA has access to strong enablers to support the growth of the local clean energy ecosystem:(1)the ava

217、ilability of low-cost finance;(2)existing infrastructure to build up the energy trade;and(3)nimble and decisive leadership,enabling the de-risking of large and complex early-harvest projects.The confluence of these factors can enable MENA to leapfrog on the new energy economy and continue its pivota

218、l role in the global energy value chain,albeit with a broader product basket conventional O&G,O&G with CCUS,green or blue hydrogen,synthetic fuels such as SAF,and further downstream products including green/blue ammonia,chemicals and steel.Source:World Bank,IRENA,IEAThree interlocking enablers in ME

219、NAFIGURE 11Three interlocking enablers to leapfrog the new energy economyFinanceAvailability of low-cost finance,especially in the GCC,which is home to large sovereign wealth funds,boosted by recent high energy prices InfrastructureExisting infrastructure(physical,commercial,legal)to trade energy pr

220、oducts globally trusted position as reliable supplier of energy Nimble and decisive leadershipStrong governance in the region,enabling de-risking of large,complex,early-harvest projects,allowing quick decision-making and efficient execution MENA in thenew energy economySource:World Economic Forum30C

221、losing the Climate Action Gap:Accelerating Decarbonization and the Energy Transition in MENAThe report explores the decarbonization energy transition opportunities in three sectors with the highest GHG footprint in MENA power,industry and O&G.Combined,these three are responsible for two-thirds of ME

222、NAs emissions.They represent tremendous opportunities for businesses to unlock decarbonization and economic benefits fortheregion.Estimates reveal that together,power,industry and O&G non-negative ROI decarbonization levers have the potential to reduce 30%of MENA emissions,with a revenue of$35 billi

223、on per year.38 Further,the export of new energy pathways such as renewables,clean hydrogen/ammonia and SAF could further hold an estimated opportunity of around$85 billion per year by 2035.39 Therefore,sustainability action for MENA has the potential to create an estimated value of approximately$120

224、 billion per year for the region and position it as the flagbearer for the global energy value chain.To put it in context,this is 1.6 times higher than the entire oil export income of UAE in 2021 as per Environmental Investigation Agency(EIA)estimates,which was$76 billion.40 While this is the direct

225、 value of the opportunity,there is a greater GDP multiplier of this opportunity and benefits in employment and net export income.Power sectorAs the source of 33%of the regions emissions,41 the power sector produces around 590 Mt CO2e emissions per year,higher than the emissions of the United Kingdom

226、 and comparable to those of Mexico.Therefore,the power sector has a pivotal role in the regions decarbonization journey.Key considerations for the power sector are:1.High share of oil in power generation:Around 45%of power in the region is oil-based.422.Low efficiency of power generation assets:MENA

227、s single-cycle plants have 3035%efficiency vs.50%of combined-cycle plants.43 3.Low usage of renewables:MENA has the highest solar power globally(2226%of total solar irradiance)44 but less than 5%of deployed solar capacity globally45These lead to an emissions intensity of 0.52 MtCO2e per TWh electric

228、ity produced,which is higher than the global average,and nearly twice that of Europe.46The roadmap for MENA to decarbonize its power sector will also have implications for freeing up O&G for export,as well as for the export of renewable energy to nearby energy-importing regions.1.Plant efficiency:Wh

229、en shifting from simple-cycle to combined-cycle turbines,increased efficiency reduces fuel requirements for the same power output,cutting emissions and creating revenue opportunities from selling unused fuel.2.Phase out oil and coal:Switching to natural gas cuts overall power-sector emissions due to

230、 gass lower emissions intensity.There is revenue potential from selling the freed-up oil and coal no longer used,although some export sales are lost from gas used for power output.3.Shift to renewables:With the phasing out of oil and coal,the power split is 50%gas(for base load)and the rest from ren

231、ewables.There is revenue potential from selling oil,coal and gas no longer used in power generation.Applying these three levers sequentially has the potential to bring the emissions intensity down to an estimated 0.27 MtCO2e per TWh.This will also release oil and gas currently tied to domestic power

232、 generation,which would be exported.Assuming an oil price of$80/barrel and gas price of$3/MmBtu47 this has the potential to generate around$3334 billion revenue for the MENA region.48Industry and the O&G sectorThe industry sector in MENA commands a remarkable share of the regions GDP at 40%far outpa

233、cing the global average of 26%as of 2019.49 This prominence in the economic landscape is both an opportunity and a responsibility.Industrial emissions are predominantly driven by hard-to-abate sectors,including chemicals,steel and cement.Emissions can be traced back to fuel use for heat and power,an

234、d feedstock use,such as hydrogen for chemicals.50 TbS-led emissions abatements such as CCUS,hydrogen-based electrolysis and clinker replacement in cement are more than just avenues for decarbonization they also offer ways to foster innovation and capture new market opportunities by pioneering the de

235、velopment of low-carbon industrial products.This value-driven approach positions MENA at the forefront of a global trend,transforming a sustainability challenge into a competitive edge in export markets.5.4 Decarbonization and energy transition opportunities sectoral outlook Sustainability action fo

236、r MENA has the potential to create significant economic value as well as position it as the flagbearer for the global clean energy value chain.Closing the Climate Action Gap:Accelerating Decarbonization and the Energy Transition in MENA31The roadmap for sustainability in the industrial sector will n

237、ecessitate a comprehensive approach:Improving efficiency across production:Investments in high-efficiency equipment and innovative industrial processes can drive further emissions reductions.Deployment of CCUS:This can facilitate emissions abatement from fossil fuel-based facilities,serving as a bri

238、dge to a low-carbon future.Clean hydrogen transition:By switching to clean hydrogen as feedstock in hard-to-abate sectors such as direct reduced iron(DRI)steel and chemicals,significant emissions canbeabated.The journey towards a low-carbon industrial base presents strategic opportunities for the ME

239、NA region:Low-carbon industrial base for export:By focusing on the production and export of low-carbon energy products such as DRI steel and synthetic fuels,MENA can make the most of its strategic advantages such as low-cost clean hydrogen and CCUS availability.Green premiums:The export of low-carbo

240、n energy products to markets with emissions threshold constraints,such as the European Union Emissions Trading System(ETS),opens the possibility of the MENA region receiving green premiums.Similarly,the O&G production sector faces unique challenges and opportunities in the quest for sustainability.T

241、argeting fugitive methane emissions presents an immediate and tangible pathway to reducing its environmental impact.Leak detection and repair(LDAR)and instrument air systems play a crucial role in controlling methane emissions.LDAR employs specialized equipment to detect and repair leaks,capturing m

242、ethane for sale or energy use.Traditional oil field services(OFS)meet these essential needs,which include replacing gas-driven valves with oil-free air.This not only reduces emissions but also results in cost savings from decreased natural gas consumption,lower maintenance and enhanced operational e

243、fficiency.A striking feature of MENAs O&G sector is its low emissions from production 33%lower than the global average.Concurrently,the sector must actively engage in crafting a narrative that emphasizes these low emissions.This narrative,grounded in robust data and aligned with international benchm

244、arks,can redefine the regions energy profile,shifting perceptions and nurturing strategic alliances in the global energy landscape.Closing the Climate Action Gap:Accelerating Decarbonization and the Energy Transition in MENA32Decarbonizing the O&G sector in MENA requiresa multifaceted strategy that

245、leverages itsinherentstrengths:Mobilize capital towards low-emissions assets:By attracting investments in low-carbon emissions O&G assets,MENA can spearhead a new era of responsible energy production.Reduce upstream emissions:A concerted effort to minimize methane flaring and other upstream emission

246、s can significantly reduce the environmental impact of O&G operations.Advocate for global frameworks:Collaborating with international stakeholders to establish frameworks that recognize the quality of upstream emissions is vital for a fair and transparent energy market.The quest for sustainability i

247、n the O&G sector also unveils unique market opportunities:Building a global narrative:Crafting a compelling narrative around the low-emissions intensity of MENAs O&G resources can differentiate the region and align with mechanisms such as the CBAM frameworks for export.Marketing to end-customers:By

248、promoting the cleaner emissions profile of MENAs O&G products,a distinctive market position can be carved,appealing to environmentally consciousconsumers.At the same time,it is crucial to recognize that the majority of emissions in the O&G value chain happen during the consumption stage for example,

249、approximately 90%of diesels life-cycle emissions occur at this stage.51 It is vital therefore for the O&G majors of the region to engage engine manufacturers to continuously improve onfuelefficiency.Export of clean hydrogenAs discussed above,the confluence of factors places MENA in a strong position

250、 to build a formidable presence in the clean hydrogen landscape(blue and green).Abundant renewable energy resources,with vast expanses of desert with high solar irradiance and strong wind potential,make MENA an ideal location for green hydrogen production through electrolysis powered by renewable en

251、ergy sources.Additionally,the region is home to substantial reserves of natural gas,facilitating the production of blue hydrogen through carbon capture and storage(CCS)technologies,which can help mitigate carbon emissions from hydrogen production.Moreover,MENAs strategic geographical location offers

252、 the potential for hydrogen exports to global markets,providing an opportunity for economic growth and energy diversification.The availability of necessary infrastructure,such as pipelines and ports,further enhances the regions attractiveness as a hub for hydrogen production and export.Estimates sho

253、w that by 2035 MENA could export up to 18 Mtpa clean hydrogen(in ammonia form)to key demand centres in Europe and East Asia(Japan and South Korea),with the potential to generate$70 billion in revenue.52 The early signs of this change are already visible,as Saudi Arabia is building a 240 Ktpa-scale g

254、reen hydrogen plant at Neom53 that will supply the entire production to Europe.Similarly,SABIC and S.Aramco recently shipped their first consignment of blue hydrogen to South Korea.54 Export of renewables MENA could play a significant role in bridging the gap in Europes renewable energy demand and d

255、omestic supply,which is estimated to rise to 400450 TWh by 2035.55 Given MENAs cost leadership in renewables production,the landed cost of MENAs renewable power to Europe is expected to be economically favourable.While major sub-sea infrastructure or intercontinental grid integration is required to

256、service this demand,if unlocked this could lead to$8-12 billion of renewable energy trade between MENA and Europe.56 Export of SAFThe aviation sector accounts for 2%of global emissions as per IEA,and as it is one of the hardest sectors to abate,the International Air Transport Association(IATA)has se

257、t ambitious decarbonization targets for the use of SAF.Globally,the demand for SAF is estimated to grow to 130 billion litres by 2035,57 and if MENA could capture approximately 30%share,it could create an opportunity worth around$5 billion.The MENA region has the potential to scale green hydrogen ex

258、ports to 18 Mt per year by 2035,backed by its incredible renewable resources.Closing the Climate Action Gap:Accelerating Decarbonization and the Energy Transition in MENA33Renewables-based desalination This has the potential to break the nexus ofwater scarcity and high emissions in traditional desal

259、ination.In MENA,desalination is a vital component of the water supply system,especially for GCC countries.Despite being a global leader in desalination,the region relies heavily on conventional methods such as thermal distillation and reverse osmosis,often powered by fossil fuels.Of the 24 billion m

260、3 of desalinated water produced globally each year,58 the GCC produces approximately 40%59 and MENA accounts for 38%of the worlds total capacity.60However,in 2016,less than 1%of MENAs desalinated water was generated using renewable sources.This striking figure reveals an area ripe for improvement an

261、d transformation.With strategic policy changes and targeted investment in renewable energy,the region has the potential to boost renewable desalination up to 40%.61 Renewable desalination is more than an environmental boon:it is a path to water security.MENAs abundant potential for renewables,paired

262、 with its extensive seawater resources,enables self-reliance in water production,significantly reducing its dependency on external water supplies.By relying on renewable sources,the region can produce water without depleting natural water resources such as rivers and underground aquifers.This approa

263、ch creates a buffer against unpredictable weather patterns and environmental pressures,offering a new level of control over avitalresource.Saudi Arabias AI Khafji desalination plant stands as a beacon of MENAs renewable desalination movement.Using reverse-osmosis technologies powered by solar photov

264、oltaics,the plant produces an impressive 60,000 m3/day of clean water,with a peak production capacity of 90,000m3/day.62Operating on 10MW of solar-generated electricity daily,it is testament to the benefits of renewable desalination,demonstrating the dual benefit of optimized resource usage and envi

265、ronmentalstewardship.Renewable desalination is more than an environmental boon:it is a path to water security.34Closing the Climate Action Gap:Accelerating Decarbonization and the Energy Transition in MENAStakeholder action:key strategies for sustainable transformation inMENA6Driving decarbonization

266、 and materializing energy transition are two key priorities for the MENA region.Closing the Climate Action Gap:Accelerating Decarbonization and the Energy Transition in MENA35While the region needs to play catch-up on emissions disclosures and target-setting with the rest of the world,it has a real

267、opportunity to leapfrog its sustainability journey by fully embracing the energy transition.Policy-makers therefore need to navigate this landscape carefully and design a policy roadmap that is fit for purpose for MENA to achieve these objectives.This section presents a high-level policy roadmap tha

268、t could enable sustainable transformation inMENA.In an era defined by the pressing need for climate action,the MENA region finds itself at a crossroads of responsibility and opportunity.As the global community rallies to combat climate change,businesses worldwide are embracing transparency,accountab

269、ility and bold target-setting to reduce GHG emissions.This section discusses a comprehensive policy roadmap tailored to the unique context of MENA.A survey of LSM members identified that only 21%of respondents are willingly looking to engage SBTi in science-based target-setting.Members highlighted f

270、our primary reasons:The absence of a mandate from the government/regulators on science-based target-setting or demands from investors The lack of applicable frameworks in industries such as O&G or the lack of clarity on the most suitable frameworks The lack of trained staff or capabilities in the or

271、ganization Resource intensiveness and the high cost of aligning these global standards The following high-level roadmap is proposed for policy-makers,embedding four key policy tools,to accelerate emissions action from corporates.6.1 Recommended policy action:catch up on emissions disclosures and tar

272、get-settingFour main tools for policy-makers to catch up with the rest of the world and comparable markets on emissions disclosures and target-settingFIGURE 12Disclosure and target-setting mandatesMeasures to increase emissions reporting and science-based target-settingExample:Mandated disclosures f

273、or publicly listed companiesSectoral emissions reduction targetsTop-down reduction targets for sectors to drive actionExample:Emissions intensity targets for power sectorFinancial incentives and regulationsFinancial levers to encourage greater emissions and SBT complianceExample:ESG-linked incentive

274、s(tax/Zakat/VAT credits)Capability and knowledge support Measures to bridge the capability gap in MENA and lack of trained staffExample:Training support for SMEs/skill development programmeSource:World Economic ForumClosing the Climate Action Gap:Accelerating Decarbonization and the Energy Transitio

275、n in MENA361.Disclosures and target-setting:A crucial first step,ensuring that companies not only report on their ESG metrics but also commit to concrete targets.Emissions reporting and target-setting for the top 200 publicly listed companies and state-owned enterprises:Standardized GHG emissions re

276、porting Reporting on climate-risk scenario planning Adoption of science-based targets(starting with voluntary adoption)2.Sectoral emissions reduction targets:These are dynamic benchmarks that increase or“ratchet up”over time,pushing industries to continually innovate and reduce their carbon footprin

277、ts.Sectoral emissions targets that“rachet up”periodically,starting with the power sector(33%share in regions emissions)Targeted decarbonization policies for othersectors:O&G:e.g.zero methane flaring,enhanced oil recovery Cement:e.g.clinker change,waste heatrecovery Aviation:SAF,electrical ground ser

278、viceequipment Mandated deployment of CCUS for hard-to-abate sectors such as cement3.Capability and knowledge support:Endorsing global frameworks such as the Task Force on Climate-Related Financial Disclosures(TCFD)ensures that reporting is both comprehensive and meaningful.Standard-setting and harmo

279、nization across theregion:Reporting standards Global Reporting Initiative(GRI),CDP,TCFD Target-setting standards SBTi Training support for multinational corporations(MNCs)and SMEs/skill development programmes Centralized support centres for promoting adoption/training Annual stocktake of adoption 4.

280、Financial incentives and regulations:Integrating sustainability criteria into both business-to-government(B2G)and business-to-business(B2B)procurement ensures that the principles of sustainability permeate the entire supply chain Inclusion of sustainability in B2G and B2B procurement ESG performance

281、-linked incentives(tax/VAT/Zakat credits)Access to ESG-linked green and sustainable finance,especially for SMEs(e.g.green bonds,sukuks)Carbon pricing through carbon tax/levy,compliance with the ETS,etc.Several nations are already setting commendable examples:United States:The ongoing development of

282、the Securities and Exchange Commissions climate disclosure rule underscores a commitment to transparent reporting on climate risk and future scenario planning.China:Listed firms are now mandated to dedicate a distinct section in their annual reports to environmental and social responsibility,signall

283、ing the weight given to these considerations.India:Leading the way,India has mandated ESG disclosures for its top 1,000 listed companies,complete with key performance indicators to ensure the data provides meaningful insights.Policy-makers across MENA need to catch up on corporate emissions disclosu

284、res and target setting.Closing the Climate Action Gap:Accelerating Decarbonization and the Energy Transition in MENA37Standing on the precipice of an era of energy transition,MENA finds itself poised to harness its abundant renewable and conventional energy assets,unlocking new pathways to sustainab

285、ility and prosperity.This section delves deep into the policy framework necessary to unleash the transformative power of these resources.Well-considered and forward-thinking policies lay the foundation for MENAs journey towards realizing its energy potential and shaping a brighter,more sustainable f

286、uture.LSM members recognize this opportunity as highlighted in the member survey:64%of respondents are seeking to unlock new business opportunities from sustainability action,while 50%are seeking to comply with regulations and 36%view sustainability action as a risk-mitigation action.However,they id

287、entify major external and internal challenges that inhibit them from maximizing this opportunity.The essential ones are:(1)the lack of policy/regulations;(2)the lack of access to technology and finance;(3)the nascency of the market;and(4)the lack of trained staff specialized in emissions monitoring,

288、verification and reporting.In response to these challenges,a five-tool framework is proposed for MENAs policy-makers to help them usher in the energy transition era.6.2 Recommended policy action:leapfrog on energy transitionFive main tools for policy-makers to accelerate the energy transition and ha

289、sten the deployment of TbS in the regionFIGURE 13Financial enablementMeasures to decrease the cost(or improve IRR)of energy transition/low-carbon tech projects,while protecting consumersExample:Direct Capex grants/tax creditsCapability-buildingMeasures to bridge the capability gap andtrain labour fo

290、rce for green jobsExample:Skills development programmesTechnology and infrastructureMeasures to improve access to nascent tech and supporting infrastructureExample:Access to electricity gridRegional harmonization of standardsMeasure to set standards for producers and OEMsExample:Green H2 standardsDo

291、mestic and export market developmentMeasures to nurture the market for low-carbon technologiesExample:Offtake commitmentAccelerateenergy transitionin MENASource:World Economic ForumClosing the Climate Action Gap:Accelerating Decarbonization and the Energy Transition in MENA381.Domestic and export ma

292、rket development:By ensuring a steady demand for low-carbon technologies,governments can incentivize innovation and production in this vital sector.Offtake commitments for low-carbon technologies Obligatory use of sustainable products for the top 200 companies(e.g.renewables,hydrogen,CCUS)Building a

293、wareness among end consumers to work towards adoption of sustainable products Clear policy on long-term purchase agreements for renewables,hydrogen,SAF,captive generation,net metering,etc.2.Regional harmonization of standards:By promoting uniformity,policy-makers can make project development more st

294、raightforward and comparable throughout MENA.Standard-setting and harmonization across theregion:Standards for new fuels such as SAF Standards for green and blue hydrogen Standards for usage of CCUS across various industries International collaboration to adopt common technical definitions and rules

295、 of business 3.Technology and infrastructure:Ensuring that innovators have access to essential infrastructure such as electrical grids,pipelines and ports can remove barriers to development and deployment.Support for innovation(demos/pilots/research and development R&D initiatives)R&D partnerships b

296、etween government,state-owned enterprises,universities and the privatesector Access to infrastructure such as electrical grids,pipelines and ports Faster administrative processing(e.g.land permits)4.Financial enablement and consumer protection:By making affordable financial resources available,proje

297、cts with long-term environmental benefits become immediatelyfeasible.Access to low-cost finance Direct capital expenditure(CapEx)grants/taxcredits Subsidies for end consumers to adopt sustainable products Carbon markets to enable alternate revenuestreams Removal of current non-equitable and regressi

298、ve fossil-fuel subsidies and replacing them with targeted citizen support(largely relevant for gas subsidies in non-GCC MENA countries)5.Capability-building:Policy-makers must orchestrate comprehensive training initiatives that are attuned to the industrys demands.This includes both specialized prog

299、rammes for existing professionals and broader education for those entering the workforce.Skills development programmes Collaboration between educational institutions and businesses to align curricula Support industry partnerships to exchange bestpractices Several nations are pioneering strategies to

300、 accelerate the adoption of low-carbon technologies:United States:The landmark IRAs energy security and climate package allocates$369 billion towards relevant funding,tax credits,rebates,deductions and loans.Europe:Far-reaching European initiatives such as the Renewable Energy Directive(RED and RED

301、II),along with the establishment of the European Hydrogen Bank,to provide both regulatory guidance and financial support.India:With targeted approaches such as mandating fertilizers to use 70%green hydrogen by 2035 and oil refineries to replace 30%of grey H2 with green H2 by the same year,India is s

302、etting tangible,ambitious goals for a sustainable future.There is a real chance for MENA to leapfrog and capture the opportunity from global energy transition.Closing the Climate Action Gap:Accelerating Decarbonization and the Energy Transition in MENA39Owing to their emissions and economic profiles

303、,the GCC and non-GCC MENA countries form two stark subgroups with different critical priorities for decarbonization and energy transition.GCC countries,for example,need to reduce the emissions intensity in hard-to-abate sectors,such as power and O&G,while protecting the populations high standards of

304、 living and employment.GCC countries will continue to play a major role in the global energy value chain and develop new energy products and derivates to diversify energy exports(e.g.clean hydrogen).Meanwhile,non-GCC countries in MENA need to support decarbonization without creating barriers to econ

305、omic growth and poverty alleviation.They should also endeavour make the most of the regions significant potential for renewable energy to capture an upside from the global energy transition.These critical priorities translate into specific strategic actions for GCC and non-GCC MENA countries,which w

306、ill require the above policy roadmap to be customized to align with each countrys realities on the ground.MENAs transition to sustainability hingeson regulatory action,leadership initiatives,collaborative efforts and embracing the potential ofdecarbonization.Shaping the transition to a more sustaina

307、ble future in the MENA region hinges on the determined action of a range of stakeholders.The LSM member survey revealed crucial challenges to sustainability initiatives that include a lack of regulatory guidelines,limited technology access and insufficiently trained staff in ESG areas.With an ambiti

308、on to become sustainability leaders,MENA companies grapple with these hurdles,which require policy intervention and multitiered engagement.6.3 Different critical priorities for GCC vs.non-GCC MENA countriesStrategic actions for GCC and non-GCC countries in the MENA regionFIGURE 14Energy transition a

309、nd decarbonizationGCC countriesNon-GCC MENA countriesConsumer participation Capitalmobilization Accelerate the deployment of renewables,technology-based solutions and fuel switching to reduce emissions intensity in hard-to-abate sectors(e.g.power and oil and gas upstream)Mobilize consumers to adopt

310、more sustainable lifestyles and pay the premium for more sustainable products Ensure a just transition and shield consumers from higher costs to minimize the impact of decarbonization on poverty-alleviation targets Develop a framework and policies to attract low-cost sustainable financing from other

311、 regions and multilateral institutions to support the transition Support the development of carbon credit-generating projects by esdtablishing frameworks and policies to participate in carbon markets Remove current non-equitable and regressive fossil fuel subsidies and replace with targeted citizen

312、supportDeploy capital for decarbonization and to develop the green economy(e.g.transition equipment manufacturing)Use existing nascent carbon exchanges to develop the carbon market across the value chain Export capital to other parts of MENA to support the energy transition Develop nascent low-carbo

313、n technologies to diversify the energy export basket(e.g.clean hydrogen,carbon capture and sequestrationIncrease the share of renewables when adding new capacitiesIdentify opportunistic ways to decarbonize high-emissions assets(e.g.fuel switching in gas-fired power plants to free up gas for export)A

314、ttract investors and create frameworks and policies to encourage the export of renewables and sustainable products(e.g.hydrogen)Source:World Economic Forum,How Decarbonisation and Energy Transition Can Create Value for MENAs Energy Sector,23 May 2023Closing the Climate Action Gap:Accelerating Decarb

315、onization and the Energy Transition in MENA40MNCs need to navigate the unique sustainability landscape in MENA.The regions businesses must recognize that the sustainability transition can unlock distinct opportunities while mitigating risks,which can be categorized as swords and shields.These effort

316、s require actions both within and beyond the organizations boundaries,and engage with the wider business environment.6.4 Action for businesses:navigate the unique sustainability landscape in MENABusinesses need to recognize that the sustainability transition can unlock unique opportunities while red

317、ucing headwind risksFIGURE 15ShieldsUnlock value for shareholders Enhance image with stakeholdersSwordsPlay key role in the countrys net-zero journeyContribute to countrys net-zero agendaRemain among highest contributors of emissions in the country/regionDeclining financial performance due to higher

318、 financing and operational costs and limited/no revenue growthStranded assets no longer able to generate economic returnsDeteriorated relationships across stakeholder groupsNegative attention from international mediaLead across key initiatives/mandatestLower cost of capital(“greenium”)Reduce operati

319、onal costsDeploy new future-proof revenue streamsCreate a strong narrative as a distinct regional leader in climate change actionCultivate stronger,mutually beneficial relationships with main stakeholdersSource:World Economic ForumClosing the Climate Action Gap:Accelerating Decarbonization and the E

320、nergy Transition in MENA41Businesses need to take action within and beyond their four wallsFIGURE 16Beyond four wallsMonitor and leverage other monetization avenues(e.g.assets generating carbon credits)Identify and pursue financing opportunities in other markets(green project finance)Work with suppl

321、iers(especially SMEs)to raise supplierstransparency and commitments Plan for resilience and future-proof the business Within four wallsWithin the wider system(consumers,regulators,policy-makers)Build internal organization capabilities and capacities Build winning coalition,partner with like-minded r

322、egional/global players and collaborate with policy-makersBalance the IRR by de-risking the sustainability solutions Monitor and grow consumers willingness to pay Seize value creation opportunities with new growth vectors Set clear ambition and develop concrete roadmap to decarbonize Catch up with pe

323、ers from other geographies by establishing emissions measurement/reportingSource:World Economic ForumClosing the Climate Action Gap:Accelerating Decarbonization and the Energy Transition in MENA42ConclusionAs outlined earlier,MENA faces significant climate challenges that have the potential to profo

324、undly affect life in the region.These challenges bring with them substantial economic and social stability risks.This necessitates customized sustainability initiatives,increased investment in resilience and adaptation,and collaborative efforts among stakeholders to navigate these distinctive enviro

325、nmental stressors.The urgency of the situation demands immediate and nuanced action,including reducing emissions,building resilience against climate change,including water scarcity,and mobilizing a cohesive effort among governmental bodies,businesses and international organizations.While several MEN

326、A countries have made commitments to climate targets,there is a need for greater ambition,particularly from large companies in hard-to-abate sectors.Corporations in the region must catch up with their global counterparts in setting net-zero goals and outlining clear roadmaps.Policy-makers must seize

327、 the moment,promoting measures that enhance emissions reporting,and establish science-based targets.In particular,they should focus on managing the emissions of high-emitting sectors such as power,industry and oil and gas.Simultaneously,policy-makers and regulators should implement necessary enabler

328、s,including measures to bridge capability gaps,and provide greater sustainability-linked incentives toenhancecompliance.Furthermore,it is crucial to recognize that climate action offers significant opportunities for the MENA region,especially in the context of the global energy transition.The conver

329、gence of synergies in the region of renewable resources,available infrastructure and agile and decisive leadership places the region in a good position to leapfrog on energy transition and drive green growth for future generations.Policy-makers must alleviate challenges faced by corporations in scal

330、ing low-carbon technologies and implement measures to develop the nascent market while reducing costs(or improving the internal rate of return)for project developers,enhance access to technology and infrastructure,bridge capability gaps and work towards regional and global standards harmonization.Th

331、ough the task is complex and multifaceted,MENA has the potential to emerge as a global leader in a world that is adapting to a newenvironmental reality.Businesses must collaborate closely with policy-makers,demonstrating action in both decarbonization and emissions reduction,as well as in energy tra

332、nsition and green growth.They must also inspire their value chain partners,particularly SMEs,to take further action and build the necessary capabilities.The global energy transition is anticipated to be disorderly,requiring the use of various technology-based pathways to collectively achieve net-zer

333、o targets.To realize the benefits arising from this global transition,MENAs stakeholders must demonstrate“Visionary Pragmatism”,ensuring a transition that is just for all communities involved.This transcends mere compliance with global standards,representing a strategic opportunity to pioneer new technologies,align with emerging global norms and lead the way into a future where sustainability is p