Jordan’s coming climate crisis will hit youth hard

15 Jan 2022

As in much of the Middle East, most young people are focused on jobs and finances, unaware of mounting climate risks

Climate change is not considered a national priority in Jordan, underming the country’s efforts to take a position at COP26. Young people, who will be most affected in their lifetimes, are disadvantaged by a lack of relevant education and information provision. They are also more preoccupied by immediate challenges of poverty and unemployment — even though the country’s acute vulnerability means environmental challenges are already exacerbating these problems.

What next

Without effective mitigation, global temperature increases and lower precipitation by 2050 will cause major stress on Jordan’s fragile natural resources. More droughts will increase disruptions to water and food supplies. This will play into existing economic problems of disrupted livelihoods, poverty and joblessness among youth that are exacerbated by the existing education system, which does not meet market needs.

Subsidiary Impacts

  • Climate change will further undermine employment prospects, driving more young people to emigrate.
  • Environmental deterioration will have most impact on the poorest, further worsening inequality.
  • Water shortages will constitute an acute regional challenge, with spillover effects into and from neighboring countries.

Analysis

Unemployment reached 25% in 2021, with youth unemployment at 63% — among highest in the world. With poverty around 16% and a large inequality gap, most Jordanians rank environmental issues and scarcity of natural resources near the bottom of their pressing concerns (see JORDAN: Vested interests may block urgent tax reform – May 20, 2021).

Regional exemplar

This is not unusual among Middle Eastern countries (see MIDDLE EAST: Climate change poses multiple threats – October 21, 2021). A 2020 survey showed that in crisis-hit Lebanon, economic issues were the main focus of public attention, with high living costs (48%), the weak economy (34%) and unemployment (31%) concerning most respondents respectively.

However, even in Saudi Arabia, a relatively wealthy oil producer, a 2019 survey showed that the top concerns were still unemployment and jobs (34%) and taxes (31%). This may in part reflect the large number of expatriate workers in the country.

Education and information

Although a Jordanian youth delegation did attend COP26, most young people are distracted by poverty and unemployment from the very real local threat of climate change. Without mitigation, the country’s 2021 National Climate Change Adaptation Plan is forecasting significantly higher local temperatures as well as a 20% rainfall decline cutting agricultural production by 10% by 2050, more electricity cuts and infrastructural damage from more extreme weather events.

Despite this threat within their lifetimes, most young people — even educated cadres such as engineers — have little knowledge of or interest in climate change. Consequently, they are unlikely to participate in initiatives seeking to tackle the problem or hold leaders accountable over climate issues.

Although Jordanian youth have relatively good access to education, the curriculum does not cover environmental issues. This in part reflects wider problems of a system that tends not to be student- centred or encourage analytical thinking. University degrees — for instance in civil engineering and medicine — follow old-fashioned structures and often fail to fit graduates for employment, thus worsening the distraction caused by immediate economic problems.

Religious and cultural factors may also play a role. Among conservatives, some reportedly believe that the impacts of climate change — such as increased droughts and flash floods — are the result of ‘fate’ rather than severe natural reactions to increase in mean temperature levels. On a similar basis, climate change adaptation initiatives, such as the adoption of new natural resource management practices, have not been widely accepted by users.

Young people are less likely to see environmental disasters as ‘fated’

This mindset is increasingly less common among young people, in part due to their improved access to more diverse sources of information. These include:

  • international social media accounts such as CNN Climate and UN Climate Change;
  • regional accounts, for example the Environment and Development Magazine and Climate Action Network Arab World;
  • online training courses like org; and
  • extra-curricular school or university environmental clubs.

Nonetheless, in many cases, the information accessed is misleading, due to a lack of transparency and presentation skills. In particular, available data on climate change tends not to be available in Arabic and to be expressed in dry, scientific terms. Moreover, much of it is not open-source.

This causes many young people to lose interest in content that comes across as intangible.

COP26 dynamics

The outcomes of COP26 Glasgow showed that, even on the global level, the world is far from any consensus on actions to mitigate climate change (see INTERNATIONAL: Pressure for climate action will build – November 19, 2021). For its part, Jordan offered an ambitious contribution in its updated Nationally Determined Contribution (NDC) report.

However, it lacked clear, attainable goals. For example, it committed to a highly speculative 31% reduction in greenhouse gases. Given the country’s limited capital and resources, that target will likely prove impossible to achieve in the promised timeframe.

Moreover, Amman’s participation in COP26 was superficial in several areas. The delegation included representatives from the environment ministry, state non-governmental entities and youth, but it lacked wider civil society and local media representatives. Although representatives participated in several side events and discussions, they lacked a common strategic agenda and guidelines.

Members were absent from many high-level negotiations aiming to form shared commitments with other countries that are principally receivers rather than emitters of greenhouse gases, in order to communicate climate vulnerabilities, adaptation needs and investment opportunities to developed countries. The result was a missed opportunity to bring green funding and investments into Jordan.

Future trends

Ultimately, the major challenge of youth unemployment in Jordan cannot be separated from factors related to the ecosystem. Already, environmental problems are contributing to the low economic growth rate and high unemployment, especially in rural locations.

<100 cubic metres per year Per capita water availabilty

Water availability is under 100 cubic metres per person per year, below the acceptable global threshold (see JORDAN/ISRAEL: Despite cooperation, water may be short – February 9, 2018). The forecast impacts of climate change on rainfall and temperature will exacerbate this, leaving even fewer renewable water resources available to supply the growing population.

As well as shortages in drinking water supply, there will be decreased availability of water for irrigation and industrial purposes. That will have an impact on growth, since water is an essential input for key sectors contributing to GDP, including government services, finance, manufacturing, transport, tourism and agriculture.

This will have a knock-on impact on jobs, livelihoods and food security. Particularly vulnerable are young people living in poor agricultural communities in the rural highlands and Jordan Valley, who have a lower adaptive capacity and spend a higher share of their incomes on food.

Ultimately, addressing these intertwined problems would require an interdisciplinary approach across sectors. However, there is little sign of a concerted top-down effort in this respect. Meanwhile, young people preoccupied by immediate economic challenges and with little access to reliable and comprehensible information sources on climate change are unlikely to lead a grassroots initiative for change.

The EU: Using Airborne Technology to Detect Water Leakage in Underground Pipes

15 Dec 2021

As global warming heavily impacts water sources globally, it is important to address any wastage owing to faulty water infrastructure and facilities. In some countries in Europe, a large quantity of water is lost owing to leakages in underground pipes. It is difficult to monitor the water transmission mains in rural localities, as traditional field surveys are costly both in terms of time and money. In order to increase efficiency in infrastructure monitoring, and in turn eliminate water wastage, European researchers are looking towards innovative approaches that can help water companies locate leakages in their systems.

One such approach has recently been developed under the European Union (EU) project, WADI, coordinated by youris.com. This innovation uses drones to detect water leakages in infrastructure. The drones are equipped with multispectral and infrared cameras and can cover wide areas, as well as sites that are too difficult to access. Data from these drones is analysed using an approach called the Triangle method.

The Traingle method of data analysis combines surface temperatures and a vegetation index to determine water leaks. Leakages lead to lower surface temperatures, which is detected by a thermal infrared camera. However, the thermal response of vegetated soils differs to bare land, making it difficult to obtain clear results on moisture content and potential water loss. To deal with this issue, researchers have included a parameter in the data analysis that measures the vegetation cover fraction, which is inferred by hyperspectral cameras to get a temperature-dependent humidity scale that varies according to vegetation.

This innovation was initially tested in France and Portugal where the equipment was validated and the measurement strategy fine-tuned. The images collected during the drone flights were processed and analysed, and potential leakages identified. Detected sites were then categorized as true positive/true negative /false positive /false negative, and associated with the technology used, environmental conditions, vegetation type, soil type, humidity, soil temperature, irrigation presence and precipitation in the ten days prior to the flights. Overall, the system proved able to detect water in the soil (on vegetated and bare land) in approximately 70% of the cases, while the performance of the technology in discovering actual water leaks (not owing to the land being vegetated) was approximately 50%. Most importantly, it was observed that the accuracy of the system in targeting true events improved significantly over time.

This technology works best in agricultural regions with bare soils, with crops at the initial stages of growth, and in areas with a mix of both.  The solution also works well in clay and sandy clay soils. However, its performance is limited in areas with silty clay soils. Moreover, the complexity or diameter of the pipes being investigated, and the type of technology used in the water system does not have an impact on the performance.

The WADI system is one of a kind as it can monitor complex networks and long pipes (50 to 90 km/h depending on the use of drones or planes), and as it’s airborne it can reach inaccessible or secluded locations in spite of difficulties in terrain. Moreover, the cost of conventional ground detection techniques ranges from EUR 1,000 to EUR 5,000 per kilometre, while this airborne technology ranges from EUR 50 to EUR 200 per kilometre. While this innovation ensures greater availability of water resources by giving water companies an efficient mechanism for detecting leakages it can also significantly reduce energy consumption. Further, it is estimated that applying the WADI technique to 5% of European water distribution systems could potentially reduce 166.5 million kg of CO2/year by cutting the energy consumption of water supply.

The service is now at the prototype stage. A group of partners within the EU have prepared a roadmap for the release and development of a full service in the future. It is expected that the commercialisation of this technology would begin after the project ends in 2022.

References

Pianta, Loredana.(2020). “Airborne Water Leak Detection Using an Innovative ‘Triangle Method’.” News & Events. WADI. https://www.waditech.eu/newsevents/airborne-water-leak-detection-using-an-innovative-triangle-method-.kl.

Majid Al Futtaim Green Sukuk

15 Nov 2021

The financial sector is evolving to achieve social and environmental targets around the world. Innovation is spurring a wave of new financial services and products, from public equities, green loans, social and responsible investing to green bonds and sukuk. Through these innovations, there is hope that the world could cover its climate finance gap which is estimated at US$ 2.5 – 4.8 trillion by 2030.

Green Sukuk is a Sharia-compliant bond, where 100% of the proceeds go to finance or refinance green projects that contribute to mitigating climate change as well as preserving biodiversity. The first green sukuk was issued in Malaysia in 2017 to finance a solar power plan (US$ 59 million), and was followed by the first issuance of a sovereign green sukuk worth of US$ 1.25 billion in 2018 in Indonesia.

In May 2019, Standard Chartered Bank (SCB) successfully issued the first ever green corporate sukuk in the MENA region for Majid Al Futtaim Holding LLC Company (MAF), the leading shopping mall, communities, retail and leisure pioneer across the Middle East, Africa and Asia. The US$ 600 million green sukuk was priced at 4.638% over ten years. These Islamic bonds, which offer 220 basis points over mid-swaps, received orders in excess of US$ 2.8 billion and were more than 4.6 times oversubscribed by a diverse investor base; a third of the investors were from Asia, a third from Europe, and a third from the MENA region. The green sukuk will be used to fund some of MAF’s existing and new projects, including green buildings, renewable energy, sustainable water management, and energy efficiency. In preparation for the issuance of the MAF sukuk, the company has established a Green Finance Framework and a Green Finance Steering Committee that will oversee the selection of new and existing projects for their green portfolio.

MAF has a proven record of supporting the UAE in achieving its climate targets. They have launched a net positive strategy to reduce the company’s water consumption and carbon emissions, and to produce a positive corporate footprint by 2040. They are also the first organization in the region to achieve LEED certification for its shopping malls, hotels and offices buildings, as well as the Green Star rating by Global Real Estate Sustainability Benchmarks for five consecutive years, and a ‘low risk’ environmental, social and governance (ESG) rating by Sustainlytics.

References

South Korea Plans to Build Three Hydrogen Powered Cities by 2020

15 Oct 2021

At the COP21 meeting in Paris in 2015, 195 countries agreed to keep global warming below 2°C above preindustrial levels. To reach this target, the world will need to cut energy-related carbon dioxide (CO2) emissions by 60% by 2050 even as the population grows by more than two billion people. This requires a dramatic increase in energy efficiency, and a transition to renewable-energy sources and low-carbon energy carriers. In 2019, the Hydrogen Council—a consortium of 18 companies in the automotive, oil and gas, industrial gas, and equipment industries—presented their vision on how hydrogen can contribute to achieving ambitious climate targets. The council considers hydrogen as an enabler for the transition to a renewable-energy system, and a clean-energy carrier for a wide range of applications. If serious efforts are made to limit global warming to 2°C, the council estimates that hydrogen could contribute around one-fifth of total abatement needs by 2050.

South Korea is vying to win the race to create the first hydrogen-powered society. It wants to build three hydrogen-powered cities by 2022 to position itself as a leader in green technology. In December 2019, the Ministry of Land, Infrastructure, Transport, and Tourism in South Korea announced that they chose the cities of Ansan, Ulsan, Wanjua, and Jeonju as candidate cities for the hydrogen economy, and Samcheok to specialize in research and development of hydrogen technology. The government plan calls for an investment of US$ 25 million for each of the three candidate cities, half of which will be paid by regional governments.

Ansan (one hour South of Seoul) will become an eco-friendly city by linking tidal power generation to hydrogen production, and installing three hydrogen charging stations to operate two hydrogen buses and ten hydrogen forklifts. In addition, a manufacturing innovation entrepreneurship town will be established, and 232 homes will be supplied with hydrogen.

Ulsan (one of the centers of Korea’s (petro) chemical industry) will build a pipeline network to utilize byproduct hydrogen generated in petrochemical complexes for buildings and charging stations in the city center based on accumulated experience in hydrogen town, which has been operating since 2013. It decided to build a hydrogen city in connection with local specialized industries such as a demonstration project for hydrogen fueling for ships.

Wanju (about two hours South of Seoul) is expected to develop into a regional hydrogen production and supply base; and Jeonju (just 10km from Wanju) will serve as a hydrogen utilization and publicity city. In the transportation sector, hydrogen-electric buses will be introduced in the second half of 2020 to run the bus route between Wanju and Jeonju, as well as shuttles and city tours in Jeonju Hanok Village.

Multi-unit housing complexes and individual buildings in the pilot cities will use hydrogen as an energy source for cooling, heating and electricity. The strategy is part of a wider vision to power 10% of the country’s cities, counties and towns by hydrogen by 2030, growing to 30% by 2040.

References

Using Gamification to Teach Children Sustainability

15 Sep 2021 | Original

On some level, our relationship with nature and the environment is deeply connected to what we were taught as children. Lessons in preventing wastefulness through recycling and reuse as children, go a long way in determining the choices we make as adults on the kind of impact we make on the environment. Hence, early years education can play a key role in building societies that value sustainability and understand the importance of protecting the environment.

It is important that societies invest time and effort in providing knowledge to young people on how humans impact the environment. If children understand the links between their consumption patterns and greenhouse gas (GHG) emissions, they will learn to practice caution in consumption choices as adults. Similarly, if children are provided with a deep understanding of how global warming will impact their own futures, they will have clarity on why it is important to preserve the environment. In recent years, the education system has made progress on imparting environmental awareness to the student body. Some schools conduct small awareness campaigns, others organize tree planting days on- and off-campus, and some ensure that students understand how to separate rubbish and recyclables.

Whatever method of imparting environmental education, it is most important is to consider how it can be made interesting and engaging for the students so that they don’t treat it as a burdensome chore, but rather actively participate and practice the lessons in their lives. One such way is gamification. Gamification is the use of game design and mechanics to promote learning by increasing participation, loyalty, competition, and engagement. It can be a useful tool when teaching children about the environment in that it captures the students’ attention and also motivates behavioral change.

Games use simulations of real-world contexts and competitions to encourage learning and adaptation of certain behaviors. One example is Super Sorter, a game that takes children to a virtual materials recovery facility where they are asked to sort mixed recyclables. Plastic bottles, cardboard boxes, and other recyclables appear on a conveyor belt and children are required to sort them using four different technologies. All the sorters specialize in one specific recyclable, and children need to place sorters strategically to get the highest recovery rate and win. Lifeboat to Mars simulates how ecosystem function. It takes children to Mars, a clean slate for humanity, where it introduces different ecosystems, food webs, and single cell organisms. Children are then tasked with making decisions using this knowledge to build an ecosystem on Mars. Similarly, Eco is a digital game that simulates a civilization and emphasizes players’ impact on the environment requiring children to find a balance between development and the conservation of the natural world. Another recent application of gamification is a playful and interactive science textbook that lets users explore different layers of the world providing an understanding of how their actions impact the environment.

A recent study shows that gamification has the potential to educate and motivate sustainable behavior and living.[1] Gamification can be a very useful tool for younger audiences in converting real world problems into understandable and actionable tasks, while ensuring that the learning process is meaningful and fun. However, the study finds that more thought needs to be put into game design to build user loyalty. The study states that if game design is not well thought out, learning takeaways may not translate to actual behavioral change. Game developers need to understand user psychology when building player interface. Games need to be novel, creative and include difficulty levels so players do not lose interest over time. The design also needs to include challenges and puzzles as further motivators for users to stay engaged. Additionally, it is important that game design has elements of storytelling to emotionally involve the user and enrich their experience.

A large number of game producers end up producing games that promote violence, destruction, and occupation. However, for young children, the best way to gamify sustainability is to use images and characters that are already popular amongst them. For example, a game with Elsa from the famous animation Frozen can teach children about global warming, and Spider-Man could teach children about saving the planet by putting an end to illegal logging. Thus, established powerhouses in the gaming industry who are already doing an amazing job at conceptualizing, designing, and launching all kinds of games for diverse audiences, and hold immense loyalty as well as profits, need to build on this knowledge-base and join the fight for a sustainable future.

[1] Schiele, Kristen. (2017). Utilizing Gamification to Promote Sustainable Practices. 10.1007/978-3-319-53121-2_16-1

Using Biotechnology to Reduce GHG Emissions from Animal Farming

15 Aug 2021 | Original

Agriculture accounts for almost 20% of the world’s greenhouse gas (GHG) emissions,[1] and livestock alone uses 80% of total agricultural land. The bulk of GHG emissions from livestock (consisting of methane, nitrous oxide, and carbon dioxide) arise from four main sheep and cattle rearing activities: enteric fermentation, manure management, feed production, and energy consumption. While governments place a high value on the introduction of clean energy, there is much to be desired in terms of finding innovative ways to control GHG emissions by the dairy and meat industry. For the world to achieve the Climate Action Plan targets for 2050, a focus on cleantech alone will not be enough.

Cutting down GHG emissions associated with livestock requires concerted research, and the development of technologies that can ensure cleaner methods of animal farming. In parallel, the world also needs to rethink its consumption patterns. While raising awareness is the first step towards altering the consumption of meat and dairy, the food industry will have to ensure the faster development and widespread distribution of alternatives to ensure a long term change in consumer behavior.

Genetic selection focused on ruminant animals’ enteric fermentation could significantly reduce overall emissions by 2050. Experts say that about 20% of animal methane emission is determined by genetic make-up alone.[2] Researchers have already developed genetic systems that can reduce methane emissions by 20%.[3] However, a lot is still to be desired in terms of breed specificity of genetic programs. Moreover, uptake remains an obstacle owing to a lack of financial incentives in the form of credit payments for methane limitation while animal rearing.

Another way to use biotechnology to reduce emissions from animal farming is through innovations that improve animal health and productivity. Healthier livestock have better productivity and longer lifespans, making it possible to meet the world’s growing meat and dairy demand with fewer animals and reduced GHG emissions. A McKinsey study suggests that in North America implementation of improved animal health measures can improve the productivity of farm animals by 8%. Researchers are working towards developing innovations in the Internet of Things (IOT) as low cost methods of supporting farmers in monitoring animal health. A great example of such an innovation is LIVEQuest, a low-cost tool developed through a partnership between the United Kingdom and China that allows farmers to place devices on livestock and continually monitor health and productivity. This helps farmers cater to livestock needs quickly and improve animal health and productivity in a cost-effective manner, thereby providing farmers with the right incentives for take up.[4]

Addressing the production of animal feed can also improve GHG emissions from livestock. In India, a software tool helps determine the best mix of feed for 2.4 million animals in more than 30,000 villages. The software considers each animals’ nutritional needs and GHG emissions when suggesting a feed mix.[5]

All the above innovations focus on the production side of the meat and dairy value chain. Working on clean innovations in production, without addressing excessive consumption patterns in meat and dairy is a one-legged approach to combating environmental degradation. It is estimated that by 2050, global meat consumption would more than double. In 2016, the United Arab Emirates (UAE) Ministry of Foreign Trade reported annual meat consumption at 85.14kg per capita, which was thrice the amount in major meat importing countries, and 18 times more than the world average.[6] Reducing the consumption of meat and substituting with less carbon-intensive food is critical in ensuring that the world is able to meet GHG reduction targets by 2050.

While changing consumer behavior would require sustained awareness campaigns, development of non-meat alternatives that look and taste like meat would be a good way to ease consumers into finding alternatives to fulfill their protein requirements. Biotechnology has advanced fairly in this endeavor, however, meat resembling products in the market are still far from being readily available.[7] Companies working on the production and distribution of these alternatives are a handful. Examples include Impossible Foods, a company producing plant based burgers that look and act like meat while using 75% less water, 95% less land and 87% fewer gas emissions than a regular beef burger; NotCo, a Chilean company that produces dairy alternatives; and Finless Foods, a company developing non-fish alternatives to seafood. These companies use cutting edge biotechnologies such as synthetic biology and artificial intelligence in creating their products. However, the field of synthetic biology is still uncharted territory as investors and governments tread carefully in devising ways that can truly change how societies eat.

The UAE is not the largest producer and/or consumer of dairy and meat in the world and hence its contributions to the GHG emissions owing to production are low compared to other countries. However, its forward-looking policies embedded in wellbeing and innovation, and its rich human capital can make it a pioneer in the research and development of biotechnologies that can disrupt the way the livestock industry impacts the world environment.

[1] McKinsey & Company. April 2020. Agriculture and Climate Change. https://www.mckinsey.com/~/media/mckinsey/industries/agriculture/our%20insights/reducing%20agriculture%20emissions%20through%20improved%20farming%20practices/agriculture-and-climate-change.pdf

[2] Ibid, 2020

[3] Ibid, 2020

[4] Innovation China UK. http://www.icukonline.org/Technology%20portfolio/NEWTON_PROJECT1.shtml

[5] Sreelata, M. 02 July, 2019. Software helps cut Indian cows’ methane emissions. https://www.scidev.net/global/livestock/news/software-helps-cut-indian-cows-methane-emissions-1x.html

[6] Pandey, V. 27 July, 2019. UAE Fresh Mutton and Fruits Market, 2016. Glasgow Consulting Group. http://glasgowconsultinggroup.com/uae-fresh-mutton-and-fruits-market-2016/#:~:text=According%20to%20the%20ministry%20of,more%20than%20the%20world%20average.

[7] Wilcox, M. 14 May, 2019. Synesthetic Biology is Changing What We Eat. Here’s What We Need to Know. https://civileats.com/2019/05/14/synthetic-biology-is-changing-what-we-eat-heres-what-you-need-to-know/

Sustainable Economic Recovery Post COVID-19 in the GCC Region

15 Jul 2021 | Original

Member states of the Gulf Cooperation Council (GCC) are facing three different but interconnected shocks: the COVID-19 pandemic, a significant drop in oil prices, and climate change. First, COVID-19 has undercut economic growth and stability in the entire world as well as in GCC countries; the International Monetary Fund (IMF) projects a 7.3% economic contraction for oil exporters in the Middle East region,[1] and S&P Global expects GCC government debt to rise to USD 100 billion in 2020.[2] Second, oil prices have fallen from US$ 64 per barrel in 2019 to US$ 40 in early June 2020, which is alarming since this is well below the fiscal breakeven point for oil.[3] While GCC countries have been trying to diversify their economies, most of them are still heavily dependent on oil exports. More than 60% of Saudi Arabia, Bahrain, Oman, and Kuwait’s government revenues come from hydrocarbon. This figure drops to 54% for the UAE, and 38% for Qatar.[4]  Third, climate change could potentially render the MENA region uninhabitable by 2100 if no action is taken to decrease global carbon emissions.[5] By 2050, temperatures in the MENA region are expected to increase by 4°C, and could reach as high as 50°C during daytime by 2100.[6] Mitribah, Kuwait has already registered temperatures of 54°C in 2016, and Sweihan, Abu Dhabi has reached 50.4°C in 2017.[7] Moreover, by 2050, the climate impact on water resources in MENA is expected to invoke losses up to 14% of GDP.[8]

Sometimes the world needs a crisis, and this certainly does apply to GCC countries. While these governments have largely focused on public health amid the pandemic, priorities are being gradually redirected to long-term economic recovery. GCC countries have announced economic stimulus packages totaling US$ 97 billion, however, investment in green economic recovery and innovation is crucial to building back their countries better. Unfortunately, and according to Bloomberg, out of the total US$ 12 trillion global stimulus packages, less than 0.2% has been allocated towards climate concerns.

Shaping a Green Recovery for GCC Countries:

  1. Investing in clean hydrocarbon energy. Green stimulus packages build resilience against the threat of climate change but also deliver more jobs and higher and equitable growth. A report by the International Renewable Energy Agency (IRENA) estimates economic returns in renewable energy at US$ 3-8 for every US$ 1 invested, in addition to quadrupling the number of jobs in the sector over the coming three decades. It also projects an additional US$ 100 trillion to be added to global GDP by 2050 if investment in this sector is accelerated.[9]
  1. Building greener infrastructure. GCC countries will also need to invest in innovative technologies for greener cities such as seawater desalination projects, green buildings, and clean mobility, as well as developing and greening public transportation systems.
  1. Investing in the blue economy. The MENA region is considered the world’s most water-scarce region holding around 1% of the Earth’s total renewable freshwater resources.[10] Additionally, the Indian Ocean is one of the world’s busiest trade routes and accounts for the passage of 80% of the world’s maritime oil trade. GCC countries will need to invest in in developing a sustainable maritime industry and ensure the sustainable use of marine ecosystems.[11]
  1. Enforcing environmental, social, and governance (ESG) disclosure. Governments and regulators will need to improve the measurement, assessment, and disclosure of companies’ ESG performance. The financial returns on ESG practices and guidelines are economically sound; a performance analysis, conducted by Morgan Stanley, of more than 10,000 mutual funds, has showed that sustainability funds met or exceeded median returns of traditional funds 64% of the time.[12]
  1. Building a real data economy. Any true reform to transform GCC countries into more resilient, greener, and growing economies will need to start with data. It may be worthwhile to follow the EU’s example. The new Recovery and Resilience Facility of EUR 560 billion by the Next Generation EU offers financial support for digital and green reforms and has prioritized the building of a real data economy. This entails compiling data from the different key sectors and industries in all European countries to support the implementation of the European Green Deal.[13]

[1] Augustine, B. (2020). GCC to lose $270 billion in oil revenues in 2020, says IMF. Gulf News. https://gulfnews.com/business/gcc-to-lose-270-billion-in-oil-revenues-in-2020-says-imf-1.1594640168553

[2] Jones, M. (2020). Gulf government debt to see record $100 bn surge in 2020. Reuters. https://www.nasdaq.com/articles/gulf-government-debt-to-see-record-%24100-bln-surge-in-2020-sp-global-2020-07-20

[3] Kabbani, N. (2020). How GCC Countries Can Address Looming Fiscal Challenges. Brookings Institute. https://www.brookings.edu/opinions/how-gcc-countries-can-address-looming-fiscal-challenges/

[4] Kandil, M. and Mahmah, A. (2020). Economic Challenges for the GCC Countries after Covid-19. Economic Research Forum. https://theforum.erf.org.eg/2020/05/20/economic-challenges-gcc-countries-covid-19/

[5] Pal, J. and Eltahir, E. (2016). Future temperature in southeast Asia projected to exceed a threshold for human adaptability. Nature Climate Change. https://www.nature.com/articles/nclimate2833

[6] Hergersberg, P. (2016). Max Planck Gesellschaft. https://www.mpg.de/10856695/W004_Environment_climate_062-069.pdf

[7] Broom, D. (2019). How the Middle East is Suffering on the Front Lines of Climate Change. World Economic Forum. https://www.weforum.org/agenda/2019/04/middle-east-front-lines-climate-change-mena/

[8] World Bank. (2018). Beyond Scarcity : Water Security in the Middle East and North Africa. MENA Development Report;. Washington, DC: World Bank. https://openknowledge.worldbank.org/handle/10986/27659

[9] Oxford Business Group. (2020). Can emerging  economies afford green recovery from Covid-19?. Oxford Business Group. https://oxfordbusinessgroup.com/news/can-emerging-economies-afford-green-recovery-covid-19

[10] Kandeel, A.(2019). Freshwater resources in the MENA region: risks and opportunities. Middle East Institute.https://www.mei.edu/publications/freshwater-resources-mena-region-risks-and-opportunities

[11] Ahmed, M. (2020). The blue economy- riding a wave of optimism? The National. https://www.thenational.ae/business/comment/the-blue-economy-riding-a-wave-of-optimism-1.1002524

[12] Morgan Stanley. (2015). The Business Case for Sustainable Investing. https://www.morganstanley.com/ideas/business-case-for-sustainable-investing

[13] European Commission. (2020). Europe’s Moment: Repair and Prepare for the Next Generation. https://ec.europa.eu/commission/presscorner/detail/en/ip_20_940

Micro, Small, and Medium Enterprises (MSMEs) and Sustainable Fashion

15 Jun 2021 | Original

Fashion is a competitive and growing industry. Big brands have lowered production costs making clothing more affordable, and release up to 24 collections per year. Not only are people buying more clothes, but also, bought garments are being replaced at a faster pace.[1] This trend in fast fashion carries a hefty price tag on the environment. Up to 85% of clothing produced each year ends up in landfills.[2] Moreover, it is estimated that the fashion industry produces 10% of global carbon dioxide emissions annually and uses up to 1.5 trillion liters of water.[3] Also, new research shows that micro-plastics from clothing make its way out to seas and oceans.[4]

Thanks to digital media, information on the harmful effects of fast fashion is readily available worldwide, and consequently, a growing population of environmentally conscious shoppers are turning to sustainable fashion. Sustainable fashion is a jmovement that emphasizes quality over quantity, and promotes making conscious buying choices driven by information on how each piece of clothing is made. This movement gave rise to a number of MSMEs who cater to this fashion niche and promise to produce clothes that are made from sustainable materials and processes, and have a smaller carbon footprint.

MSME examples of sustainable fashion include Bug Clothing, a home business led by one woman in the UK that makes handmade clothing using deadstock fabric from big designer factories; Tsouls, a small business led by an American husband and wife that produces footwear made of cork; and Joseph & Alexander,a small UAE brand that produces swimwear from plastic sourced out of oceans. It is important to note that as MSMEs enter the sustainable fashion market, this creates the opportunity for complementary business to emerge, such as MESME vendors and suppliers. Interesting examples include Sourcing Playground, a B2B platform that connects brands to more sustainable manufacturers; and Queen of Raw, a platform for businesses to buy and sell deadstock fabric.

Another way startups are augmenting sustainability in fashion is through the development of dyes and fabric using biotechnology. Typically, dyes used in mass production are manufactured using harsh chemicals, release toxic byproducts, and consume a lot of water and energy. Tech startups have come to the rescue and are using synthetic biology to change the way dyes are produced. Two promising examples from Europe are Pilio bio and Colorfix.  Pilio bio is located in Paris and manufactures pigments and dyes using enzymes, and Colorfix is based out of Norwich in the UK and uses microbes to dye textiles using minimal water and energy.

Tech MSMEs are also using biotechnology to produce fabric that is more sustainable. Growing plant-based textiles (such as cotton), requires land and consumes large quantities of water. Similarly, synthetic fibers derived from fossil fuels not only contribute to greenhouse gas emissions, but also leave microplastic residues in clothing. Two notable tech MSMEs working towards producing sustainable fabric are Spiber and Bolt Threads. Spiber is a Japanese startup that produces fabric using protein fibers. The company has created outdoor jackets made from microbe-derived silk, and works toward lowering the cost of spider silk production to levels similar to that of synthetic fibers. Bolt Threads produces spider silk using yeast and is selling to big brands like Stella McCartney.

It is clear that MSMEs around the world are working towards making fashion sustainable with full force. Their approaches are innovative, and focus on building environmental awareness in communities. They are key agents of change, and can play an integral role in shifting the way societies consume and impact the environment. Around the world, governments have erected support programs for MSMEs to encourage this change.[5] Some programs provide funding to small businesses, while others aim at connecting artisans to large scale producers, latest technologies, and international markets. Moreover, central banks offer a variety of schemes that aim at providing MSMEs easy access to finance. Currently, ethical design is geographically concentrated in Australia, Scandinavia, and the United Kingdom. Broadly speaking, these regions have progressive governments who incentivize sustainable and ethical practices, as well as business environments that are increasingly environmentally conscious and competitive. In order to promote sustainable consumerism, it is essential that governments take an even more proactive effort towards supporting, rewarding, and promoting MSMEs that make mindful consumption possible.

[1] McFall-Johnsen, M. (2019). The fashion industry emits more carbon than international flights and maritime shipping combined. Here are the biggest ways it impacts the planet. Business Insider Nederland. https://www.businessinsider.nl/fast-fashion-environmental-impact-pollution-emissions-waste-water-2019-10?international=true&r=US#while-people-bought-60-more-garments-in-2014-than-in-2000-they-only-kept-the-clothes-for-half-as-long-2

[2] McFall-Johnsen, M. (2019). The fashion industry emits more carbon than international flights and maritime shipping combined. Here are the biggest ways it impacts the planet. Business Insider Nederland. https://www.businessinsider.nl/fast-fashion-environmental-impact-pollution-emissions-waste-water-2019-10?international=true&r=US#while-people-bought-60-more-garments-in-2014-than-in-2000-they-only-kept-the-clothes-for-half-as-long-2

[3] Davis, N. (2020, April 7). Fast fashion speeding toward environmental disaster, report warns. The Guardian. https://www.theguardian.com/fashion/2020/apr/07/fast-fashion-speeding-toward-environmental-disaster-report-warns

[4] Messinger, L. (2018). How your clothes are poisoning our oceans and food supply. The Guardian. https://www.theguardian.com/environment/2016/jun/20/microfibers-plastic-pollution-oceans-patagonia-synthetic-clothes-microbeads

[5] European Commision. (2016). Support for SMEs and entrepreneurs. Internal Market, Industry, Entrepreneurship and SMEs – European Commission. https://ec.europa.eu/growth/smes/support/networks_en

 

Islamic Finance and the Market for Green and Sustainable Sukuk

15 May 2021 | Original

Despite the decelerating growth in Islamic finance due to the COVID-19 pandemic and the sharp drop in oil prices, the industry has grown significantly in the past couple of decades and is estimated to reach around US$ 3.5 trillion by 2021.[1] Islamic finance has emerged as an untapped and substantial source of funds for sustainable development in both Muslim and non-Muslim countries.[2] One of the most promising areas for Islamic financing is green sukuk, a new green bond targeting environmentally sustainable projects whilst conforming to Sharia investment principles.[3]

The first green sukuk was issued by Malaysia’s Tadau Energy in 2017 at a value of US$ 59 million to cover a solar power plant. Others followed such as the world’s first sovereign green sukuk of US$ 1.25 billion in Indonesia; Majid Al Futtaim’s first green corporate sukuk in the region in 2019 (US$ 600 million); Saudi-based Islamic Development Bank green sukuk (US$ 1.12 billion) in 2019; and earlier this year Egypt has announced that it will begin issuing green bonds rendering it the first sovereign issuer in the MENA region.[4],[5] Most of these sukuk were oversubscribed reflecting the high demand for green investments.

Other types Islamic finance products include Sustainable and Responsible Investment (SRI) and Sustainable Development Goals (SDGs) sukuk. SRI sukuk are designed to fund socially responsible and humanitarian projects. One example is the first US$ 50 million vaccine sukuk issued in 2019 by the International Finance Facility for Immunization with the Islamic Development Bank to accelerate funding for immunization programmes that save children’s lives in the world’s poorest countries.[6] Other examples include the Khazanah Nasional Berhad SRI Sukuk in Malaysia to improve access to quality education in government schools;[7] the first sustainable sukuk in Turkey issued by Zorlu Enerji through the Industrial Development Bank of Turkey in 2020;[8] and the US$ 1.5 billion first sustainability sukuk by Islamic Development Bank in response to COVID-19.[9] As for SDGs sukuk,  in 2018 HSBC Amanah Malaysia was the first financial institution in the world to issue an SDGs sukuk to support seven of the SDGs.[10]

As investor appetite for green and sustainability bonds grows, key considerations for the future of sukuk markets include:

  • The need for a legal framework. Many Arab states, such as the UAE, have integrated environmental, social and governance (ESG) measures in their vision and national plans. A key step towards implementing these strategies in the green and sustainable sukuk market would be requiring issuers to disclose their ESG performance.[11] Another way measure to increase the attractiveness of green and sustainable sukuk is for governments to enforce a certain percentage of issuance to be green or socially responsible.[12]
  • The need for incentives. Despite the extra cost to issuers, the main driver for green and sustainable sukuk is investor engagement and goodwill. One of the main issues that face green sukuk issuers especially in the GCC area is the lack of tax incentives. It may be worthwhile to follow the example set in Malaysia where the government has started paying for the cost of third-party checks for issuers of SRI green bonds.[13],[14]
  • Finding the right project. According to the President of the Gulf Bond and Sukuk Association, Mr. Michael Grifferty, one of the biggest challenges that the green sukuk market faces is finding projects that are sustainable, measurable, and size- and scope-appropriate for capital market financing. In order to attract more investors into the market, issuers in the GCC need to certify and report on their green and sustainable performance, integrate green policies internally, and adopt an appropriate governance framework. [15]
  • Diversifying into blue sukuk. Continuous issuance of green bonds has driven the Republic of Seychelles to issue the world’s first sovereign blue bond in 2018 at a value of US$ 15 million to protect marine environments and safeguard fisheries.[16] Islamic finance could diversify its product range beyond green and sustainable sukuk to include blue sukuk that address marine and ocean ecosystems.

[1] Bouahina, A. and Ahmed, S. 19 February 2020. As Islamic finance continues upsurge, new tool helps harness it for developing- country infrastructure. World Bank. https://blogs.worldbank.org/ppps/islamic-finance-continues-upsurge-new-tool-helps-harness-it-developing-country-infrastructure

[2] Deloitte. 27 November 2015.  Corporate Sukuk in Europe: Alternative financing for investment projects. https://www2.deloitte.com/content/dam/Deloitte/xe/Documents/financial-services/me_Islamic-finance_corporate-sukuk-in-europe.pdf

[3] World Bank. 15 February 2018. https://www.worldbank.org/en/news/video/2018/02/15/green-sukuk—financing-the-future

[4] Noronha, M. A new shade of green: Sukuk for sustainability. EIU. https://eiuperspectives.economist.com/sustainability/new-shade-green-sukuk-sustainability

[5] Meskin, M., 03 March 2020. Middle East sovereigns must follow Egypt’s green example. Global Capital. https://www.globalcapital.com/article/b1klms1yd64qxf/middle-east-sovereigns-must-follow-egypts-green-example

[6] IFFIm, 09 April, 2019. IFFIm issues sukuk to the Islamic Development Bank. International Journal of Management and Applied Research. https://iffim.org/press-releases/iffim-issues-sukuk-islamic-development-bank

[7] Zain, N. et al. 2019. Innovations in Sukuk in the Global Finance Market: Reviewing Key Considerations. http://ijmar.org/v6n4/19-021.pdf

[8] GIFIIP. (2020). Turkey Issues its First Sustainable Sukuk. http://www.gifiip.org/turkey-issues-its-first-sustainable-sukuk/

[9] IsDB. (2020). Islamic Development Bank issues USD 15 billion debit sustainability sukuk in responsive to covid-19. https://www.isdb.org/news/islamic-development-bank-issues-us-15-billion-debut-sustainability-sukuk-in-response-to-covid-19

[10] UNDP. (2018). HSBC Amanah Malaysia issues world’s first United National Sustainable Development Goals Sukuk. https://www.undp.org/content/undp/en/home/news-centre/news/2018/HSBC_Amanah_Malaysia_issues_worlds_first_United_Nations_Sustainable_Development_Goals_sukuk.html

[11] CFI Institute. (2019). ESG Integration and Islamic Finance: Complementary Investment Approaches. Principles for Responsible Investment. https://www.unpri.org/download?ac=9578

[12] Jivraj, H. (2020). Why so few green sukuk? Sector still faces longstanding challenges, say practitioners. Salaam Gateway. https://salaamgateway.com/story/why-so-few-green-sukuk-sector-still-faces-longstanding-challenges-say-practitioners

[13] Ibid, 2019

[14] EIU. (2020). A New Shade of Green Sukuk. https://www.gulfbondsukuk.org/wp-content/uploads/2020/03/A_New_Shade_of_Green_Sukuk.pdf

[15] Ibid.

[16] World Bank. (2018). Seychelles Launches World’s First Sovereign Blue Bond. https://www.worldbank.org/en/news/press-release/2018/10/29/seychelles-launches-worlds-first-sovereign-blue-bond

Desalination Effects on the Environment and the Role of the UAE

15 Apr 2021 | Original

In the UAE, 42% of the potable water supply comes from thermal desalination of seawater. The UAE has more than 70 major desalination plants, and produces 14% of global desalinated water making it the second-largest producer worldwide.[1] According to the State Energy Report in 2015, water demand in the UAE grew at the rate of 35.8% from 2008 to 2012, while the installed capacity of the desalination plants reached 1,585 million gallons per day, and total water production stood at 393,878 million gallons per year.[2] As its population grows and economy expands, the UAE will continue to increase desalination to ensure water availability.

Desalination is a method used to reduce the salt content of sea and ocean water so that it can be consumed for drinking and economic activities. Desalination plants typically use a large amount of natural gas, and are one of the major contributors to greenhouse gas (GHG) emissions in the region. To reduce its carbon footprint, the UAE has embedded sustainability and innovative desalination technologies in its water safety policies. One such effort is the 2013 Renewable Energy Desalination Programme founded by Masdar, Abu Dhabi’s renewable energy company. Under the programme, Masdar’s mandate is to research and develop energy efficient desalination technologies.

While a lot of headway has been made in achieving energy efficiency, there remains a need to increase focus on the treatment of harmful desalination byproducts. Desalination processes lead to the production of brine, a high-salinity byproduct that can threaten maritime ecosystems if released back into the sea without treatment. Even when not released back into the sea, brine can seep underground and harm groundwater.  Brine reduces oxygen levels in water, introduces harmful toxins, and increases the temperature of seas and oceans. It is estimated that the UAE contributes more than 20 percent of brine globally. Brine treatment in itself is a challenging process that uses high levels of energy and capital, and releases high levels of GHG emissions as well.

To eliminate the harmful effects of brine on the environment, disruptive technologies would need to be researched and used on a larger scale, and at a faster pace. For example, the UAE is researching innovations to repurpose brine for agricultural use as part of a project led by the International Center for Biosaline Agriculture (ICBA). The aim is to be able to reinvent the agriculture system as saltwater based. Another promising technology that is being experimented with in the UAE is the development and use of algae that can absorb salt from water. Indeed, in Brazil, researchers are working on introducing certain algae into brine that can tolerate salty water. In addition to neutralizing some of the harmful toxins in brine, the algae is said to be digestible by humans and is high in proteins and vitamins.

There is plenty of scope for creative innovation in desalination technology and brine treatment. Recently, the Columbia University School of Engineering and Applied Science developed a new technology that uses a radically different approach to the treatment of brine. Their methodology costs less and uses less energy, while removing more than 95 percent of salt in brine, hence making it possible to either return it safely to oceans, or use it in other economic activities.[3] Another innovation was developed by a Canadian based company called Oneka. The company produces small buoys that are placed in the ocean to desalinate water that is then directly pumped to communities. Not only does this innovation use zero land and electricity, it produces brine that is only slightly more saline than ocean water, and since the buoys are placed in the ocean, the brine is distributed in a larger area and dilutes rapidly. While this innovation is targeted towards small island communities, there is a potential for research on larger scale applications of the same technology.

The UAE plays a key role in global innovation. It has rich human capital, a growing economy, an enlightened government, and is a hub for disruptive innovations. Given this, and its heavy reliance on desalination, the UAE can pioneer researching, developing and adopting technologies that can make brine treatment efficient and eliminate its harmful effects on the maritime environment. This way the UAE can play an important role in the provision of safe and sustainable access to clean water the world over.

[1] United Arab Emirates Information and Services.(2020). Water Security Strategy 2036. Retrieved from https://u.ae/en/information-and-services/environment-and-energy/water-and-energy/water-#:~:text=Connecting%20desalination%20technologies%20to%20renewable,stage%20flash%20distillation%20(MSF).

[2] Ibid.

[3] Columbia University School of Engineering and Applied Science. (2019). Radical Desalination Approach May Disrupt the Water Industry. https://phys.org/news/2019-05-radical-desalination-approach-disrupt-industry.html