The second edition of the National Bank of Abu Dhabi (NBAD) report on ‘Financing the Future of Energy’ states that the Middle East is in a prime position to grow its renewable energy sector. The past year has seen a number of factors converging to promote renewable energy and financial institutions have an important role to play in promoting the growth of this sector through engagement with public and private sector stakeholders to create a more energy efficient economy.
The report states that low oil prices and the cost competitiveness of renewables is encouraging governments to turn to it as a hedge against fossil fuel price volatility. This, combined with governments’ long-term ambitions for greater energy independence by decarbonising their economies, will be the key drivers for the transition to a clean energy world. The report reasserts that even in the current economic climate, global energy demand is outstripping today’s supply. NBAD’s research in 2015 found that closing this gap would require $48 trillion of investment over the next 20 years, with renewables playing a critical role in the energy mix of the future.
Alex Thursby, NBAD’s Group CEO, said, “Today the question on everyone’s mind is: will the low oil price environment stall the growth of renewables? We don’t believe so. The underlying drivers for renewables are long term and strong, particularly across the West-East Corridor. Consumer demand is shifting to a preference for clean energy, governments are pushing hard for policy change to decarbonise their economies, subsidies for fossil fuels are coming off and renewables have become cost competitive against hydrocarbons with new technologies, such as battery storage of clean energy, potentially adding to this advantage. In this new normal environment, there is a huge role for the financial community to play in fostering the growth of this sector. As the leading bank in the Middle East, we remain committed to being a positive force in the sector and accelerating the transition to a much needed new world of energy.”
Mark Yassin, Head of Global Banking and Co-Head of Wholesale Banking at NBAD, commented, “Demand for renewable energy continues to grow across the Globe and our research has identified that there is approximately $640 billion of investment required for renewable energy projects across Asia and this part of the world. For the first time, 2015 saw the developing world attract greater capital flows into clean energy than the 30 OECD member countries and we think that the Middle East has timed its entry into this market well. The involvement of the financial community in the region will act as a catalyst for the growth of renewables and we want to play our part by using finance to transform business practices and the energy industry. Earlier this year, we committed $10 billion for environmentally sustainable activities over the next 10 years and are also working on a green bond proposition, putting us in the forefront of environmental financing across the West-East corridor.”
The report, which was launched recently at the Global Financial Markets Forum in Abu Dhabi, was produced by NBAD with contributions from the University of Cambridge and PwC Abu Dhabi’s Sustainability and Renewables team.
Sustainable Business is a core part of NBAD’s business and as a result, the bank established a dedicated Sustainable Business team to drive this agenda forward, internally, through improved environmental and social risk management and policies, and externally, through the launch of new products and services. In January 2016, the team made a landmark commitment to lend, invest and facilitate a total of $10 billion of financing within the next 10 years to projects focussed on environmentally sustainable activities – a first for any GCC bank. In September 2015, NBAD became the first bank in the UAE to sign up to the Equator Principles, a voluntary set of guidelines based on International Finance Corporation standards on social and environmental sustainability and the World Bank Group’s environmental, health and safety guidelines. NBAD is also consistently one of the top 10 rated companies across the S&P Hawkamah Pan Arab ESG Index, the Institute for Corporate Governance.