UAE: Driving net-zero aspirations with public-private partnership support

As the climate change crisis exacerbates on a mass scale, nations are bound by a shared commitment and mutual aspiration. Reducing emissions and transitioning to clean, renewable energy sources have now been elevated to immediate priorities rather than long-term possibilities, and respective leaderships are already overseeing significant strides in response to the climate threat. However, sustainable reform requires further progression, with continuous effective and efficient activities dependent on the potential of a vital component blossoming at the national level – public-private partnerships (PPPs).

PPPs in the UAE
This reality is present in the UAE, where foundations have already been laid and benchmarks set for such collaborations at the leadership’s behest. During the last two years alone, the UAE government has introduced numerous initiatives through the relevant departments that have successfully encouraged private entities to participate in the National Climate Change Plan 2050. After all, the UAE generated 190 million tons of carbon dioxide as recently as 2019, and making sustained net-zero progression is a non-negotiable necessity.

Under the PPP model, the Abu Dhabi Investment Office (ADIO) announced plans to procure investment infrastructure schemes worth $2.72bn in February 2020, while another prominent example concerns the Dubai Department of Finance (DOF). In 2019, DOF allocated PPP projects worth $272m in total, with a notable project being the five-stage extension of the Route 2020 Dubai Metro line.

Such actions certainly provide encouragement for widespread private sector involvement in meeting net-zero aspirations, yet obstacles do remain, and certain mechanisms must be appreciated where climate-smart PPPs are concerned.

Challenges and considerations
As private companies pursue net-zero aspirations, some challenges must be considered, understood, and addressed. It starts with setting the overall ambition and low-carbon strategy, then measuring, disclosing and acting on reduction of emission level. But the key challenge is the collaboration in ecosystems. Ecosystems accelerate the speed and scale of change, overcoming barriers via collaboration and risk-sharing.

A shared, flexible, and iterative risk management approach to climate risks and associated uncertainties is not just essential but also achievable with a climate-smart PPP approach.

Climate-smart PPPs can undoubtedly be a key innovation mechanism for the UAE to build resilience, mitigate climate change, and ultimately achieve energy and infrastructure goals. And to ensure these scenarios come to fruition, climate-smart PPPs should prioritise the integration of energy efficiency and clean energy in all economic and social infrastructure areas. At the same time, the crucial role of the public sector must also not be overlooked.

While the private sector can bring together greener financial resources and low carbon and climate-resilient technology for sustainable development, the onus of establishing an enabling environment for climate-smart PPPs that reduce political, regulatory, and policy uncertainty does rest with the public sector. As such, the public and private sectors must ultimately come together to reach and exceed their shared energy and infrastructure development goals. They must also implement a shared, flexible, and iterative risk management approach to climate risks and associated uncertainties.

From a strategic perspective from which private sector entities should adopt to make net-zero contributions, it is important to understand the influence and magnitude of the PPP model.

Because PPPs are central to the government’s policy for developing the infrastructure required for such accomplishments, there is now a great emphasis on two aspects – growing the private sector and increasing the national employment rate in addition to mitigating climate change risks. The PPP model applies to all strategies that private companies adopt as it enables the development of strategic projects and services in a cost-effective and quality-assured manner. And crucially, renewable energy is a prominent sector where PPP strategies have already been implemented effectively.

Scaling new climate change heights
Transitioning the UAE into a climate-resilient green economy, managing greenhouse gas (GHG) emissions, minimising climate risks, and increasing climate adaptation capabilities have never been more essential than today – and PPPs can and will play an influential role in ensuring these priorities are addressed in the years and decades ahead.

Engaging the private sector, public sector, and all other stakeholders is imperative, and doing so will also drive the development and introduction of new innovative solutions that support these efforts.

Bakatjan Sandalkhan is a partner and an associate director at Boston Consulting Group (BCG)