Economic integration crucial for Mideast’s growth, says Saudi economy minister 

Economic integration crucial for Mideast’s growth, says Saudi economy minister 
Economic integration crucial for Mideast’s growth, says Saudi economy minister 

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Jeddah - Yasmine El Tohamy - RIYADH: A global promise of net zero will be unmet unless the societal impact on vulnerable nations, access, and affordability is considered, experts said. 

A panel of ministers, private sector players, and specialists at the World Economic Forum in Davos, Switzerland, sought to address how ambitious sectoral transitions can be aligned with equitable and socially responsible outcomes.

A narrative shift within climate discourse began to occur during the 2022 UN Climate Change Conference and in the build-up to COP28, to one that is “very much” focused on the socioeconomic implications of this environmental crisis, Rania Al-Mashat, Egypt’s minister of international cooperation, outlined. 

While this notion is not entirely novel, as it has been reiterated “time and time again” by developing nations, countries of the Global North have begun to come to terms with the fact that climate and development should not be mutually exclusive conversations, rather, they come hand in hand, Al-Mashat affirmed.

She said that the most pivotal aspect of addressing the current discrepancy is the ability to secure the financing needed. 

Developing nations commonly emit much less than their developed counterparts, and yet, they must now adapt to a rapid and bold renewable energy transition that requires steep financing. 

To fulfill this, the minister said that there must be “a realization of additional concessional finance, maybe blended structures to be able to crowd in the private sector.”

This will allow for the concept of “leaving no one behind” to be translated into a transition that helps rather than hinders the global economy’s potential.

She further underscored the role of governments, multilateral development banks and philanthropy in allowing this to occur, saying: “This requires policies from the government side, it requires also a lot of work, collective work in the spirit of Davos with different stakeholders, be it multilateral development banks also several of the initiatives that are taking place here this year are related to philanthropy as again patient capital that can come in, create pools of grants that actually help in rescaling, for example, or can help in also allowing more private sector engagement.”

The world as a collective will not be able to succeed without instilling the idea that the transition can be done equitably, Luc Triangle, the general secretary of the International Trade Union Confederation, said, reaffirming the notions posed by the minister. 

The repercussions of this extend beyond developing nations. They underscore the imperative for a revised industrial policy that considers the requirements of all workers globally as they adjust to this shift.

He said the world needs an industrial policy that is focused on the green transition and on the digital transformation.

The official said such a policy, however, cannot be limited only to those countries where we have the financial resources.

When discussing the phasing out of fossil fuels and shifting jobs away from fossil fuel-intensive industries, the inequity becomes greatly apparent, he outlined. 

While in regions such as Western Europe, a coal exit can be supplemented through alternative jobs due to a strong economy, other nations do not have the fiscal capabilities and resources to provide alternative job options. They are thus harmed by the global call to arms. 

Triangle said: “We unfortunately have examples where we then see that countries where we have mainly extractive industries in fossil fuel, and where we have fossil fuel turned or driven, energy-intensive industries. There we have closing downs of companies, and we don’t have an industrial policy in place there where we can create new jobs. So then jobs disappear and there is absolutely a negative balance. And so this inequality in the world is a reality today.”

The focus of this year’s WEF revolves around rebuilding trust. In line with this sentiment, the official emphasized that this outlook should not be confined to specific nations; rather, it should encompass the entire global community.

Thus, financing is a tool that is needed in order to facilitate this faith, and developed nations must assist in financing climate action in developing countries. 

Without that, there will be a rippling effect of growing inequality that will ultimately lead to “winners” and “losers” of the transition, he said, emphasizing that “this is not the world that creates trust, or a world where people feel that they are taken on board.”

This stands true across the global spheres, but also on a micro-level, nations must ensure that trust is built within their borders, Josu Jon Imaz, the CEO of Repsol SA, said while speaking on the panel. 

The threat to industrial jobs within Europe has led to families suffering the consequences of a lack of affordability and an inability to pay their energy bills, he affirmed. 

“We forgot affordability for industries and jobs, talking about the cement paper mills, steel makers, chemical sector and they can’t afford the energy cost in many regions in Europe. So industrial jobs have been threatened,” the CEO said. 

Thus, while nations applaud themselves on decarbonizing, these accelerated efforts have resulted in a need for more local natural gas production, with countries opting to import it instead, ultimately creating a cycle that decreases job availability. This makes purchasing natural gas increasingly difficult and more expensive for nations in the Global South.

“You could say okay, but we are doing pretty well because we are decarbonizing, but at the same time, we multiply by two by three by four the LNG price in the world because we forgot that we have to produce natural gas. We start buying natural gas everywhere. We make it impossible for the global south for emerging countries to acquire to buy these natural gas. They have to shift from gas to coal and year after year, we are increasing the CO2 emissions dramatically in the world. So we are failing in our policies,” he concluded.

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