Why the UAE’s Hosting of the COP Climate Summit Could be a Turning Point for Climate ActionThe recent IPCC report has painted a grim picture of the future of our planet, with U.N. Secretary-General António Guterres warning that "we seem hellbent on destruction." However, there is reason to be hopeful. In 2023, the UAE will host the next COP climate summit, which could be a turning point for leaders to galvanize into action on climate change.

The decision to hold the critical round of climate talks in the Gulf may seem controversial, given that the region has built its wealth on its fossil fuel endowment. However, this also provides the UAE with a unique opportunity to lead the way in showing what a post-fossil fuel world could look like.

Previous rounds of climate talks have seen countries struggle to acknowledge the role of fossil fuels in emissions and agree to phase them out. However, the UAE's oil producer credentials position it uniquely to unite the world around this fundamental statement of the obvious.

It's not just governments that need to step up. The fossil fuel industry needs to significantly rebalance its investment towards renewables to align with the Paris Agreement. Even leading oil and gas majors tend to have total portfolios with less than 25 percent clean energy, which needs to change significantly. The good news is that a recent analysis by McKinsey shows that when portfolios are more than 40 percent clean, and firms are closer to alignment with the Paris Agreement, they will start to see the upside in valuation from investors.

The UAE's hosting of the COP climate summit is a modern-day energy diplomacy "Nixon goes to China" moment. It's a chance for leaders to come together and unite the world around the obvious: we need to take bold action on climate change. The stakes are high, and we must seize this opportunity to transition to clean energy and create a sustainable future for ourselves and generations to come.

External Link:
McKinsey analysis on clean energy investments