Dubai, April 15, 2014 - The Dubai Supreme Council of Energy (DSCE) and the World Bank (officially International Bank for Reconstruction and Development, ‘IBRD’) today signed an advisory services agreement to partner together and design a funding strategy for Dubai’s green investment program. The program will also consider financing through green bond and sukuk products.
Green bonds are a financial market innovation that allows investors to support eligible “green” projects through a fixed income investment product. Issuance proceeds are earmarked for qualifying climate and environmentally-friendly projects. The green bond market was pioneered by multilateral development banks, with the World Bank issuing its first green bond in 2008. The World Bank Group is contributing to the market’s growth by also working with new issuers to help them develop their own programs to finance green investments.
A key prerequisite for green financing products is a strong pipeline of eligible activities and projects. The Dubai Carbon Centre of Excellence (DCCE) is working alongside DSCE to develop these project activities and reporting through the annual State of Energy Report.
A signing ceremony for the agreement was held under the patronage of His Highness Sheikh Ahmed bin Saeed Al Maktoum, Chairman of the Supreme Council of Energy during the World Green Economy Summit (WGES). The WGES is being held under the leadership of the Dubai Supreme Council of Energy (DSCE) and is the first green summit in the Middle East and North Africa region.
“We are all converging towards the implementation of the Green Economy for Sustainable Development” stated His Excellency Saeed Mohammed Al Tayer, Vice Chairman of the Dubai Supreme Council of Energy, and continued that “it is important to establish innovation and replicability to ensure that the success stories can benefit from a multiplier effect across the region while facilitating a participatory and collegial approach”.
“Climate change is a fundamental threat to development and sustainable economic growth. We have been working in different ways to help mobilize financing for activities that mainstream climate thinking into planning processes whether it is to mitigate climate change, help countries adapt to the effects of climate change, or build more resilient communities. We are delighted to partner with the Dubai Supreme Council of Energy and Dubai Carbon to share our experience in the rapidly growing green capital markets for the benefit of Dubai's ambitious program of climate-smart investments" said Madelyn Antoncic, Vice President and Treasurer at the World Bank.
DSCE’s planned green investment program would be part of the Dubai Integrated Energy Strategy 2030 (DIES) that was developed in 2010 and deployed in 2011 under the guidance of His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice President and Prime Minister of the UAE, and Ruler of Dubai. The DIES sets the strategic direction of Dubai towards securing sustainable supply of energy and enhancing demand efficiency.
Two examples of Dubai’s ambitious program in this area are:
- The Sheikh Mohammed Solar Park, designed to be the single largest solar installation at 1000mW once finalized, and the
- Demand Side Management Strategy (DSM), through which 30,000 buildings are planned to be retrofitted to meet the highest energy efficiency standards.
Each project will also provide the market with useful knowledge and data. These valuable economic insights will support the development of the industry in the region and can change incentives.
“Building a Knowledge Economy and leveraging the participation of the private sector have always been key prerogatives in Dubai” stated H.E. Waleed Salman, Chairman of the Dubai Carbon Centre of Excellence, and continued that “the State of Energy Report has been created as a knowledge product to facilitate access to the progress and activities”.
Since its first issue in 2008, the World Bank has now issued more than 60 green bonds in 17 currencies, raising US$ 5.3 billion. Until recently supranationals, including the African Development Bank, European Investment Bank, and International Finance Corporation (IFC) have been the main issuers in this market. However, the market has been gathering momentum with new issuers and investors joining. DSCE’s entrance into this market will be a milestone introducing a new issuer, a new geographic focus and a new investment type.
“The World Bank’s own green bond issuances have established a process that allows investors to support specific programs with their investments. Working with DSCE is an opportunity for us to share our experience about designing a program that will benefit a member country and help mobilize funds for climate-smart activities”, said Michael Bennett, Head of Structured Finance and Derivatives at the World Bank.
The Dubai Supreme Council of Energy (DSCE) was formed, by Ruler Decree (No. 36 of year 2009), issued by His Highness Sheikh Mohammed Bin Rashid Al Maktoum, Vice President and Prime Minister of the UAE, and Ruler of Dubai to ensure security of energy supply in the Emirate of Dubai. DSCE’s primary focus is the development and execution of an integrated strategy to seek sustainable sources of energy and facilitate engagement with prominent partners in seeking new supplies and alternative means of powering Dubai infrastructures. The DSCE Board of Directors, chaired by HH Sheikh Ahmad bin Saeed Al Maktoum, includes several related agencies in Dubai.
About the World Bank
The World Bank (International Bank for Reconstruction and Development, IBRD), rated Aaa/AAA (Moody’s/S&P), is an international organization created in 1944. It operates as a global development cooperative owned by 188 nations. It provides its members with financing, expertise and coordination services so they can achieve equitable and sustainable economic growth in their national economies and find effective solutions to pressing regional and global economic and environmental problems. The overriding goal is to achieve major, sustainable improvements in standards of living worldwide. It has been issuing bonds in the international capital markets for over 60 years to fund its activities. Information for investors is available on the World Bank Treasury website: (http://treasury.worldbank.org/capitalmarkets).