Qatar green bonds, sukuk and ESG (environment, social and governance) funds are soon expected to be in place as the country is “primed” to take advantage of the trend of carbon target, according to a senior official of the Qatar Financial Centre (QFC)
"With Qatar Petroleum's (QP) aggressive green investments, the Qatar Stock Exchange’s guidance on ESG reporting, and QFC’s institutional backing, there is a strong likelihood Qatar-issued green bonds, sukuks and ESG funds will be launched shortly," Thaddeus Malesa, Senior Advisor for Economics and Research, QFC Authority, wrote in an article.
With the country foreseen to run a substantial budget surplus starting this year, times of capital accumulation have returned, he said, adding the outlook for sustained financial surpluses is well defined.
Whereas Qatar is set to earn more export revenue from the outlined energy investments, its imports are growing at a far lesser rate – enabling aggregate excess returns to be invested through the QFC institutions, according to him.
Concurrently, the array of QFC financial institutions continues to grow as specialist funds, wealth managers and re-insurance firms join to provide services to and from Qatar, Malesa said.
Meanwhile, these financial institutions are also broadening the types of advanced facilities clients can take advantage of, including the ability to gain exposure to local aircraft financing and real estate investment trusts.
"The positive results are already in – as of the end of second half, assets under management and custody by QFC financial institutions grew by 16.8% year-on-year to approximately QR66bn," he said.
The QP's decision to concentrate on environmentally friendly investments anticipates more future demand from conscious consumers as well as shifting global regulations in the space, Malesa said.
The already agreed-upon North Field East (NFE) project includes $200mn for greenhouse gas (GHG) reduction measures and technologies, which are being paired with the global LNG or liquefied natural gas industry’s largest carbon capture and storage facility, solar power generation and waste heat recovery, he highlighted.
According to the QP, these cited improvements alone are expected to achieve an estimated 30% reduction in emissions compared with similar LNG facilities worldwide – especially critical when NFE volumes amount to 33mn t/y.
Whereas QP is set to procure solar power from the 800MW Al Kharasaah facility for NFE purposes at the start, the company has plans to construct a solar power portfolio of 4,000MW by 2030.
Although all regional energy companies, including QP, had in the past focused almost exclusively on the reduction of flaring to improve their environmental profiles, this new collection of environmentally friendly investments "enable future QP expansion into export-oriented green facilities", he said.
Transactions for green/carbon-neutral LNG cargoes, aluminium, and steel are becoming increasingly common-place, according to him.
Whilst QP is co-developing GHG quantification and reporting methodology to substantiate carbon-neutral LNG cargoes, Hydro has developed a proprietary ‘Reduxa’ line of low-carbon aluminium products, and ArcelorMittal recently launched ‘XCarb’ green steel certificates for net zero steel making.
With Germany foreseeing $35.7bn investment by its steel industry alone to become climate-neutral by 2050, the European market will increasingly favour cleaner energy and energy-intensive products across the board, he said.
Finding that other countries are likely to follow suit as they set and operationalise their own carbon targets; Malesa said "Qatar is primed to take advantage of this trend moving forward."