The United Arab Emirates is the world’s sixth-largest oil producer and one of many richest nations on the planet, with a gross home product per capita of above $43,000 as of 2019, in line with the World Bank. As per its “Vision 2021,” Iis petroleum- and natural-gas-reliant economic system is committed to sustainable development as a way to emerge because the Gulf Cooperation Council’s, or GCC’s, most diversified economic system. This consists of the digitization of the economic system, which has change into a precedence in the course of the COVID-19 pandemic.
A green economic system for sustainable digitization
The first digital Abu Dhabi Sustainability Week Summit 2021 was broadcast stay all over the world in English and Arabic on YouTube, receiving over 100,000 views in the course of the occasion from individuals hailing from over 175 nations, and it featured over 500 influential international leaders from authorities, enterprise and know-how who explored the social, financial and technological alternatives supporting a sustainable green restoration from the pandemic.
At the summit, GCC leaders reconfirmed their decarbonization pledges “to save the equivalent of 354 million barrels of oil through the deployment” of renewable energies. This represents a 23% discount in oil consumption to cut back the facility sector’s carbon dioxide emissions by 22%, in line with the newest figures from the International Renewable Energy Association.
In his opening handle, Sultan Ahmed Al Jaber — the UAE’s minister of trade and superior know-how, particular envoy for local weather change, and chairman of unpolluted power firm Masdar — pointed out that with the COVID-19 pandemic, society is now witnessing the implementation of synthetic intelligence, machine studying and the digitization of various spheres of life all around the world. Accordingly, electrification, decarbonization and digitization initiatives have change into more and more essential throughout all industries.
Masdar’s photo voltaic power initiatives
New digital applied sciences require a excessive consumption of electrical energy, which within the UAE is presently produced predominantly utilizing fossil fuels that adversely influence the setting. Given the UAE’s huge hydrocarbon assets, Masdar is aiming to change into a significant blue hydrogen producer and contribute to the nation’s efforts to cut polluting carbon emissions by practically 1 / 4. Masdar not too long ago reached an settlement with Abu Dhabi’s Department of Energy and 5 further establishments to develop clear hydrogen gas options.
But the UAE’s Paris Agreement dedication to zero emissions by 2050 is closely reliant on photo voltaic power to diversify Abu Dhabi’s power sector into renewable sources. Solar power is seen as an anchor to Masdar’s renewable methods from many views. In Abu Dhabi, it’s building the world’s largest solar energy plant, as deserts are a number of the finest locations to reap solar energy. They are by no means in need of daylight and are wealthy in silicon — the uncooked materials for the semiconductors from which photo voltaic cells are made. Another profit to putting in photo voltaic panels within the desert, in line with a 2018 research, is that it might create a extra humid setting that causes vegetation to unfold to fight desertification.
Masdar City: The UAE’s aerospace and green know-how zone
Developed by Masdar, Abu Dhabi’s Masdar City is likely one of the world’s most sustainable city communities, providing a strategic base by means of which corporations can construct their networks domestically and globally and might discover a number of funding alternatives and take a look at revolutionary new applied sciences from inception by means of to implementation to assist the UAE diversify its economic system.
Housing a free zone space, the town has greater than 900 organizations, from worldwide conglomerates to startups, creating revolutionary applied sciences within the areas of power, water effectivity, mobility, area, blockchain know-how and synthetic intelligence to deal with the world’s most crucial sustainability challenges in additional than 30 nations.
UAE Space Agency
Based in Masdar City, the UAE Space Agency contributes to supporting a sustainable nationwide economic system by creating satellites utilized in pure useful resource mapping, environmental monitoring, land-use planning and safety, and it has additionally launched a probe to Mars.
Digital economic system
The UAE authorities has made the digitization of its economic system a precedence as a way to deliver effectivity to authorities, creativity to trade, and construct worldwide management. To accomplish this objective, the UAE has established in Masdar City the world’s first graduate-level, research-based synthetic intelligence college, Mohamed bin Zayed University of Artificial Intelligence, which welcomed its first college students in January 2021.
The UAE additionally adopted the Emirates Blockchain Strategy 2021 and The Dubai Blockchain Strategy, which have undertaken a number of blockchain initiatives. SustVest is a crowd-investing blockchain-based platform that lets individuals put money into photo voltaic initiatives and earn returns from shoppers who use their funding to put in photo voltaic panels. The firm is predicated within the Dubai Silicon Oasis Authority and has constructed its resolution on the Nem blockchain. Its founder, Hardik Bhatia, defined:
“The global rooftop solar segment is booming with opportunities, and is valued at over $66 billion. Emerging economies are looking to transition to solar as it offers a green and cheap alternative to conventional energy sources. SustVest enables this transition in emerging economies by crowdfunding rooftop solar projects in emerging economies on its platform. We tokenize solar projects granular to the level of individual solar cells, and investors purchasing these tokens can earn dividends generated by the sale of electricity from these individual solar cells. We are opening the gates for retail investment into solar space, and we do so by tokenizing the projects to reduce the barrier of entry and creating a secondary marketplace for providing liquidity to investors.”
The Central Bank of the United Arab Emirates, together with the Saudi Central Bank, is creating a state-backed bilateral central bank digital currency, “Aber.” Aber is initially set to help the UAE and Saudi Arabia make less expensive bank-to-bank, cross-border funds and monetary settlements utilizing blockchain know-how on a probationary foundation, and in line with official statements, it is going to be solely accessible to a restricted variety of banks. Eventually, Aber can be used globally on China’s blockchain-based service community, or BSN, which is able to help future CBDCs from numerous nations such because the UAE.
Crypto-asset laws within the UAE
The UAE prioritizes blockchain and distributed ledger know-how and has launched numerous associated ventures, particularly for the reason that COVID-19 pandemic. Nevertheless, cryptocurrency regulation within the nation remains restricted.
Toward the tip of 2020, the UAE’s Securities and Commodities Authority, or SCA, published “The Authority’s Chairman of the Board of Directors Decision No. (21/R.M) of 2020 Concerning the Regulation of Crypto Assets.” The SCA’s determination lays out its licensing regime for anybody who needs to supply crypto property inside the UAE, together with exchanges, crowdfunding platforms, preliminary coin choices, custodians, and different providers that use crypto property.
The Financial Services Regulatory Authority, or FSRA, of the Abu Dhabi Global Market considers crypto property to have traits like these of shares, that means they’re to be handled as securities and are topic to information disclosure necessities associated to danger and transactions. On the opposite hand, utility tokens and non-fiat cryptocurrencies are thought of commodities and should not topic to market laws. Law No. 20 of 2018 on Anti-Money Laundering defines laundered funds to be property in no matter kind, together with digital currencies. Article 3 of Law No. 8 of 2017 on value-added tax imposes a 5% tax on imported and exported commodities. This tax could apply to utility tokens and non-fiat cryptocurrencies, because the FSRA considers them to be commodities.
The UAE does not have a signed tax treaty settlement with the United States. However, in line with the Conduct of Business Rulebook, crypto-asset companies are obligated to declare worldwide revenue for tax functions in line with the requirements of the intergovernmental Foreign Account Tax Compliance Act settlement between the UAE and the United States.
A green restoration is an absolute crucial for a sustainable social and financial future within the post-pandemic world, as pointed out by Alok Sharma, president of the twenty sixth United Nations Climate Change Conference of the Parties — higher referred to as COP26 — who praised Masdar’s undertakings in creating green power applied sciences.
Finding financing for this green transition will doubtless not be too difficult, according to Khaldoon Khalifa Al Mubarak, managing director and group CEO of Mubadala Investment Corporation. Because a tectonic paradigm shift has occurred for the reason that COVID-19 pandemic, with the markets pricing local weather danger into the worth of securities, there’s a elementary reallocation of capital towards sustainable investing to make sure a green restoration in a post-COVID-19 world. As Laurence Fink, chairman and CEO of BlackRock — the world’s largest asset supervisor — pointed out:
“I believe that the pandemic has presented such an existential crisis — such a stark reminder of our fragility — that it has driven us to confront the global threat of climate change more forcefully and to consider how, like the pandemic, it will alter our lives. It has reminded us how the biggest crises, whether medical or environmental, demand a global and ambitious response.”
The views, ideas and opinions expressed listed below are the creator’s alone and don’t essentially mirror or characterize the views and opinions of Cointelegraph.
Selva Ozelli, Esq., CPA, is a world tax legal professional and authorized public accountant who incessantly writes about tax, authorized and accounting points for Tax Notes, Bloomberg BNA, different publications and the OECD.