(Bloomberg) -- Air pollution costs the Middle East and North Africa about $141 billion a year, or 2% of economic output, according to a World Bank report which urged nations to reform fossil-fuel subsidies, provide cleaner transport and create markets for emissions.
The findings will likely add to growing interest in green and sustainability-linked bonds and loans in the region, where offerings jumped two-and-a-half fold to almost $19 billion in 2021 from the year before. Borrowers can often cut costs through green bonds, used to fund projects to reduce emissions.
The biggest cities in the Middle East are among the most polluted in the world, with the average urban resident breathing in air that exceeds by more than 10 times the level of pollutants considered safe by the World Health Organization, the bank said Monday. Air pollution led to nearly 270,000 deaths per year.
It also found that an average resident in the region throws away more than six kilograms of plastic that ends up in seas every year, the highest level in the world, leading to an economic loss equivalent to around 0.8% of combined GDP.
“As countries recover from Covid-19, there is an opportunity to change course and choose a greener, bluer and more sustainable growth path that has fewer emissions and less environmental degradation,” Ferid Belhaj, the World Bank’s vice president for the region, said in the report.
Some of the Middle East’s biggest economies have sought to better align themselves with global environmental standards and prepare for a life after fossil fuels. Saudi Arabia, the world’s largest oil exporter, committed to end planet-warming emissions by 2060 and establish a multi-billion dollar fund to improve carbon sequestration. The United Arab Emirates and Bahrain laid out their goals.
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But Persian Gulf countries are among the few still spending billions of dollars to increase their output of oil and gas with the kingdom planning to raise daily crude-production capacity to 13 million barrels from 12 million by 2027. The International Energy Agency has called for the cessation of new investment in fossil fuels if the world is to neutralize carbon emissions by 2050.
Green debt issuances gained traction in 2021 with investors snapping up notes sold by Egypt, Islamic Development Bank, Qatar National Bank and regional state-run firms like Saudi Electricity Co. This year, Saudi Arabia’s readying its first-ever green bond through the government, while Qatar is planning to sell such debt.
In July, Saudi Electricity borrowed $500 million through a green facility which was financed and guaranteed by Japan Bank for International Cooperation. The 12-year facility will be used to finance transmission and distribution projects related to renewable interconnection, energy efficiency and system reliability.
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