LONDON: Maturation of Gulf states’ economies presents further opportunities to deepen the relationship between the region and the UK, the new Lord Mayor of the City of London told Arab News before departing for COP28 in the UAE.

Just a few weeks into the role and Michael Mainelli was on hand, like his predecessor, to witness yet another British Cabinet reshuffle.

But with the return to frontline politics of former Prime Minister David Cameron, Mainelli is optimistic that this will further strengthen ties with Saudi Arabia, one of several Gulf states to have announced participation in a £30 billion ($37.9 billion) investment pledge into the UK.

“When it comes to that investment it’s enormously welcome, but what I think is great is it shows how Saudi and other Gulf states have really matured their economies,” Mainelli said.

“They’ve gotten a better understanding of what they want to achieve with their sovereign wealth funds beyond just investments and returns, and that includes knowledge transfer. That’s really exciting as it offers two-way transference between us and them,” he added.

“With Cameron’s appointment (as foreign secretary), you get undoubted foreign policy expertise, including in the Gulf, which I think will prove a good move and help deepen connections with Saudi Arabia.”

Pushing the idea of London as a “hub of connectivity” appears central in Mainelli’s year-long tenure, which he said he is serving under the theme “Connect to Prosper.”

Asked where the Gulf figures in this, he replied: “The Lord Mayor typically spends 100 days traveling each year. Of this, three weeks will be in North America, three in Asia, after which a smattering of other countries.

“And then, interestingly, the Lord Mayor will typically spend two weeks of travel around the Gulf each year. This shows you just how important it is as a destination, being right up there with Asia and North America.”

COP28 in Dubai has been designed with a strict focus on carbon, which plays into Mainelli’s “personal ambition.”

While he would be “going in with an open mind,” he said he would also use the event to revive interest in the notion of voluntary carbon markets, which first emerged during COP3 in Kyoto in 1997.

“I believe there’s a lot more work to be done when it comes to carbon markets … but we do need to get these to work,” he added.

“The initial idea was to have emission trading permits and businesses paid to remove carbon from the atmosphere — typically this would involve planting trees or seagrass — with the idea being we reduce our environmental impact by taking it out of the atmosphere.

“But it became subject to a lot of issues, ranging from the difficulty of measuring to ensuring the carbon was sequestered properly, and frankly also issues of fraud and corruption.”

Despite the initial difficulties, Mainelli remains convinced that it is a feasible and practical solution to reducing carbon levels in the atmosphere.

“It’s just the market hasn’t been fully formed and the basis upon which prices are set not properly calculated,” he said.

Of particular concern is what he described as the “final bit,” adding: “Let’s say I pay you to for a ton of carbon offset a year over a 25-year period, which you agree to facilitate through the planting of a forest.

“Now let’s say having planted that forest, a hurricane hits and uproots the trees, or there’s an avalanche, perhaps there’s a parasite, and the trees are destroyed, maybe the soil doesn’t allow them to grow, or maybe at the end of the 25 years you simply chop the forest down.

“Were any of these to happen, then nothing really has been achieved. All that has happened is you’ve deferred 25 years of emissions.”

For Mainelli, the solution to the issue and restitution of carbon markets as a tool in the route to net zero resides in the “appropriate use of insurance,” which he said would put a financial impetus behind the idea and “drive clearer, harder standards.”

Of particular pertinence, he noted, would be the fact that insurers would not insure carbon capture sites without having conducted “sufficient due diligence.”

Insurers “would crawl all over whoever was planning to set up one of these carbon capture sites, and they’d want to know what trees were being used, where seeds were sourced,” he said.

“They’d survey the ground, they’d ask why it was located at the base of a mountain. They’d do all this, and not only would they insure the site, they’d be building knowledge.”

This, said Mainelli, would be pivotal as that increased understanding would serve to improve the means and methods of carbon capture deployed in these carbon markets, leading to standardization.

It is “fairly evident” that the Gulf is determined to find workable solutions to address the climate crisis, he added.

“I spent a week earlier this year in Abu Dhabi, and also spent a week last year in Saudi, really trying to understand the situation on the ground there, and I was extremely impressed at the commitment to net zero in both nations and in other areas,” he said.

Pointing to the 25 substantial hydrogen projects in place in the UAE and the 40 Saudi Arabia has in the pipeline, Mainelli said there is an opening for closer ties with the City of London.

While development of hydrogen production would always be of interest, he said there is also reason to considering the creation of a sufficient transport mechanism for getting this hydrogen out into the world. This, he added, offers “great potential for collaboration.”