energy challenges egypt’s next battle
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Energy crisisTRANSCRIPT
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Energy Challenges: Egypts Next gy g gypBattleThi d R d T bl f UN Gl b l C t L l N t k / ECRC Third Round Table for UN Global Compact Local Network / ECRC
Hisham Zaazou, First Assistant to the Minister of TourismMinistry of Tourism, Arab Republic of EgyptMinistry of Tourism, Arab Republic of Egypt
Cairo : 27 Sep, 2010
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MoT is implementing the Green Sharm Strategy that will position Sharm as a global leader in holistic greening of tourist destinations
Eco Tourism is the way of the future this is the right time to get on board while some first moverGreen Sharm Initiative Highlights
Eco-Tourism is the way of the future - this is the right time to get on board while some first-mover advantage is still attainable
To become a Green Tourist Destination, a holistic approach has to be used, based on four key Greening components: Reduced Carbon Emissions, Sustainable Water Supply, Effective Waste Management, Healthy Bio-Diversity
Sharm has a lot of opportunity for substantial improvement along all greening components - if the currenttrend of environmental degradation is not reversed, Sharm risks losing at least 16 - 35% of its annual revenue (USD 300 600 Mn per year)revenue (USD 300-600 Mn per year)
A holistic Green Sharm Initiative has been developed to address all four greening components through a set of 33 integrated projects
Th I iti ti t t t t St 1 hi li ti lt f Sh i th h t The Initiative uses a two-stage strategy: Stage 1 achieves realistic green results for Sharm in the short-medium term, while Stage 2 aims for a more radical green approach in the longer-term
The Initiative requires a cumulative investment of EGP 1.6 Bn over the next 10-years (above 2% of Tourism Revenue from Sharm annually) 48% of which offer strong returns-on-investment for local
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Source: Booz & Company analysis
y) gbusinesses and can thus be financed through the private sector
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The Pressing Need for ChangeThe Journey to Becoming a Green SharmThe Journey to Becoming a Green SharmNext Steps
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Global tourism market is responding to demand for eco-tourism,
Shift in Global Tourism towards Eco-Tourism
and successful tourist destinations are quickly becoming green
1,600
1,800Mn Tourists
4.0%
Global Tourism Demand- Mn Tourists; 1997-2008
Total World
1,000
1,200
1,400
, Total WorldTourism
400
600
800
14.9% Ecotourism1
0
200
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
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15% 19% 23% 24% 27% 29% 32% 33% 35% 38% 41% 45%% of Global
Note: 1) Ecotourism is referred to by the WTO as nature based tourismSource: World Travel and Tourism Council; The International Ecotourism Society; UNWTO; Locum Consulting; Booz & company analysis
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To effectively become environmentally sustainable and capitalize
Baseline Analysis Dimensions
on eco-tourism trends, a destination must address four key areas
Analysis Dimensions
Emissions
1
m
p
o
n
e
n
t
s
Water Supply
Emissions
2
n
a
b
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t
y
C
o
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pp y
Solid & Liquid Waste
Technology & Operations
Stakeholder Choices & Behavior
Regulations & Governance3
S
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a
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Bio-diversity
4
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Source: Booz & company analysis
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44% of carbon emissions in Sharm are locally driven, while 100% of Sharms energy supply is emission generating
Breakdown of Energy Supply in Sharm1
Carbon EmissionsA
Breakdown of Total Sharm Emissions - 2007 (Kt CO2)
Limited LocalI fl
Breakdown of Energy Supply in Sharm- in Bn MJ in 2007 -
27%Hotels
Influence Area of FullLocal Influence
1% Diesel1%
30%Fuel Oil2
68%Gasoline
56%Air Transport
11%Other
Natural GasDiesel%Gasoline
Total = 3.02 Bn MJ
3%2%
Infrastructure
Water TransportLand Transport
Avg. Global Energy SupplyOil 34%Coal 25%Gas 21%Total = 992 Kt
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Renewable 13%Nuclear 7%
20%Green EnergyNote 1) Excludes air transport and electricity (electricity is generated outside Sharm)
2) Source: CAPMAS; Booz & Company interviews; Booz & Company analysis
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Transport emissions in Sharm are higher per passenger km than benchmarks, mainly driven by taxis and local dive boats
Carbon EmissionsA
Average Land Vehicle Emissions- gm of CO2 per passenger km -
160Future land transport
options for Sharm International
Sharm-Hurghada
Trips3% 1%
Boat Fuel Consumption- Litres per Nautical Mile in 2009 -
140
11599
options for Sharm InternationalTrips 6.0
Max.
3122
LocalDivingTrips
97%
1.4
4.32.5
Avg.
22
Sharm Taxis
Italian and French Taxis
Battery Electric (Natural
Plug-in Hybrid
Battery Electric
(Renewable
Buses1
Sharm Diving Boat2Glass-bottom Boat
T t l CO2
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Taxis(Natural Gas)
(Renewable energy)
Note 1) Passenger load factor for buses is assumed at 60%2) Based on the daily distance traveled to Ras Muhammad (10 nautical miles) and Tiran Island (20 nautical miles) from Travco Marina
Source: How green is your diving? - divernet.com; On the road in 2035 MIT; Booz & Company interviews; Booz & Company analysis
Total CO2 = 34,424 tons
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similarly emission related to hotel energy consumption is both high relative to benchmarks, and rising per guest night
Carbon EmissionsA
37Alto Green Hotel1
Sharm Hotel Emissions vs. Guest Nights Growth Average Hotel Energy Consumption per Guest Night- MJ/GN; 2007 -
e
s
t
c
t
i
c
e
s
7251
140
Seychelles Islands
Majorca
Melbourne Green HotelsCO2e = GN * Energy/GN * CO2e/Energy
B
e
P
r
a
c
B
e
a
c
h
s
t
i
n
a
t
i
o
n
s
164225
212
Africa
Middle East
Sharm 2
CO2e =
25 7%
X XGN Energy/ GNCO2e/
Energy
18 0% C t t6 5%
B
D
e
s
y
n
t
244240237
226
North America
Caribbean
Asia and the Pacific
Europe 25.7% 18.0% Constant6.5%
A
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g
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b
y
C
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Note: 1) In Melbourne2) For Holiday Inn; Laguna Beach and Laguna Gardens Resorts
Source: Sustainable Tourism Project Report; UNWTO; Green Globe; Booz & Company analysis
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Water desalination in Sharm is energy intensive, while water wastage as well as water consumption per GN are relatively high
C
Water SupplyB
7 20%
%
Water Waste as % of Total Production- Sharm vs. Benchmarks -
- %; 2007 -
Water Waste as % of Total Production- Sharm vs. Benchmarks -
- %; 2007 -
Electricity Consumption in DesalinationBy Reverse Osmosis1
- KWh per m3 -
13%
7%5%5%
10%
SharmParisBerlinTokyo California Albuquerque2
4 Max
3
SharmParisBerlinTokyo California Albuquerque2
Average Water Consumption per Guest Night- Liters/GN; 2007 -
450416413
1 Min
Best Practice1Sharm
279149
Greece CaribbeanSharmSpain -Malta
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Note: 1) Libert, J.J., Desalination and Energy, Desalination2) Largest city in New Mexico - US. Albuquerque's climate is usually sunny and dry
Source: Quantum Sphere Inc; Governorates Environmental Affairs Office; Caribbean Alliance for Sustainable Tourism; International Tourism Partnership; UNWTO; Sustainable Urban Infrastructure, Siemens, 2008; www.cabq.gov; Booz & Company analysis
(Aegean Islands)
Balearic Islands
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Waste management practices in Sharm are significantly below acceptable standards, leading to negative tourist perceptions
Level 5Waste ManagementC
t
e
Level 1
S
o
l
i
d
W
a
s
t
Waste Collection and Transportation
Recycling/ Processin
g
Energy RecoveryDisposal
Waste Optimizati
on Prevention, and
minimization of Collection of
waste in closed Transportation of waste in Sorting and
recycling of Using waste to Disposal of
remaining waste Best-waste at main sources
carts or disposal bags
of waste in closed trucks
recycling of waste generate energyin a sanitary landfill
practice
Current Sharm Baseline
Waste is collected in closed carts and
transported in closed trucks
Dumping in desert in non-
sanitary landfill
q
u
i
d
W
a
s
t
e
2008 Breakdown of Liquid Waste Treatment Capacity
by Methodology46%54%
Minister of Housing issued a decree (no. 44 of 2000) that allows level-2 treated water to be used in irrigation1
In 2002 the Minister of Agriculture issued decree no. 603 allowing irrigation of inedible plants using treated wastewater
Filtration Chlorination
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Note: Executive regulations of law 4 of 1994 prohibit the emanation of bad odor from treated wastewaterSource: Governorates Environmental Affairs Office; Law 4 of 1994 and its Executive Regulations; Booz & Company analysis
L
i
q
100% = 42,805 m3/daywastewater However, Red Sea Governor recently prohibited use of
treated waste water in irrigation except after disinfection
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Sharm suffers from over-use of diving sites, significant above recommended levels, thus threatening the survival of coral reefs
Summary of Current StateBio-DiversityD
Prices for diving are low and not proactively managed
Regulation & governance are inefficiently applied
Demand is intense and threatening biodiversity
Market Economics Regulations & Governance
Summary of Current State
1 4 6
Sector Overview
Diving fees (USD 9) low versus benchmarks
Advanced divers willing to pay up to USD 18
Distribution of mandates across, MoT, EEAA & CDWS, Coast Guards & Marine Police is creating overlaps in regulation setting and poor enforcement
~80,000 dives and snorkel stops per site - 4x above internationally accepted levels
At current rate, dives expected to reach 172,000 by 2020
No fee plan across sites
Fees not collected consistently
Dive operators are sensitive to demand fluctuations
Capacity is not actively managed Infrastructure (moorings, marinas,
boats) cannot meet forecasted demand in 2015
2
5
Dive operators have high fixed costs ( ~70% ) which makes them sensitive to changes in demand volumes
Reefs are in good health due to their natural structure, yet threats to coral reefs will continue to intensify, mainly due to:
Shoreline construction (frozen)
3
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( ) Fishing Desalination sludge
Source: Booz & Company Analysis
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In summary, the current rate of environmental degradation in Sharm risks the loss of 16%-35% of tourism revenue in 10 years
Why Sharm Urgently Needs To Change NON EXHAUSTIVE
Tourism Revenuefrom Divers
Potential Loss due to Coral Reef Degradation
Tourism Revenuefrom Sharm
Total # of Tourists in Sharm
Tourists who visit Primarily for Diving
Avg. Companionsper Diver
Total # of TouristVisits at Riskin Sharm
2.3 Mn
x
Primarily for Diving
7 - 15%
per Diver
1.5
x x
Visits at Risk
0.4 - 0.86 Mn
Avg. Spendingper Tourist Stay
$780
Avg. Spending per Diver Stay
$636
Avg. Spending per Companion Stay
$780
Avg. Spend Per Diver& Companion Stay
$726
Total Revenue From Tourism in Sharm
$ 1.8 Bn
Total RevenueFrom Divers
$102-219 Mn
Total RevenueFrom Companions
$189-405 Mn+
Net Revenue at Risk
$ 291 Mn $ 624 Mn(16%) (35%)
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Source: Ministry of Tourism, Booz & Company analysis
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The Pressing Need for ChangeThe Journey to Becoming a Green SharmThe Journey to Becoming a Green SharmNext Steps
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Green Sharm team has successfully completed Phase II project design and with implementation pending
(2 th ) (6 M th ) O G i
Phases of Transformation into a Green Tourism Destination
Completed Completed
Phase IScoping & Target Setting
Develop Green framework for Launch high-priority projects Finalize the implementationK
Phase IIProject Planning & Design
(2 months) (6 Months) On-Going
Phase IIIMulti-year Implementation
Develop Green framework for Sharm
Baseline key environmental components (as-is situation)
Benchmark best practices in other tourism destinations
Launch high-priority projects identified in Phase I
Develop detailed transformation blueprint, e.g. Detail legal and/or regulatory
framework
Finalize the implementation roadmap to become a green destination
Secure public and private commitment
St t d d ll h d
Key Elements
other tourism destinations Identify key gaps in achieving
environmental sustainability Develop green strategy and key
strategic initiatives Develop a multi-year
Detail future investment needs, and study public and private financing opportunities
Outline delivery platform for key environmental components
Structured and well-phased implementation of all individual initiatives identified in Phase I and II
Ongoing monitoring of implementation progress
Develop a multi-year transformation plan
Identify projects that can produce change momentum
Phase and prioritize initiativesIdentify key success factors for
Initiate discussions on relevant public-public partnerships with key stakeholders
Build consumer demand approach to brand, market and promote green tourism in Sharm
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Identify key success factors for program delivery
green tourism in Sharm
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Outcome of Green Sharm Initiative Phase I was approved by H.E. Th P i Mi i t ith th l f hi 7 k t t b 2020The Prime Minister, with the goal of reaching 7 key targets by 2020
Green Targets for Sharm by 2020
G T t b 2020G C t
Emissions
1 a
Green Targets by 2020Green Components
Coral Degradation (% per year)
Emissions(Ktons)
128
323 5%Hotels Energy
172b
Reduce destination related emissions by 36% compared to business-as-usual.
Reduce Hotels energy consumption per
Water Supply
2 c
Liquid Water C d
323
505
48%
5%
L 1
Consumption(MJ per GN)
172184
212
b Reduce Hotels energy consumption per GN by 13%
Decrease water consumption per guest night for existing hotels by 13%, and for new hotels by 28%
Waste Management
3
d
e
qWasteIndex
Consumed(litres per GN)
L3L2
L 1413
359336
L3
L 120%
Reduction in water wastage in supply network by 75%
Achieve at least level 31) in solid waste management best practice (Level 5 is highest standard)Management
Bio-diversity
4
f
g
Water Waste(%)
Solid Waste IndexL55%
highest standard)
Achieve at least level 2 in sewage treatment best-practice (Level 3 is highest standard)
Reduce the rate of degradation of
Prepared for H.E. The Prime Minister of Egypt 14
y g
1) Level based on qualitative Booz & Company evaluationSource: Booz & Company analysis
gbiodiversity to 5% per year
Long-term Vision 2020 Target Baseline (2008)
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Reaching these targets requires undertaking 14 Programs (detailed i t 33 j t ) th t dd ll f (4) i tinto 33 projects) that address all four (4) greening components
Overview of Green Sharm ProgramsEach of the below programs has been further detailed
into a set of 33 Waste1 2 3 4
Green Air Access
Conservation of Bio-diversity
Effective Waste Management
i
ii
iii
interlinked projects Water SupplyWaste
ManagementBio-diversity Emissions
Effective Waste Management
Green Energy Infrastructure
Green Land Transport
Operational Efficiency Improvement for Hotelsvi
iv
iii
v
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P
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r
a
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s
Operational Efficiency Improvement for other Buildings
Green Building Design
Green Water Transport
vii
viii
ix
G
r
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n
Resilient Water Supply
Legislation & GovernanceEnabling programs are developed to ensure
implementation and increase effectiveness of all 10 green strategic programs so that all greening
Funding & Financing
Marketing & Branding
x
xi
xii
xiii
E
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components are effectively addressedMarketing & Branding
Awareness & Community Education
E
P
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Source: Booz & Company analysis
xiv
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Green Sharm Initiative - Phase II covered 17 projects that focus on i i h bi di it d lid t tpressing issues, such as bio-diversity and solid waste management
1 iiPhase II Project List
Develop Sustainable Diving Management StrategySet Standard for Technology Upgrade of Marine EnginesSet Measures to Reduce Excessive FishingSet Environmental Standards for Water Sports Operators Establish Effective Solid Waste Managementn
g
t
s
Conservation ofBio-diversityBio-diversity
1 ii
iiiEstablish Effective Solid Waste ManagementEvaluate & Develop Recycling PlanEvaluate & Develop Organic Composting PlanEvaluate & Develop Waste-to-Energy Conversion PlanSetup a Bus Rapid Transit System
G
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Effective Solid Waste Management
Green Land Transport
Waste Management2
vvi
Adopt Green Best Practices in Hotel Operations EfficiencyDevelop Eco-label Certification Program
Operational Efficiencyfor Hotels
Emissions3vi
xi
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P
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Legislation & Governance
Funding & Financing xii
xiii
Establish Green Council & Green CentreReview & Update Green LegislationCreate Green Funding StrategyInitiate Fundraising CampaignDevelop Tourism Marketing Center
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E
Source: Booz & Company Analysis
Marketing & BrandingDevelop Tourism Marketing CenterDevelop Branding & Marketing Strategy
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A comprehensive list of funding sources was evaluated to ensure th t ll j t d t l fi dthat all projects are adequately financed
Fund Sourcing FrameworkFinancingS Ch l Financing
ContributionSources Channels
Internal Financing
Green Center Generated Revenues Comments
Internal, or self-financing was Green Fees, Taxes & Fines
Multi-Lateral Orgs&
Intl Govs
Cor-porations
Philan-thropy
National Govern-
ment
Indivi-duals
considered to be the primary source of funding, including:
Green fees, taxes and fines that could be collected (e.g. diving fees)
R
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R
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Fundraising
Intl Govs
Special Events
Contributions
Sponsorship / Partnership Other revenue generated by Green Center activities (e.g. training fees)
External funding was considered to:
R
p
Capital Market
Financing
Private Sector EquityEquity Sourcing
Debt
Close gaps in required financing
Fill any cash-flow gaps
Provide supplementary funding (to iti t ti i k)e
r
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F
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s
e
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F
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Financing Debt Sourcing Debt (e.g. loans, bonds)
mitigate revenue generation risk)
E
x
t
e
E
x
t
e
Source: Booz & Company analysis
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To ensure implementation, about EGP 100 Mn. for must have G P j t f th i 3 ill b d dGreen Projects for the coming 3 years will be needed
Must Have Projects
Description 2010-2012 Funding Requirements (EGP Mn.)
Ensure smooth roll-out of Green Sharm Projects Review and update existing legislations Develop a comprehensive training and educational program Build human resource capabilities of protectorates
Green Center 37.3
p p
Implement Diving & Snorkeling Sustainable Capacity Management Launch desert conservation project and prohibit commercial fishing
Biodiversity 29.3
Develop Branding & Marketing Strategy for Green Sharm Establish a Tourism Marketing Center to coordinates national and international
marketing activities for Green SharmMarketing 17.0
Establish the Green Tourism Fund to secure financing for priority programs Launch fund raising campaign
Green Fund
Launch a comprehensive marketing & communications campaign for Green Tourism
11.0
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Launch fund raising campaign
Source: Booz & Company analysis
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External fundraising is currently being pursued from international d h h d i ifi t i t t i G ff tdonors, who have expressed significant interest in Green efforts
Fundraising Contributions2
Wave 1July - August
Wave 2September - December
GFMECDSolar Power Plant
JBIC
USAID
European Neighborhood Policy
Forum on China-Africa
Establish Green Center
Marine Engines
Solar Power Plant
World Bank
CTF
Forum on China-Africa Cooperation
African Development
Liquid Waste Management
Bus Transit System
Waste ManagementOthers
Bank
French Development Agency
Waste Management
Upgrade Water Supply
Establish Green Center
E t bli h G F d
Prepared for H.E. The Prime Minister of Egypt 19
Agency Establish Green Fund
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To ensure success of the Green Sharm Initiative, three (3) key f t d t b dh d tsuccess factors need to be adhered to
Success Factors for Green Sharm Initiative
The pioneering factor of the Green Sharm Initiative is driven by its holistic approach to greening. It is this holistic approach that will give Sharm the global leadership role that is required to attract international funding. As such the initiative needs to be launched in its entirety avoiding inclinations to cherry pick amongst projectentirety, avoiding inclinations to cherry pick amongst project
To ensure commitment and support for the green transformation journey from all relevant Ministries and stakeholders, the Green Sharm Initiative must be sponsored and led by the highest levels of government leadership. As such the establishment of a PPP-style Green Council chaired by the Prime Minister, and comprised of all related Ministers (Tourism, Environment, Aviation, Transportation,, etc.) and private sector leaders (Head of Egyptian Hotel Association and Head of Chamber of Diving and Water Sports etc)Hotel Association, and Head of Chamber of Diving and Water Sports, etc)
To ensure continuity and effective implementation of programs, a small team of dedicated full-time project managers must be assigned to the Green Sharm Initiative. As such the
t bli h t f G C t ti t th G C il i iti l f
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establishment of a Green Centre reporting to the Green Council is critical for success
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Prepared for H.E. The Prime Minister of Egypt