Renewable Energy

Six UAE banks allocate $52bn for renewable projects

By Pramod Kumar

August 22, 2023, 7:09 AM

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Financial sector ‘plays pivotal role’
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$17bn of green sukuk and bonds issued

A total of AED190 billion ($51 billion) was allocated by six UAE banks for the financing of renewable energy, waste-to-energy and green technology projects in the years leading up to 2022.

The banks are First Abu Dhabi Bank, Abu Dhabi Commercial Bank, Emirates NBD, Dubai Islamic Bank, Mashreq and Abu Dhabi Islamic Bank, the UAE state-owned Wam news agency reported, citing data from the UAE Banks Federation (UBF).

The increased growth in green funding by UBF members aligns with the guidelines of the central bank’s sustainable finance working group and sector-wide sustainability objectives, which support the initiatives during the “Year of Sustainability” and the UAE’s hosting of Cop28.

UBF has launched a steering committee focused on environmental, social and corporate governance (ESG) issues and to boost the financing of green projects in the Gulf state.

Jamal Saleh, director-general of UBF, said: “Our financial sector is playing a pivotal role in helping the UAE achieve net zero emissions in line with the national climate change plan of the UAE 2050 and United Nations’ SDGs.”

The UAE is one of the first countries to include sustainability reports among the mandatory disclosures of public companies listed on the stock exchange.

The country’s banks and financial institutions have initiated the issuance of green sukuk and bonds worth AED62.4 billion ($17 billion) in recent years.

Sukuk are Sharia compliant bonds that were developed as an alternative to conventional bonds which are not considered permissible by many Muslims as they pay interest, and also may finance businesses involved in activities not allowed under Sharia law.

The UAE in July approved an updated national energy strategy and vowed to treble its renewable energy investment over the next seven years, investing up to AED200 billion, as climate experts warn the world is losing the race to reduce global warming.

The strategy aims to raise the share of clean energy in the UAE’s energy mix to 30 percent by 2031.

The UAE government also aims to reduce carbon emissions across the country by 40 percent by 2030, ahead of its net zero target in 2050.

In 2022, global investment in low-carbon energy transition topped $1 trillion for the first time – on a par with fossil fuels.

However, the Renewables 2023 Global Status Report, published in June, revealed that Africa and the Middle East combined represented just 1.6 percent of worldwide investment last year.

China accounted for 55 percent of total investment, followed by Europe at 11 percent and the US at 10 percent.

The report was compiled by REN21, a Paris-based organisation made up of scientists, governments, non-government organisations and industry experts in renewable energy, of which the UAE and Morocco are members.

The research found that, at a single percentage point, the Middle East recorded the lowest growth in renewables as a share of its electricity generation between 2012 and 2021.

The UAE is hosting the Cop28 summit later this year, which will mark the first global stocktake since the Paris agreement was signed in 2015.