Khaled Al Khawaldeh (Abu Dhabi)
The UAE overtook Saudi Arabia to become the top investor in climate tech in 2024 according to a recent report from global consultancy PWC which revealed the country had increased its climate tech investments globally by 138% between 2023 and 2024.
According to PWC State of Climate Tech report, most growth came from an equity investment in Chinese electric vehicle (EV) manufacturer, Nio, by CYVN Holdings in Abu Dhabi as well as a $129 million mega deal in Zap Energy through the Government of Abu Dhabi during the same period.
The growth in investments saw the UAE become the largest global investor in climate tech in the region investing a total of $2.3 billion in the year after the COP28 summit in Dubai and the announcement of the $30 billion Alterra climate focused fund, based at Abu Dhabi Global Market.
"Despite short-term setbacks due to the global energy crisis and other geopolitical pressures that have resulted in lower investment in climate tech, we believe that, in the long run, climate tech will play a major role on the road to net zero," Noel Aoun, Group Chief Strategy Officer of Abu Dhabi's TAQA Group said in the report.
Nevertheless, the rise in funding coming from the UAE was simultaneous with an overall decrease in funding coming from the region. The report, which was based on pitchbook data, found that there was a 28% decrease in investment into global climate technology from the region and a 41% decrease in investments into the region.
Moreover, while capital outflows from the region remained high, it found investment by Middle East investors into scaling homegrown companies remained limited, making up just 1.2% of total climate tech investments.
In 2024, much of the emphasis was on mobility, particularly EVs which received a massive 84% of total investments in 2024, despite only accounting for 16% of emissions in the region. This was cited as problematic in the report, which recommended more technology driven investment in areas like energy and construction which made up an overwhelming amount in the region’s emissions.
"When we examine the climate tech stack, it becomes clear that investments are not always aligned with the priorities needed to achieve net zero. Sectors like agriculture, construction and manufacturing remain significantly underfunded," Vijay Bains, Group Chief Sustainability Officer at Emirates NBD, said.
The report found that the region had embedded itself as leader in AI-related climate technologies. AI-related climate-tech companies in the Middle East attracted $47.3 million in global investments in 2024, a significant increase from $5.4 million raised in 2023. Middle Eastern investments abroad in AI-startups were almost $6 billion.