Green Fi­nance Is On The Rise

Forbes Middle East - - CONTENTS -

This year, the global green bond mar­ket is ex­pected to hit $200 bil­lion, with a 20% growth rate com­pared to 2018, ac­cord­ing to a re­port by Moody’s. How­ever, green fi­nance is still in its nascent stages in MENA.

The U.A.E. is lead­ing the way in green fi­nance, tap­ping into green bonds, loans and Sukuk. First Abu Dhabi Bank (FAB) is­sued the first green bond in the re­gion for $587 mil­lion in March 2017. Then Abu Dhabi's Mas­dar signed the first green re­volv­ing credit fa­cil­ity (RCF) for $75 mil­lion in Septem­ber 2018, and most re­cently U.A.E. gi­ant, Ma­jid Al Fut­taim, is­sued the re­gion's first cor­po­rate Green Sukuk, val­ued at $600 mil­lion. Dubai Elec­tric­ity and Wa­ter Author­ity also launched a $27 bil­lion Green Fund in 2016 to fi­nance sus­tain­able projects.

Mean­while, green fi­nance has the po­ten­tial to play a big­ger role in fund­ing the GCC's am­bi­tious pipe­line of green projects. The U.A.E. and Saudi Ara­bia are ahead of other coun­tries in this area, ac­cord­ing to an S&P re­port ex­pec­ta­tion.

The U.A.E.'s En­ergy Strat­egy 2050 aims to cut car­bon diox­ide emis­sions of power gen­er­a­tion by 70%, in­crease the con­tri­bu­tion of clean en­ergy in to­tal en­ergy mix from 25% to 50%, and im­prove the con­sump­tion ef­fi­ciency of house­holds and cor­po­rates by 40% by 2050. Such a tran­si­tion will re­quire an in­vest­ment of $163.3 bil­lion over the next 31 years, which re­quires $4.6 bil­lion in in­vest­ments an­nu­ally.

Saudi Ara­bia has an­nounced plans to pick up to $50 bil­lion of new in­vest­ment in re­new­able projects by 2030. Since the first green bonds were is­sued in 2007, the is­suance has reached $521 bil­lion glob­ally, led by de­vel­oped coun­tries—the U.S. with $118.6 bil­lion, China with $77.5 bil­lion and France with $56.7 bil­lion, ac­cord­ing to the Cli­mate Bonds Ini­tia­tive.

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