MENA’s Low-Carbon Energy Projects

The sectors include renewables (solar PV, wind, and hydro), hydrogen, nuclear, and waste-to-energy.

According to the report, solar PV has a 50% share by project value of planned and committed project investments, followed by hydrogen at 21%, nuclear at 14%, wind at 10%, and hydropower and waste-to-energy projects accounting for 5% of total projects by value.

On a MENA regional level, low-carbon energy projects are mostly concentrated in North Africa, garnering a 59 percent share, followed by 38 percent in the GCC and 4 percent in the Levant by project value.

The energy transition is prompting the largest global capital deployment since World War II, and private equity flow into the sector has passed $750 billion, yet outside developed economies, deployment is still slow and hesitant despite favourable government policies, the report noted, citing a lack of needed clarity on green energy regulations and high uncertainties in the macro and industry outlook as reasons.

According to APRICORP’s report, "crowded competition for green/clean energy investments has hence inflated asset valuations due to the willingness of international investors to accept lower returns on investments (ROI) on green projects, which discourages smaller regional investors from competing on new projects,"  the report noted.

MENA’s green finance market is moving towards the mainstream, with total issuance growing by a staggering 122 percent in 2021 on a year-on-year basis.

Approximately 45 percent of MENA power sector investments for 2022–2026 are in renewable energy, and green and sustainability debt issuance reached $18.64 billion in 2021, up from $4.5 billion in 2020, stated the report.

According to the report, MENA Energy investments, including renewables and clean energy, will continue to rise in 2023, fueled by high oil and gas windfalls.

Key findings of the report said the regional privatisation drive would continue in 2023 with increased public-private partnerships (PPPs) and initial public offerings (IPOs).

Regional energy players will continue to unlock value from their hydrocarbon assets while targeting synergies through PPPs in new energy technologies like hydrogen, ammonia, and carbon capture, utilization, and storage.

and $25 trillion in additional capital to be mobilised in the global sustainable finance market by 2030. In 2021, the Multilateral Development Banks increased their climate-related financing by 24 percent to $81 billion, out of which $52 billion went to low- and middle-income nations.

In 2020 and 2021, the MENA region witnessed milestone achievements for regional banks—including APICORP—in terms of ESG and sustainability, says the report.

According to ESCWA (the United Nations Economic and Social Commission for Western Asia), the estimated climate financing needs for MENA Arab countries top $570 billion, of which Egypt, Iraq, and Morocco alone account for $425 billion, and hence a chronic shortage exists.

The report concludes that there are possible ways of accelerating the deployment of climate funds from supranational, public, and private sources.

By Sumita Pawar