Masdar To Issue A first Green Bond This Year

"This will allow international investors to join Masdar's green energy journey," Mohamed Al Ramahi, CEO at Masdar, said at the Abu Dhabi Sustainable Finance Forum on Thursday.

"We have the tools to meet our climate objectives; we believe we have the capital and  the solution, but it will take all of us working together to succeed," said Mr. Al Ramahi.

The size of the planned bond was not disclosed.

According to the Boston Consulting Group, the issuance of green bonds in the Middle East region grew by 38 percent between 2016 and 2020, and in 2020 alone, Middle Eastern governments drove 97 percent of green bond issuances, compared with 13 percent four years earlier.

"In these early stages of the climate transition, there is a critical need for patient, high-risk capital for investments in sectors whose paths to decarbonization are dependent on technologies that are still in the early stages of development, such as iron and steel, heavy road transport, and shipping," the consultancy said in a report this month.

The UAE has already committed $163 billion to reach net zero by 2050, while Saudi Arabia has pledged about $180 billion to meet its target by 2060.

Masdar will publish its first green finance framework "in the coming weeks,"  Mr. Al Ramahi said.

Last month, the company announced its new shareholding structure as part of a deal with the Abu Dhabi National Energy Company, better known as Taqa, Mubadala Investment Company, and Adnoc, along with the creation of a green hydrogen business unit, according to the report.

As part of the deal, Masdar is looking to aggressively expand and has set a renewable energy portfolio capacity target of at least 100 gigawatts by 2030, with the lion's share coming from wind and solar technology.

A global investment of $5.7 trillion per year is required until 2030 to meet our [climate] commitments, Mr. Al Ramahi said.

As the report mentioned, Masdar aims to add up to 10 gigawatts of new capacity this year and is considering acquisitions and new projects in different markets as part of its growth strategy, a senior executive told The National in an interview this week.

The additional capacity "will come from across all countries,"  said Fawaz Al Muharrami, executive director of clean energy at Masdar.

Masdar is currently active in more than 40 countries and has invested in or committed to invest in projects worth more than $30 billion, according to the report.

Bloomberg's Capital Markets League Tables showed earlier this month that the market for green and sustainable bonds and sukuk (Islamic bonds) in GCC economies set a record in 2022. This was because more banks and government-related entities joined the market.

The report said that total green and sustainable bond and sukuk issuances in the region last year reached $8.5 billion from 15 deals, compared with $605 million from six deals in 2021.

Saudi Arabia was the biggest issuer in the region, with more than half of the total volume. The UAE was the next biggest issuer, with the rest of the volume coming from them.

In 2021, all GCC issuances were generated by the UAE.

The Public Investment Fund, which is Saudi Arabia's sovereign wealth fund, put its first $3 billion green bond on the London Stock Exchange in October of last year.

The transaction was more than eight times oversubscribed, with orders exceeding $24 billion, the state-run Saudi Press Agency reported at the time. In November, Dubai Islamic Bank, the UAE’s biggest Sharia-compliant lender by assets, raised $750 million through the sale of its debut sustainable Sukuk, concluded the report.