Financing the Future of Energy is the hot topic in Middle East financial circles right now.
Governments around the world are keen to break from carbon based energy - global demand is far outstripping the supply and last year it was found that closing this gap would require US$48 trillion of investment over 20 years. Renewables must play a large part in the energy mix of the future.  

Until recently the Middle East had been slow to join the renewable energy movement, but, surprisingly, in some ways they are now taking the lead. One of the area's biggest banks, National Bank of Abu Dhabi (NBAD), has committed $10 billion to finance sustainable activities over the next 10 years, putting green energy at the forefront of financing across the West-East corridor.
A key question to Middle East finance groups, and the main area of debate at the recent Global Financial Markets Forum in Abu Dhabi (GFMF), was whether low oil prices would affect the move to support sustainable energy. Happily, this was not thought to pose a problem, as green energy requires a different approach to investing with stable returns over the long term. In oil's case, it's only the price per barrel (to the end consumer) that is low, not the overall production. In fact, the cost competitiveness of clean energy is encouraging governments to turn to it as a hedge against the volatility of fossil fuel prices.

Only in one area does oil still beat clean green; transport as Middle East still in the slow lane for green transport reform. Even here it's likely that electric vehicles will eventually overtake, offering a solution to pollution problems that are causing world-wide health problems, the killing of crops, acceleration of global warming and acid rain.

Globally, the economic development of the MENA region has particular importance to the green energy movement because this is where the largest new demand will come from. It currently has the highest carbon intensity of any global region and its demand is expected to grow by 8.3 per cent a year: more than 3 x the global average.

While the economies of this region have been built on oil and gas, and that will continue for the foreseeable future, it is clear that renewables will become a significant part of the energy mix.

There are many success stories and some records in 2016 Financing the Future of Energy Report, with solar prices falling by 80 per cent in six years, on-shore wind by 40 per cent, and the Middle East is now part of that upswing; Dubai has set a new world record  for solar costs; less than 5cents per KW Hr; competitive with oil at US$10/ barrel - and gas at US$5/MMBtu.

Who'd have thought the area known for gas and oil would be investing in clean energy? Yet even here, the future's starting to look green.

Sponsored article