How Middle East’s SWFs are driving the green energy transition 

The Middle East plays a strategic role in the global energy transition - pioneering low-carbon, hydrogen-driven circular economies, developing sustainable destinations and reshaping supply chains through localisation. The GCC countries are setting forward-thinking climate agendas, with Bahrain and Saudi Arabia targeting net zero emissions by 2060 and Oman, Qatar and the UAE committing to achieve this even sooner, by 2050.

Underpinning these ambitions are visionary national strategies: Saudi Arabia’s Vision 2030, for example, aims to generate 50% of its electricity from renewables,¹ while the UAE Energy Strategy 2050 targets a threefold increase in renewable energy contribution to 14GW by 2030.² These targets reflect a region-wide shift toward cleaner, more sustainable energy systems as part of a broader move away from fossil fuel dependency. 

At the COP28 summit, the UAE’s President, His Highness Sheikh Mohamed bin Zayed Al Nahyan, reaffirmed this commitment with an initial commitment of US$30bn to Alterra ³ to fund clean energy and climate projects globally, aiming to mobilise US$250bn by 2030. The UAE’s extension of the Year of Sustainability into 2024 further signaled the region’s long-term green vision. 

The Middle East Sovereign Wealth Funds (SWFs): Key drivers of sustainable strategies across the region 

At the heart of these sweeping changes are the region’s largest sovereign wealth funds (SWFs). These institutions have acted as both global and regional catalysts for innovation and sustainable growth. They continue to play a pivotal role in financing the energy transition, enabling breakthrough innovation and shaping the next era of sustainable economic development.

According to the Invesco Global Sovereign Asset Management Study (IGSAMS) 2023, a notable 90% of Middle East SWFs now have sustainability embedded in their core strategies.⁴

Top priority sectors for Middle Eastern SWFs are closely aligned with their respective national strategies for economic diversification and future-readiness. Among these, renewable energy stands out as a focus area, with investments in solar, wind and green hydrogen projects aimed at supporting the global energy transition and reinforcing the region as a leader in clean energy.

As a key SWF in the Middle East, Saudi Arabia’s Public Investment Fund (PIF) is committed to remain at the forefront of promoting the global clean energy transition.⁵ It has conducted the largest-ever voluntary carbon credit auctions worldwide, selling 3.6m credits to international companies.

According to PwC analysis, in 2024 there was an active participation of SWFs as unique investors in global climate tech,⁶ amounting to US$3.55bn in 2024. In the area of e-mobility and autonomous vehicles, Abu Dhabi government-owned investor CYVN, for example, invested US$2.2bn in Chinese manufacturer Nio - marking a significant contribution to autonomous vehicles within the AI-driven smart mobility segment. Ayar Third Investment Company, a subsidiary of Saudi PIF, also invested US$750m into American automotive manufacturer, Lucid while Qatar Investment Authority strengthened its overall investment with some of its notable investments being in the energy sectors of the UK and the US. 

Expanding global footprint, building long-term value

Beyond their growing commitments to e-mobility, sovereign wealth funds (SWFs) in the Middle East are strategically expanding their global sustainability-focused investment footprint, actively supporting global decarbonisation and clean energy initiatives. 

Abu Dhabi is making bold, strategic investments in the global energy transition, allocating billions of dollars toward renewable energy, low-carbon technologies and decarbonisation efforts. Central to this push is Masdar, which leads renewable projects worldwide. A key enabler of the UAE’s sustainability agenda and climate action (jointly owned by ADNOC, TAQA and Mubadala), has invested in numerous renewable energy projects globally in more than 40 countries across six continents with a combined capacity of more than 51GW.⁷ This includes a 49% shareholding in the North Sea 3GW Dogger Bank South project – one of the world’s largest planned offshore wind farms.⁸

Masdar’s investments have also created entry points into advanced markets and technologies. Mubadala Energy’s US$13.5bn investment in sustainable biofuels in Brazil,⁹ is also a case in point. The move aligns with the company's broader strategy to advance energy transition and decarbonisation across its 11-country portfolio and reflects a shift toward future-oriented, low-carbon energy solutions.

These efforts align with the UAE’s Energy Strategy 2050 and are further supported by the ALTÉRRA platform, aimed at accelerating climate finance in emerging markets. Collectively, they reflect Abu Dhabi’s commitment to economic diversification, climate leadership and enhancing global energy access.

In the region, the Oman Investment Authority (OIA) has invested in US-based Electric Hydrogen (EH2),¹⁰ a company producing cutting-edge electrolysers to accelerate low-cost green hydrogen production - part of OIA’s wider push to align its portfolio with Oman’s green hydrogen strategy. 

In South Africa, the Qatar Investment Authority (QIA), through its joint venture with Enel Green Power RSA, has signed long-term Power Purchase Agreements to supply 330 MW of renewable energy¹¹ to major South African industrial players. The initiative, comprising wind farms in South Africa’s Eastern Cape, reflects QIA’s commitment to ESG integration and the global low-carbon transition. 

These investments reflect a coordinated strategy by regional SWFs to capture long-term value from the energy transition, build technical and operational expertise and reinforce the resilience of the region. 

However, despite this strong global footprint, there is a pressing need to intensify investment within the region itself - particularly in hard-to-abate sectors such as industrial manufacturing, FALU (Food, Agriculture and Land Use) and energy. While the global investments in EV are powering the Middle East’s e-mobility ambitions with tangible benefits, such as enabling technology transfer, fostering knowledge spillover and creating high-skilled employment opportunities within the region.

Targeted domestic investment across other critical sectors is now critical to achieve regional decarbonisation goals and unlock sustainable growth from within.

From traditional capital allocators into strategic enablers of sustainable finance

Regional SWFs are evolving from traditional capital allocators into strategic enablers of sustainable finance, embedding sustainability into core investment practices and using their long-term investment horizons to drive and capitalise on the global green transition. For example, Abu Dhabi’s Masdar has successfully raised US$1bn through its second green bond issuance under its Green Finance Framework.

In the last few years, many of the largest regional SWFs have appointed chief sustainability officers or heads of sustainability, with some integrating ESG considerations into their due diligence mandates. Advanced funds even use ESG “scorecards” when assessing deal viability and scrutinising investments that don’t meet sustainability standards. 

With longer holding periods and less pressure to deliver short-term returns, SWFs are uniquely positioned to lead green investments and green technology.

Saudi Arabia’s PIF for example has signed an MoU with French energy giant Engie for the joint development of green hydrogen projects and its derivatives in Saudi Arabia^.12 Also, in recent news, PIF-backed utilities giant ACWA Power and Badeel - an Aramco subsidiary, have signed power purchase agreements for renewable energy projects totaling 15GW in capacity. The projects include solar power plants and wind farms in the Kingdom - a significant boost to Saudi Arabia’s clean energy infrastructure and its growing renewable energy portfolio.¹³ 

New vehicles like the globally diversified Abu Dhabi-based conglomerate, International Holding Company (ADX: IHC), have announced 2PointZero, committing Dhs100bn to green investments.¹⁴ 

This positions regional SWFs not just as financial backers but actively shaping the future of green innovation, sustainable development and global energy transition.