Middle East Needs Stronger Policies To Tap Into $900bn Green FDI Flows, Energy Expert Says

Yahya Anouti’s, Partner and Lead of Energy, Resources and Sustainability practice at Strategy& Middle East, comments came on the sidelines of the Future Investment Initiative (FII) summit in Riyadh this week, as he called for stronger policies and regulations to attract international capital.

The region has seen limited green investment flows compared to Europe and the United States despite offering the world’s lowest renewable energy production costs, he said.

“If we looked at the large ones above the 1 billion, there are $0.9 trillion flowing in the last five years around and while this region has the green advantage, we’re not seeing green flows. We don’t see green investments happening to that much of the green advantage,” Anouti said.

The region’s competitive edge is particularly striking in renewable energy costs. Solar and wind power projects in the Middle East produce electricity at around $0.03 per kilowatt hour – among the lowest rates globally, according to a recent report.

This cost advantage, combined with abundant land availability and favourable climate conditions, positions the Middle East to potentially become a global hub for green manufacturing and data centers, he added.

“It’s not only about green electrons, the electricity that will be green, but we can produce green molecules like steel, aluminum, titanium that goes on the plane and so on, and you name it, in terms of clean manufacturing,” Anouti said.

The growing energy demands of AI make this opportunity particularly significant. “Today, a search in ChatGPT consumes 10 times more energy than a Google search, and we are at the start of the AI agenda,” Anouti noted.

Speaking about individual markets, Anouti highlighted Saudi Arabia’s unique position. “Saudi has the hydrocarbons advantage. You have the mix of oil and gas, and also the renewables that are coming on sea. And with this complimentary mix, you can go for many colours of hydrogen,” he said.

The UAE is also making progress in its green transition. “[In the UAE, there have been] big announcements around the hydrogen infrastructure at the federal level [and on] the net-zero transition and the energy mix,” Anouti added.

However, unlike Saudi Arabia’s large domestic market, the UAE needs to be more export-oriented to make its green initiatives economically viable, he added.

Regarding regional net-zero targets set for 2045-2050, Anouti said that while plans are moving in the right direction, implementation remains the key challenge.

The region contributes less than 10 per cent to global greenhouse gas emissions, but Anouti sees this transition as more than just an environmental imperative.

“I see it as a green economic growth opportunity to have the hydrocarbon agenda plus with the green growth where we become exporters of green power,” he explained.

He emphasised the region’s potential to help decarbonise industrial processes globally. “If I move that production [of steel] to Saudi Arabia, [we’re] helping the world decarbonise so we have a higher sense of mission to help the world with decarbonisation through becoming a hub of green manufacturing,” he said.