Energy investment in Middle East to reach US$175 billion in 2024

International Energy Agency report notes rising clean energy investment and burgeoning project pipeline as governments commit to ambitious net zero transition targets amid a fossil fuels dominated landscape.

A new report from the International Energy Agency (IEA) has valued energy investment in the Middle East in 2024 at around US$175 billion, with clean energy accounting for 15 per cent of the total. Globally, investment in all types of energy is expected to cross US$3 trillion for the first time in 2024, with US$2 trillion allocated to clean energy and the remaining US$1 trillion targeted for oil, gas and goal projects.

In 2023, combined investment in renewable power and grids overtook the amount spent on fossil fuels for the first time, however, the 2024 World Energy Investment report also highlighted that, despite two-thirds of global investment pegged for clean energy projects, the ‘record’ figure still falls short of the amount required to limit global warming to 1.5°C. 

In the Middle East, fiscal spend on fossil fuel supply historically dominates the region’s energy landscape, which is home to five of the world’s top oil producers: Saudi Arabia, Iraq, UAE, Iran and Kuwait. It is also a prominent producer of natural gas, with three of the world’s top 10 producers hailing from the region: Iran, Qatar, and the UAE.

Current data indicates that for every US$1 invested in fossil fuels, just US$0.20 is allocated to clean energy investment, which represents approximately one-tenth of the average global ratio of clean energy to fossil fuel investment. The IEA report noted that clean energy investment in the Announced Pledges Scenario (APS) is expected to more than triple by 2030, compared to 2024. Forecasted growth in regional energy investment could therefore translate to a figure of US$0.70 allocated for clean energy against the US$1 invested in fossil fuels, by 2030.

Out of the 12 Middle East countries in the report, five GCC nations are already working towards net zero emission targets, with Oman and the UAE committed to 2050, and Bahrain, Kuwait and Saudi Arabia looking at a dateline of 2060. Across the GCC and wider Middle East and North Africa region, the growing clean energy project pipeline spans solar PV, wind, hydropower and nascent clean hydrogen investment.

At national level, the UAE has also committed to reducing emissions by 19 per cent (against 2019 levels) by 2030. At the same time, in December 2023 it pledged US$30 billion in catalytic capital to launch a climate-focused investment initiative at COP28. Saudi Arabia, meanwhile, is targeting 130 gigawatts of renewable capacity by 2030, up from current capacity of less than five gigawatts.

Dii Desert Energy’s Renewable Energy Database, which tracks solar photovoltaic, wind and CSP projects in the MENA region with a capacity of more than five megawatts, tallies currently operational projects at 230, with 25 in the construction phase. In addition, in excess of 130 projects are currently in development, with more than 120 announced (including green hydrogen related projects). 

According to the analysis, this is led by project activity in Egypt, with the highest number of operational project (93) and the highest total number including projects in construction or earlier phase of development. Morocco, meanwhile, leads construction and development pipeline projects (33). The Sultanate of Oman also lists 22 announced projects, largely related to low emission hydrogen projects. 

In its recent A Green Revolution: A Socio-Economic Perspective on Renewables and Hydrogen in the MENA Region report, the independent think tank noted current regional renewable energy installed capacity of just under 27 gigawatts. The UAE is the frontrunner at 5.9 gigawatts of installed capacity, followed by Egypt (3.7 gigawatts) and Saudi Arabia (3.1 gigawatts). 

*Image Credit: Arab News