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US investment firms see clean energy potential in Middle East

Renewable energy, wind turbines and solar panels
Nearly all of the US investment companies surveyed by Sapio Research already invest in renewable energy (Photo: Chuyu2014/Envato)

Half of US investment companies are ready to invest in renewables in the UAE, Saudi Arabia and Qatar, finds a survey, as experts warn these countries’ reliance on fossil fuels threatens their fiscal sustainability if they do not change course

Nearly half of US-based investment companies are ready to invest more in the Middle East if countries in the region show “a clear commitment at COP28 to hitting the international community’s climate goals”, show the results of a survey.

The study by London-based consultancy Sapio Research of 500 US-domiciled investment companies found that 41 per cent would invest more in clean energy and renewables in countries such as the United Arab Emirates, Saudi Arabia and Qatar if these nations pledged to do more to transition away from fossil fuels and towards renewables.

This figure rises to 50 per cent of the US investors surveyed if governments in the region “increase their own investments in and policy for renewable and clean technologies”.

Nearly all of the investment companies surveyed (88 per cent) already invest in renewables and most (75 per cent) have investments in the region, although the survey does not specify whether these investments are in clean energy or not.

Guy Prince, senior analyst for oil, gas and mining at non-profit Carbon Tracker, asked whether the UAE planned to “invest in the renewable energy system of the future or continue down an increasingly risky financial path of fossil fuel dependence”.

“The energy transition poses a major threat to oil and gas demand globally and therefore companies and investors must factor in the likely impact of lower, long-term commodity pricing on future revenues when they are assessing the viability of new developments,” Prince told Sustainable Views in a statement.

“A strategy aimed at maintaining, or even growing, production via significant new development and exploration is increasingly risky and could significantly erode shareholder value as the transition accelerates and prices fall,” he continued. “For oil and gas-dependent states, the impact of reduced demand and lower revenues will have implications for the states’ fiscal sustainability.”

International Institute for Sustainable Development policy adviser Natalie Jones focused on events at COP28 and their potential impacts on investment. “Global investors are training their eyes on the final outcome of COP28. Not only the UAE’s reputation, but its finances are at stake as the talks wind their way towards their critical final hours,” she said in a statement.

“Off the back of a year of record profits and as a peak in fossil fuel demand is ahead this decade, there is one-off chance for [Middle East and North Africa] countries to finally set the direction for a transition away from fossil fuels. Clearly, any such a decision will be rewarded with more foreign investment pouring in,” said Lisa Fischer, programme lead for energy systems at climate think-tank E3G, in a statement.

A service from the Financial Times