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Climate tech investments saw a 29% drop y-o-y in September, falling to USD 56 bn, according to PWC’s Climate Tech report. The drop registers investment levels below pre-2020 figures, with financing from regional investors following the trend, falling to USD 3.6 bn from USD 5 bn in 2023. The contraction in climate tech investors is the latest sign that the sector is catching up on the global cooling of venture investments, which has been ongoing for over three years.
The Gulf is leading: The UAE, Saudi Arabia, and Qatar invested big in the climate tech market, primarily through sovereign investment funds. The UAE increased its global climate investments by 138% between 2023 and 2024 and secured its spot as the top regional investor over the past 12 months. The major increase was mainly due to two major equity investments — CYNV Holdings’ USD 2.2 bn equity investment in Chinese EV manufacturer Nio and Abu Dhabi government’s USD 129 mn stake in nuclear fusion tech company Zap Energy. Saudi Arabia and Qatar are the next two top climate tech investors through the work of PIF-backed Ayar Third Investment Company and the Qatar Investment Authority. The three Gulf countries account for over 89% of the total investment from the region.
But there are more outflows than inflows: While MENA investors mobilize major climate tech capital, they funnel only a fraction into regional climate tech ventures. Only 1.2% of regional capital was invested in homegrown ventures.
International financing for regional climate tech is slowing: Global investment into regional climate tech sectors saw a 41% drop from USD 193 mn to USD 114 mn between 2023 and 2024, largely due to the global trend of decreased interest in green energy and mobility ventures. AI-related climate tech, however, increased almost ninefold to reach USD 47.3 mn.
China and Europe got a big chunk of it: MENA investments in China’s climate tech rose from USD 739 mn in 2023 to USD 2.2 bn in 2024, mostly due to China’s prowess in green technologies and EV production. Regional outflows into Europe rose this year from USD 217 mn to USD 273 mn, driven primarily by investments in the energy sector, GHG capture and storage.
Sector prioritization is off: Investments in decarbonization tech for high-emission, hard-to-abate sectors are still underfunded, such as industrial manufacturing and the built environment. Balancing out the “carbon funding gap” is pivotal to decarbonizing hard-to-abate sectors. Energy is another sector in need of more funding to address its 14% share of emissions.
EVs are getting lots of attention: Mobility accounted for 84% of the region’s global climate tech investment in 2024. Regional investors are targeting big industry players to work towards establishing a “robust homegrown EV industry.” In 2023. For example, PIF and Ayar Third Investment Company invested USD 2.55 bn and USD 1.5 bn in Lucid, respectively. Saudi Arabia has also allocated USD 39 bn to establish a domestic EV manufacturing industry and aims to transition 30% of Riyadh’s cars to electric by 2030.
AI is also on the regional radar: A lot of emphasis has been placed on AI climate ventures with Middle East investors investing USD 2.4 bn globally in AI-related climate tech this year, up from USD 969 mn in 2023.
REMEMBER- AI climate tech is picking up in the region: The UAE is planning to disperse funding for pioneering research projects on using AI to enhance cloud seeding efforts, and Masdar will use IdentiFlight technology to send signals to shut down wind turbines at its 500 MW Zarafshan wind farm in Uzbekistan if a bird in the area risks collision with it. Adnoc and Masdar also signed a collaboration agreement in November with Microsoft to advance AI tech and low-carbon solutions after the trio released a joint report highlighting the transformative potential of AI for the clean energy sector. Adnoc is earmarking USD 23 bn to invest in decarbonization, focusing on infrastructure and AI tech.
Some silver linings: Even though global investment in Middle East climate tech companies has decreased, the average funding per company has risen from USD 2.6 mn to USD 3.1 mn, meaning there might be a trend of less but bigger agreements. There is also a renewed interest in energy agreements by regional investors through a number of major acquisitions such as Masdar’s number of investments in the US, Spain, and Greece.
