Yassin Nasri, is the founder and CEO of ImpactGulf
With a keen focus on renewable energy, nurturing startups and fostering a culture of social innovation, the UAE is undoubtedly a regional leader in embracing the transition to a low-carbon economy. While this momentum is undeniable, there are a few missing components that are necessary to build a comprehensive and powerful sustainability ecosystem.
The crux of this transformation begins at the pivotal intersection of startups and venture capital. It is at this juncture that pioneering green technology solutions are conceived and brought to life, and the groundwork is laid for fostering impactful investments that drive sustainability forward.
Potential of greentech in driving prosperity
The importance of greentech goes far beyond our collective mission of combating climate change and conserving our planet's resources. Sustainability bears a strong economic weight, representing a driver of growth and prosperity for society at large. According to Statista, the global green technology and sustainability market is expected to reach $62 billion by 2030. The robust growth of this market is a testament to the growing momentum towards environmentally friendly solutions.
The UAE's fervent embrace of green technologies has propelled it to the forefront of global sustainability efforts. Examples include the Green Hydrogen project at Mohammed bin Rashid Al Maktoum Solar Park, which is the first of its kind in the Middle East and North Africa (Mena) region to use solar power to produce hydrogen; as well as ADNOC’s Habshan Carbon Capture, Utilisation and Storage (CCUS) project, one of the largest integrated carbon capture projects in the Mena region. With ambitious targets to generate 75 per cent of its energy from clean sources by 2050, the UAE continues to prioritise the development and implementation of sustainable technologies, ensuring a greener and more environmentally conscious future.
Nurturing the startup ecosystem
Recognising the potential of startups in shaping a sustainable economy, the UAE has fostered a supportive environment for social entrepreneurs. Initiatives like Hub71 and the Dubai Future Accelerators programme have provided invaluable mentoring and financial support to startups, propelling innovative ideas toward successful implementation. The establishment of specialised free zones, such as Masdar City, the Dubai Silicon Oasis, and the Abu Dhabi Global Market, has also facilitated an ecosystem where startups can thrive, providing them with the necessary infrastructure and resources to scale up and flourish.
Piloting and impact investing
The UAE offers inventors and investors a great business environment with remarkable infrastructure, low taxes, a safe environment and a mentorship ecosystem. However, startups with cutting-edge technology need a project test environment and venture capital. In this context, it is essential to understand the crucial connection between funding and the emergence of unicorns in the startup landscape. According to Statista, the value of venture capital deals in 2020 shows a stark contrast: the US secured a significant $133 billion, the EU secured $33 billion, and the Mena region secured a comparatively modest $0.66 billion. Accordingly, the unicorn landscape in the startup ecosystem is indicative of this trend: the US boasts an impressive 697 unicorns in 2023, while the EU has only registered 65 and the Mena region has only a handful of unicorns.
Piloting involves creating a realistic testing ground in the UAE for evaluating green technology solutions in the real world (Technology Readiness Level 5+), with support mechanisms that facilitate collaboration with industry leaders and academic institutions.
The realm of impact investing, while gaining traction, demands a more concerted effort to develop a robust financial ecosystem that encourages and incentivises sustainable investment practices.
Establishing a conducive environment for impact investors to channel their resources into sustainable ventures is crucial to fostering a vibrant and self-sustaining green economy. Some of the concrete measures that can be suggested are to facilitate impact investing events, grant initial funding and assume partial risk of loss for bank loans and venture capital.
Lessons from Germany
As a German national with strong ties to the startup and greentech ecosystem in Germany, I have witnessed the rise of enabling bodies such as the German Federal Agency for Disruptive Innovation (SPRIND). SPRIND acts as a bridge between research and entrepreneurship, organises Founder Challenges on various innovation topics, invests in select companies, and gets involved in piloting and business development. A more conservative example is the Mittelständische Beteiligungsgesellschaften (MBG), private equity firms that support SMEs with equity or by taking on part of the risk of loss on bank loans.
Toward a more comprehensive sustainability framework
To consolidate their position as a trailblazer in sustainable development, key stakeholders in the UAE should join forces and proactively address the gaps in its sustainability ecosystem. This necessitates the formulation of concepts and strategies to engage universities and industry leaders in the process of testing and implementing innovative solutions, coupled with incentives that encourage responsible investments. Fostering stronger collaborations between public and private entities, as well as investing in research and development, will be pivotal in fortifying the country's efforts to achieve a fully self-sufficient and thriving green economy.
By implementing the above measures, we are laying the foundation for the emergence of cutting-edge green technologies, made in the UAE. However, we still need to work towards creating a regulatory framework, developing incentive measures and investing in education and awareness programmes to raise public awareness of climate and sustainability issues and, as a result, create a strong local customer base for green products and services. Ultimately, green companies will not succeed on a global scale unless they first succeed in their local market.