The GCC stands at a crossroads in its economic diversification journey, with a new report showing the region has significant untapped potential to attract climate-aligned foreign direct investment (FDI).
While more than $1 trillion in global green FDI flowed into projects between 2020 and 2024, the UAE, Saudi Arabia, and Oman together captured just $24 billion — or 2 per cent — of the total. This modest inflow contrasts sharply with the $132 billion the three countries invested abroad in green projects over the same period, highlighting a gap the region is now determined to close.
The analysis by Strategy& Middle East, based on more than 100 large-scale FDI deals exceeding $1 billion each, categorises green investment into hydrogen and ammonia, renewable power, green industrials and chemicals, batteries, electric and hydrogen vehicles, sustainable construction, and carbon capture. The findings reveal that 53 per cent of all major cross-border investment in the period went into green sectors, with hydrogen, renewable power, and batteries alone accounting for 80 per cent of flows. The momentum peaked in 2022–2023 as post-pandemic recovery boosted climate-aligned spending, though inflows remained strong in 2024 at $158 billion, nearly triple the level of 2020.
Despite capturing a small share of this trillion-dollar wave, the GCC has notable advantages. The region offers some of the world’s lowest renewable energy costs — six of the ten lowest-cost solar projects globally are based in the Gulf. Combined with ambitious net-zero pledges by Saudi Arabia and the UAE, and Oman’s emergence as a green hydrogen hub, the region has the foundations to become a prime destination for climate capital.
Saudi Arabia attracted the largest share of regional inflows at $12.6 billion, while Oman secured $8.9 billion, including two major Indian-backed projects in green ammonia and green steel. The UAE also drew in deals in hydrogen and electric vehicles, supported by its Sustainable Finance Framework. On the outbound side, GCC capital has largely targeted hydrogen and ammonia projects in North Africa, notably Egypt and Mauritania.
“Climate concerns and government incentives have created an investment surge that is reshaping the global economy,” said Dr. Yahya Anouti, partner at Strategy& and leader of its Energy, Resources and Sustainability practice in the Middle East. “The GCC is uniquely positioned to benefit, possessing bold net-zero ambitions and some of the world’s cheapest clean energy sources. Yet, more can be done to fully capture the momentum of global green investment.”
The report also draws comparisons with global peers. In the United States, the Inflation Reduction Act (IRA) has triggered a surge in climate-aligned investment across renewables, batteries, and clean vehicles, while Europe’s Green Deal is driving large-scale investment into sustainable industries. Relative to GDP, the GCC’s inflows lag behind such regions, with Oman as the only country close to matching international benchmarks.
To unlock its green FDI potential, Strategy& outlines four strategic priorities: landmark policy reforms, investment de-risking tools, green industrial development, and smarter outbound investments. Policy reforms would include climate-forward manufacturing laws, emissions reporting, and enforceable product standards. De-risking tools such as long-term offtake agreements, expanded green bonds, and dedicated clean-tech funds could help attract investors wary of project risks. Meanwhile, green industrial development could position the GCC as a leader in hydrogen, low-carbon materials, and circular economy ventures by leveraging its abundant low-cost renewable energy. Finally, targeted outbound investments in global clean-tech hubs could allow the GCC to bring capabilities and co-investment opportunities back home.
Several countries are already moving in this direction. Saudi Arabia has launched a Green Financing Framework and issued $1.7 billion in sovereign green bonds, Oman has signed a pioneering green hydrogen offtake agreement, and the UAE is embedding climate finance priorities through its Sustainable Finance Framework. These steps, experts argue, are just the beginning of a long-term shift that will determine how effectively the GCC integrates itself into global climate capital flows.
“The green transition is redefining how and where industries grow,” said Devesh Katiyar, partner at Strategy& Middle East. “As climate capital remains a fixture in global markets, the region must play a greater role in not only deploying capital but attracting it. That means embracing regulatory clarity, incentives, and de-risking mechanisms to channel more funds into the Gulf.”
