Next-Generation Climate Tech Finds Investment, Innovation in the UAE

Achieving the goals of COP28 in the UAE—accelerating the energy transition by tripling renewable capacity and doubling hydrogen production, transforming climate finance, and putting global health at the center of the climate agenda—will require significant investment in technology.

BNEF suggests annual green investments will need to nearly triple to $6.9 trillion by 2030 if we are to have any hope of hitting net zero by 2050. Fortunately, investors are rising to meet this challenge.

Venture capital investment in climate tech reached a record $70.1 billion last year, according to HolonIQ Global Impact Intelligence. 

These investments are increasingly focused on expanding the frontiers of climate technology, and some of the most innovative startups have found a home in the UAE—but with a scalable offering that they are exporting to the world. These Abu Dhabi-based companies are developing ideas and technologies that are addressing critical climate issues, such as creating credible carbon markets and helping the most vulnerable communities respond to health challenges created by climate change.

“The United Arab Emirates and Abu Dhabi is such a unique place to work because there is so much opportunity,” says Amy Lehoczky, Director of ESG at health-tech company M42. “They love innovation, they like trialing and testing different solutions. And that's what I find really unique here.”

M42, founded by G42 and Mubadala Investment Company, is a first-of-its-kind integrated health tech  company headquartered in Abu Dhabi that has a global footprint across 27 countries. Through the coming together of G42 Healthcare and Mubadala Health, M42 combines world-class patient care with healthcare technology and AI to bridge the gap between technology, sustainability and healthcare and to respond to healthcare challenges of a changing natural environment.

These increased health risks are severe. According to the World Health Organization, climate change is expected to cause approximately 250,000 additional deaths per year between 2030 and 2050, from malnutrition, malaria, diarrhea, and heat stress.

M42 brings together patient data with environmental data so that leaders and policymakers can make better decisions on where to focus their efforts to have the maximum impact on improving health outcomes, according to Dr. Wael Elamin, Medical Director of M42.

"What we're doing at the moment is like building a public library, " Dr. Elamin says of M42's work with healthcare data and AI. "We're at the stage of building the equivalent of the Alexandria library in terms of knowledge of chemistry and biology.”

The Abu Dhabi based global sovereign investor Mubadala Investment Company is also supporting innovative solutions to climate finance through its investment in ACX (AirCarbon Exchange), a digital environmental exchange that is using its proprietary technology to revolutionise the voluntary carbon trading market.

“In a world where there potential greenwashing and reputational risk are embedded in every carbon credit transaction, it is hugely beneficial to have a platform where the project data is immutably connected to the underlying transactions,” says Bill Pazos, co-founder of ACX.

“The UAE is not afraid of innovation, and that's something that's really exciting,” Pazos says. ‘Using cutting-edge technology within a regulated environment helps us accelerate the fight against climate change.”

By mid-century, BloombergNEF projects voluntary carbon markets could grow to anywhere from $160 billion to $624 billion annually. Pazos says the UAE’s recognition of carbon as a regulated asset class is an advantage in this market because banks and ACX’s other financial institution clients want to trade in a fully regulated market.

The next generation of climate technology is helping to bring us closer to meeting the goals of COP28 and achieving a sustainable future. These startups are moving beyond traditional solar and EV solutions into promising new technologies around energy storage, next-generation fuels, food and agriculture and many other exciting fields.

Direct government funding is critical to market creation, according to Bloomberg, but this funding can’t match the pool of finance accessible to development institutions or the private sector. Investors with a long-term horizon like Mubadala are essential to supporting the development of new climate technology.

For companies like M42 and ACX to succeed they need investment, access to talent and an environment that supports innovation and new solutions, and they are finding these qualities in the UAE and Abu Dhabi.

“The UAE is not afraid of innovation, and that's something that's really exciting,” Pazos says. “We're using the technology, we're using the innovation from a regulatory standpoint, and all of that together allows us to accelerate the fight against climate change.”