A report released by Greenpeace MENA – as part of the Ummah For Earth Alliance and the Global Ethical Finance Initiative – projected an annual renewable energy funding gap of US$5.7 trillion and that the Islamic finance sector is uniquely positioned to bridge this gap.
“To meet decarbonization targets in 2030, the world needs to triple renewable by 2030, requiring an average of about 1,000GW of renewable additional capacity per year,” Greenpeace MENA said in the ‘Islamic Finance and Renewable Energy’ report.
“This presents a US$30 trillion market opportunity equating to about US$5.7 trillion annually. Investments in renewable energy are expected to reach a record of US$2 trillion in 2024, approximately double the amount invested in fossil fuels.”
Forecasting that Islamic finance industry assets are projected to reach US$6.7 trillion by 2027, the Greenpeace MENA report added: “A strategic allocation of just 5% toward renewable energy and energy efficiency initiatives could mobilize approximately US$400 billion for climate finance by 2030.”
The ESG Sukuk market demonstrated unprecedented momentum in H1 2024, achieving US$9.9 billion in issuances – equivalent to the entire 2023 total. Sustainability Sukuk led this growth, comprising 63% of total ESG Sukuk issuance.
The MENA region is leading this transition, where UAE corporates issued a record US$3.9 billion in ESG Sukuk in 2023, while Saudi Arabia achieved over 300% increase in renewable capacity.
With Islamic finance principles naturally aligning with environmental stewardship, climate action, and sustainable investment, attracting both Islamic and conventional investors to renewable projects, said Greenpeace MENA Global Outreach Coordinator Nouhad Awwad.
“Islamic finance is more than an economic tool; it is a powerful catalyst for renewable energy investment, driven by faith values and the principles of balance and stewardship. It helps ensure that investments actively contribute to solutions rather than exacerbating the existing crisis.”
Countries like Indonesia, as the first sovereign green Sukuk issuer, and Malaysia are pioneering frameworks combining Islamic finance with global sustainability standards. The report also noted significant green policy developments in Bangladesh, Kuwait, Oman, Pakistan, Qatar, Saudi Arabia and the UAE.
Analysis of implemented projects funded through green Sukuk reveals comprehensive socio-economic benefits including:
- job creation across renewable energy construction and operations;
- enhanced energy security through grid modernization and smart metering;
- technology transfer and innovation in sustainable infrastructure;
- improved public health outcomes through reduced emissions; and
- strengthened climate resilience for vulnerable communities.
At the other extreme is Bloomberg reporting that the ambitious UAE fund Alterra, with a goal of mobilizing US$250 billion by the end of the decade, has so far managed to commit just US$6.5 billion out of the US$30 billion allotted to date.
CEO Majid Al Suwaidi said reported said the commitments are to seven strategies managed by BlackRock, Brookfield Asset Management and TPG Inc – with actual funds spent being significantly lower.
Majid noted a lack of investible deals in the energy transition, particularly in developing countries and emerging markets – a sentiment echoed by Jay Collins, vice chairman of banking and public sector at Citigroup Inc.
“We simply don’t have enough projects,” Jay said at the COP29 Climate Conference. “The enabling environment isn’t ready.”
