Climate technology start-ups in the UAE attracted about two thirds of total funding from 2018 to 2022 to lead the burgeoning sector's growth in the Middle East, North Africa and Turkey region, a report has shown.
About $401 million, equivalent to 62 per cent of the total regional investments of $651 million, went to companies based in the Emirates during the five-year period, start-up data platform Magnitt said in its State of Climate Tech Venture Capital Report.
Turkey came in second with $124 million, or about 19 per cent of all deals, followed by Saudi Arabia with $68 million (10 per cent), Egypt with $42 million (7 per cent) and Tunisia with $6 million (1 per cent), the remainder spread out among other countries in the region, the report said.
Funding for UAE climate tech start-ups grew at a compound annual growth rate of 120 per cent for the five-year period, which was double that of second-place Turkey's 60 per cent, the report said.
A total of 148 start-ups across Mena and Turkey received climate tech investments.
The momentum has continued into 2023, with 30 transactions and investments of $40 million recorded in the first half of this year, Magnitt said.
The UAE's growing climate tech start-up ecosystem is in line with the country's efforts to push sustainability initiatives as it prepares to host the Cop28 climate change conference next month, said Badr Jafar, chief executive of Crescent Enterprises, which collaborated with Magnitt on the report.
“Although venture investments within the climate tech sector represent a relatively small portion of this overall investment activity … it is a sector that is steadily growing,” said Mr Jafar, who is also Cop28 special representative for business and philanthropy.
It is also an opportunity to address a major gap in the industry: in the global context, existing technologies have the potential to mitigate 65 per cent of all emissions, leaving 35 per cent that can be reduced through “technologies that are yet to achieve commercialisation and scale”, he said.
“With the region hosting two consecutive editions of the UN's Cop, the upcoming Cop28 [and the] UAE's ambition to unite, act and deliver on climate action provides a major opportunity to showcase our region's climate tech start-ups while directing significant capital towards addressing the gap,” Mr Jafar explained.
Technology geared towards climate change has steadily grown over the past years as countries and industries around the world collaborate to reach their sustainability goals.
Start-ups have a key role to play, as they work to pitch and develop new ideas using the latest innovations to solve real-world problems.
Globally, however, investment in climate techhas fallen by 40 per cent over the past year as investors focus on funding ideas with the greatest potential, consultancy PwC said earlier this month.
“Climate technology has emerged as a powerful tool in driving innovation, facilitating the transition to a low-carbon economy and supporting global efforts to combat climate change and adapt to its impacts,” Majid Al Suwaidi, director general and special representative of the UAE for the Cop28 presidency, wrote in the report.
“Start-ups, investors, incubators, policymakers, decision-makers and other stakeholders are leveraging climate tech to aid the decarbonisation drive worldwide.”
In the 2018-2022 period, the number of deals for climate tech start-ups across the Mena and Turkey region reached 225, with Turkey coming first with 80, followed by the UAE with 45, Egypt with 34, Saudi Arabia with 21 and Lebanon with 10.
The horticultural sector received the lion's share of funding with $288 million, or 44 per cent of the total, boosted by Abu Dhabi-based Pure Harvest Smart Farms' $181 million funding round last year, Magnitt said.
Rounding out the top five sectors are renewable energy with $118 million (18 per cent), micromobility with $71 million (11 per cent), farming with $46 million (7 per cent) and the circular economy with $25 million (4 per cent).
The renewable energy sector led by number of deals with 39, followed by farming (35), waste management (29), horticulture (14) and responsible consumption and production (14).