PART III: Abu Dhabi Sustainability Week & Masdar

Abu Dhabi Sustainability Week (ADSW), held in January, kicked off the major global sustainability events for 2022. The event brought together heads of state, policy makers and international business leaders to promote action on climate change both globally but also in the UAE and region. COP28 is also to be hosted by the UAE in 2023 with COP27 due to be hosted by Egypt later this year.

The ADSW event was hosted by Masdar reflecting the latter’s important role in the renewables sector in Abu Dhabi. Masdar was initially established in 2006 by Mubadala, one of Abu Dhabi’s sovereign investment vehicles, with the purpose of investing in the renewable energy sector. Masdar’s role will be further strengthened with the announcement that Mubadala is to combine its efforts in this area with Abu Dhabi National Oil Company (ADNOC) and Abu Dhabi National Energy Company PJSC (TAQA) by combining their portfolios under Masdar. The new partnership will focus on renewables and green energy. On completion of the partnership Masdar will have a portfolio comprising 23 GW of renewable energy capacity, aiming to reach 50GW by 2030 with aims to grow much further beyond that. TAQA will have a leading role in the renewables business taking a 43% stake and ADNOC will take a 24% stake with Mubadala holding the remaining 33%. ADNOC will lead in the green hydrogen business taking 43% with TAQA at 24% and the balance of 33% held by Mubadala.

Hydrogen is an area that is highlighted as for development with Masdar spearheading a number of projects. The UAE’s Energy Minister Suhail Al-Mazrouei, speaking at the ADSW event, noted that the UAE is targeting to gain around 25% share of the global hydrogen market. The UAE currently has 7 hydrogen projects underway with the first green hydrogen plant in the Middle East. Fitch forecast the global hydrogen market could grow to USD183bn in size in 2023 with continued growth expected, up from USD129bn in 2017. Al-Mazrouei went on to comment that the UAE will develop both blue and green hydrogen projects and that they have built the first Middle East green hydrogen plant which they are testing. Clearly, green hydrogen is an early-stage industry with work still to be done to make it cost competitive, but the UAE should be well positioned to succeed in the industry given its existing customer base and energy infrastructure.

For us, while the UAE’s strategic objective of net-zero emissions by 2050 is an ambitious target, that there are clear moves by key sovereign-owned/quasi-sovereign entities to promote renewables/clean/green energy projects and move in this direction underscore the goal's strategic importance.  

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Fixed Income Team