UAE’s Masdar to issue green bonds

Green finance has the wind in its sails in the Gulf region. On 26 January, Masdar, Abu Dhabi’s renewable-based company, announced it would soon raise funds by issuing its first-ever green bond.  Only three months ago Saudi Arabia’s Public Investment Fund (PIF) made a similar move, raising EUR 2.7 billion via the operation, Masdar is expecting to raise EUR 700 million according to a report by Bloomberg. Even though no date is yet confirmed at this stage, reports indicate the issuance may occur during the second half of 2023. 

The money raised will fuel further investments in wind and solar energy projects as well as innovative hydrogen-based initiatives around the globe. Masdar, the United Arab Emirates’ biggest producer of clean energy, is aiming to grow its renewable energy production fivefold to reach 100 gigawatts by 2030. “Given the growth ambitions we have as a business and the pipeline we have in place, I would be expecting that we’re likely to be an annual issuer,” the company’s Chief Financial Officer Niall Hannigan said during an interview on the sidelines of Abu Dhabi Sustainability Week. 

The green bond issue falls within the larger framework of the Emirati government’s national strategy to achieve net zero emissions by 2050. Masdar’s new plans follow the announcement from the Abu Dhabi National Oil Company (ADNOC) regarding a EUR 14 billion investment in decarbonisation projects by the end of the decade. Masdar’s growth plans are also due to recent changes in its financial structure. In December 2022, Abu Dhabi National Energy Company, also known as Taqa (energy in Arabic), Mubadala Investment Company and ADNOC became official shareholders of Masdar. Through this new partnership, Masdar gains access to an expanded portfolio of clients as well as closer contact with the governments of the countries these national companies are already operating in.  Commenting on the new partnership, HE Dr Sultan Al Jaber, Minister of Industry and Advanced Technology, managing director and group chief executive of ADNOC, and chairman of Masdar said that “The Masdar clean energy powerhouse will unlock a new chapter of growth, development and opportunity for renewable energy and green hydrogen projects, both in the UAE and worldwide.”

Masdar’s growth plans also go on par with the growing demand for green energy worldwide. According to estimates, global renewable power capacity is expected to grow by 2 400 gigawatts between 2022 and 2027 to meet increasing global demand. By implementing its ambitious Green Deal, the European Union is aiming to become the first climate-neutral jurisdiction by 2050. To achieve this goal and preserve the competitiveness of its economy while ensuring sustainable growth, the EU is aiming to massively step up its use of renewable energy, including hydrogen-based solutions, as demonstrated by the cooperation agreements signed by Germany with the UAE in March 2022 for the delivery of hydrogen-based energy.