Strategy& – Climate Tech Report, 2023

According to the '2023 Climate Tech' report by Strategy&, Middle East players have significantly increased their investment in climate technology outside of the region, despite a global slowdown in such investments. In the year leading up to September 2023, Middle East investors spent approximately $5 billion on global climate tech-related transactions, compared to an estimated $1.4 billion in 2022. Saudi Arabia alone accounted for over $3 billion of this spending. However, only a small fraction of this investment is flowing into climate tech companies within the Middle East. Investments in Middle East climate tech companies have declined by over 80% in 2023 compared to 2022, with fewer deals and start-ups attracting less funding. Most of the Middle East's global climate tech investments are going towards energy and mobility technology companies. Despite the decline in local climate tech investment, the Middle East region has the potential to become a leader in renewable energies and sustainable construction. Its geography allows for cost-competitive production of solar power, and building a renewables infrastructure could lead to the development of new sectors such as green hydrogen and low-emissions manufacturing. The report suggests that Middle East investors should focus more on funding local entrepreneurs, who are currently seen as the "missing link" in their strategy. Governments can assist by boosting the start-up ecosystem, creating mission-oriented funds, stimulating demand for innovative products and services, and encouraging private capital to play a larger role in developing the regional climate tech entrepreneurial ecosystem. Entrepreneurship is also encouraged to contribute to finding technological solutions to climate change.