Unravelling the UAE Green Economy Initiative: A Quest to Harmonize Sustainability and Economic Growth

The United Arab Emirates’s “Green Economy for Sustainable Development” initiative, launched in 2012 by HH Sheikh Mohammed Bin Rashid Al Maktoum, Prime Minister of the UAE, seeks to create a harmonious balance between economic growth and environmental action. This strategic framework reflects the government’s vision to reduce the country’s dependence on oil, instead focusing on developing green technology sectors and fostering innovation through public-private partnerships. The initiative is aimed at positioning the UAE as a global leader in sustainable development and diversifying its economy through green technologies.

But given the nation’s historical propensity for industrialization through fossil fuels, we must assess its effectiveness in transitioning to a green economy model. Is the UAE truly empowering sustainability-oriented businesses and driving the development of green technologies?

While the initiative has been largely successful in incentivizing businesses to adopt green technologies and facilitating the diversification of the UAE economy away from fossil fuels, its impact is marginally constrained by challenges in infrastructure investment and the complex policy balance between industrialization and sustainability. Nevertheless, as the UAE strives for economic power within the emerging Middle East, the innovative push towards embedding sustainability into economic growth is a tantalizing strategy to evaluate.

On one hand, the UAE’s government has incentivized businesses working in green-technology through the Green Economy Initiative, empowering them to contribute to sustainable development in this form of state capitalism. This can be seen through the cultivation of a market conducive to sustainability, wherein the government’s central-planning enables collaboration with green startups. One example is the Abu Dhabi Sustainable Finance Agenda, a program within the Green Economy Initiative framework which provides grants for businesses with a sustainability-focused agenda. These incentives empower businesses through financial rewards for green commitments. This is supported by the Green Economy Report, which shows that 41% of UAE business owners believe government incentives are vital.

This emphasis on incentives can be evaluated from a state-capitalist standpoint, which values economic activity undertaken by the state. The incentive-based strategy of the Green Economy Initiative empowers sustainable businesses as the government introduces policies to encourage sustainable development, meaning companies have resources to implement green-technologies. The Green Economy Initiative’s efficacy in attracting investment also has a neoliberal dimension, which emphasizes unregulated market capitalism, suggesting a mixed economy model. UAE leverages neoliberalism by opening markets to foreign green startups, enabling the UAE to develop sustainably as these ventures align with national environmental targets.

Moreover, the efficacy of the Green Economy Initiative is evident in government-led diversification of the nation’s economy, by reducing reliance on fossil fuels and supporting sustainable development through green-technology. This is evident in Dubai’s Clean Energy 2050 vision, a target set by the Initiative which aims to generate 75% of the city’s energy from clean sources by 2050, reducing fossil fuel dependency that has burdened sustainability targets. The diversification of energy production empowers sustainable businesses, as the government provides them with the opportunity to facilitate green-technology ventures that would have not been feasible in a market monopolized by fossil fuel companies.

This is also seen in the example of Dubai’s Sustainable City, a green residential community. By supporting incorporation of renewable energy in a niche sector like housing, the government enables businesses like Sustainable City to thrive in the development of green-technology. From an economic sustainability perspective, which revolves around the pursuit of long-term economic growth, by embedding its Clean Energy Vision within the already-profitable private real estate sector through Sustainable City, the UAE can better accelerate green-technology industries.

Conversely, implementation of the Green Economy Initiative has been challenged by the extensive infrastructural investment required, impeding green-technology development. The UAE is finding it challenging to establish green-technology projects like Al Maktoum Solar Park and upgrade existing systems to improve sustainability, due to associated costs. From a perspective of state capitalism, which emphasizes involvement of the state in managing economic activity, investment into green-technology must be directed by the government to ensure adequate allocation of resources.

To evaluate, high investments needed to launch green-technology projects like Sustainable City challenges the efficacy of state-led central-planning propagated by the Green Economy Initiative, as government economic capabilities are limited. Instead, these high costs indicate the need for a more neoliberal approach of prioritizing foreign investment. This privatized perspective also has its flaws though, with the Middle East having the highest cost of capital for investors in renewable energy, with the state now focusing on using carbon capture/storage in fossil fuel plants as an intermediate step towards sustainable development. Moreover, the incentives provided by the Green Economy Initiative have remained vital in ensuring that despite costs, sustainable businesses remain competitive.

Furthermore, the Green Economy Initiative has struggled to balance the UAE’s rapid industrialization and environmental impact, disempowering sustainable businesses. This is portrayed by the nation’s energy-intensive core industries such as oil and construction, which have increased the UAE’s carbon footprint and contributed to greenhouse gas emissions. This industrial focus impedes the nation’s capacity to fulfill environmental targets by directing government support towards oil companies over sustainable businesses working in green-technology.

Thus, although UAE ranks 24th globally in citizen-reported wellbeing on the Happy Planet Index, it ranks 148th out of 152 nations on the ecological footprint metric. This is echoed in the Green Economy Report, which depicts that 29% of business owners in the UAE believe that the enforcement of sustainable policies is not adequate; by prioritizing traditionally crucial industries, the government cannot enhance competitiveness of new sustainable companies that require favorable policies to thrive. From the perspective of balancing sustainability with economic power, realist thinker Hans Morgenthau’s power politics standpoint suggests that acquiring greater economic power is in UAE’s interest, to surpass larger economies like Saudi Arabia on a regional level.

The Initiative’s economic diversification demonstrates the UAE envisions a future in which green-technology industries could extensively contribute to the economy. This view prioritizes empowerment of sustainable businesses as their green technologies enable the nation to pursue regional economic influence while maintaining environmental sustainability. This follows acclaimed economist Jeffrey Sachs’ development model which synthesizes ecology, economy, and equity. This is supported by the Ministry of Climate Change who emphasize a future where “businesses adopt sustainable practices but remain economically competitive”. Overall, the balance between industrialization and sustainability poses a challenge to UAE’s sustainable development, but green-technology cultivation in the private sector through the Green Economy Initiative helps address this.

Crucially, the initiative’s success lies in its ability to yield economic advancements from green companies, ensuring long-term sustainable development. To continue its economic rise whilst acknowledging and addressing the global need for sustainability, the UAE must continue investing in and veritably harnessing the power of a green economy.

Arnav Kedia (SEAS ‘28, CC’29) is a writer for the Columbia Emerging Markets Review studying Mechanical Engineering and Financial Economics. He is an aspiring consultant, passionate about the intersection of technology, business and sustainability. Arnav is particularly interested in the potential for sustainable development in his home country of the UAE and the wider Middle East.

Sydney Smith (Trinity / GS ‘26) is a managing editor for the Columbia Emerging Markets Review studying classical civilization. She is interested in clean energy in emerging economies, as well as geopolitical analysis.