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UAE construction strives to decarbonise

29 June 2023

There are several reasons for the UAE construction sector to decarbonise. The most compelling stand in stark contrast to each other. On one hand, the industry is a significant contributor to the national economy. On the other, it is one of the biggest contributors to global greenhouse gas (GHG) emissions.

This discrepancy makes it inevitable that the industry will have to adopt more sustainable practices.

“Can UAE construction truly achieve decarbonisation? Yes, in the long term,” says Craig Thackray, vice president – environment MEA at US-based consultancy Aecom.

“Today, it is more a matter of when this would be realistically achievable.”

A report by the Arab Monetary Fund in 2022 highlights that the construction sector contributed almost $39bn to the UAE’s GDP in 2021, accounting for 9 per cent of the nation’s $402.9bn GDP that year.

The sector is also linked to every other major sector in the UAE: it is the starting point for industries through the construction of physical environments and supporting infrastructure.

In the UAE, construction is synonymous with innovation and growth, enabling world-class projects such as the Burj Khalifa, Palm Jumeirah, Louvre Abu Dhabi and Dubai Metro.

As the country’s real estate sector enjoys demand growth, its construction players reap the benefits. Recent months have seen project announcements including Al-Habtoor Group’s estimated AED9.5bn ($2.6bn) residential developments, the AED1.2bn Upper House project by Dubai Multi Commodities Centre in partnership with Ellington Properties and the $5.4bn mixed-use Dubai South project announced by Azizi Developments. All of these represent major opportunities for contractors and their suppliers.

Environmental impact

Against all its positive contributions, however, weighs the construction industry’s negative impact on the environment.

The built environment is responsible for almost 40 per cent of global carbon emissions annually. This includes both operational carbon, which is emitted during daily use, and embodied carbon from the building materials themselves.

The World Bank estimates that about 70 per cent of global GHG emissions come from infrastructure construction and operations such as power plants, buildings and transport.

A report from the Global Alliance for Buildings & Construction during the 27th UN Climate Change conference (Cop 27) in 2022 highlights that, despite increasing investment in boosting energy efficiency and lowering energy intensity, the building and construction sector’s energy consumption and carbon dioxide (CO2) emissions have rebounded since the Covid-19 pandemic.

With rising real estate demand there comes increasing pressure from sustainability-focused investors. Property consultancy JLL notes that 63 per cent of leading real estate investors strongly agree that “green strategies can drive higher occupancy, higher rents, higher tenant retention and overall higher value”. This means that investors are actively seeking more sustainable ventures.

In a bid to stay ahead of the curve, over the past decade the UAE has introduced regulations and standards to incentivise sustainable development. These include Dubai’s green building rating system (Al-Sa’fat) and the Dubai building code, which integrates some sustainability principles; Abu Dhabi’s Pearl rating system (Estidama); and Ras al-Khaimah’s green building regulations (Barjeel) and green public procurement guidelines. More are expected to follow.

“Sustainability is on the strategic agenda in the UAE construction sector,” says Tamara Bajic, associate director – strategy and advisory at engineering consultancy AESG.

“Driven by operational expenditure reduction and green financing schemes, and supported by the UAE’s Net-Zero by 2050 pathway, a growing number of businesses are demonstrating their commitment to decarbonisation.”

Bajic says that developers are driving decarbonisation by investing in low-carbon construction materials and building envelopes; designing for solar energy utilisation; thinking upfront about operational emissions; and planning energy-efficient mechanical, electrical and plumbing systems.

Challenges arise during the implementation process, however, as well as in aligning project requirements with a contractor or supplier’s “decarbonisation maturity”, says Bajic.

At present, in the UAE market there is a lack of visibility into the sustainability processes of suppliers, and limited availability of low-carbon materials and technological solutions. “In most cases, developers cannot directly control emissions from construction activities as they are dependent on outsourced construction contractors,” adds Bajic.

Procurement teams can play a role in spotting the data blind spots and building sustainable procurement systems. “This will be key to influencing the contractors’ business models to take into account product life cycle emissions and activities performed on the construction site, and to implementing carbon-reduction initiatives,” she says.

However, reluctance remains when it comes to overhauling entrenched industry practices, notes Aecom’s Thackray.

“Change within the construction industry is a challenge as the magnitude required is significant and the proposed implementation time is limited,” he says.

Financial barriers also limit the implementation of decarbonisation measures, but this is slowly changing in light of recent commitments made by financial institutions and large clients in the UAE. First Abu Dhabi Bank has committed to lending, investing, and facilitating $75bn in sustainable finance by 2030, while Abu Dhabi Commercial Bank plans to provide AED35bn in green finance by 2030. Meanwhile, Abu Dhabi National Oil Company (Adnoc) is supporting decarbonisation by allocating $15bn for projects focused on clean power, carbon capture and storage and energy efficiency.

“Carbon-reduction initiatives are not necessarily costly if we are looking at the long-term goals,” says Bajic. “In most cases, the carbon reductions have a highly positive impact on the operational expenses, and offer fast returns.”

Working together

As changes are introduced in the industry, and the shift towards the use of sustainable building materials and cleaner fuels picks up pace, it is important to take into account the current footprint of new and existing developments, says Bajic.

“Clients and consultants can then identify initiatives that support decarbonisation and prioritise them by conducting a cost/benefit analysis to understand what is achievable within the company’s absorption capacity.

“This needs to be followed up with clear minimum sustainability requirements for new projects, as well as with incentives to support the scale-up of new technologies and access to renewable energy infrastructure.”

Thackray says that governments and clients can facilitate change through incentivisation schemes to provide tangible benefits to contractors.

“There needs to be a combination of incentives – this includes financiers and organisations establishing contract provisions to drive sustainable practices,” he says.

“Government regulation would be the most effective incentive, however, as failure to comply would have significant consequences. Legislative requirements can thus drive meaningful change to meet sustainability targets.”

Ultimately, the construction industry must take a whole life cycle approach to its projects, from design and procurement through to construction, operations and end-of-life.

“The opportunities lie in the multi-level approach and collaboration for decarbonisation,” says Bajic.

“Once the decarbonisation initiatives are drafted across the value-chain, the involved players must identify areas of collaboration and co-create the delivery of sustainable projects together with designers, architects, suppliers, contractors, and also governments and financial institutions.”

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Mehak Srivastava

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    The past 12 months have tested whether a technocratic Jordanian government installed to address the country’s creeping fiscal crisis can hold the line while the region around it convulses.

    On that narrow measure, it has largely succeeded, though more by adhering to an inherited programme than by breaking new ground. The question of whether Amman can move beyond budget discipline into structural reform remains open.

    The most consequential developments of the past year have spoken more to Jordan’s dependence on external capital than to any decisive shift in domestic policy.

    The fiscal line

    When King Abdullah II appointed Jafar Hassan prime minister in September 2024, he installed a figure who had served as his chief of staff and, earlier, as deputy prime minister for economic affairs, with a specific brief to cut public debt. The choice put fiscal credibility in the chair.

    Hassan inherited a wide fiscal gap. The overall government deficit stood at 7.3% of GDP in 2024, with gross public debt at 82% of GDP and the IMF programme targeting a reduction below 80% by 2028. Growth came in at 2.6% in 2024 and is projected at 2.7% in both 2025 and 2026 – providing little support to consolidation efforts.

    The deficit is narrowing – the IMF projects 6.3% of GDP in 2025 and 5.4% in 2026 – on the back of concrete revenue measures: higher taxes on electric vehicles and e-cigarettes, the deferral of a planned customs-tariff cut, and the collection of tax arrears. Losses at the National Electric Power Company (Nepco), the state-owned single buyer, were held to 1.1% of GDP in 2024, against an expected 1.3%.

    Much of that 2024 performance, though, preceded Hassan’s September appointment, and the consolidation is, in that sense, the programme’s trajectory rather than a break attributable to the new government. A March 2026 directive curbing government vehicle use and freezing official foreign travel – tightened as the regional conflict strained the budget and extended through year-end – speaks to the active restraint being applied.

    The discipline is real, but it is the plumbing of the public finances – revenue, tariffs, arrears, loss containment – not the structural reform of the economy.

    The harder reforms

    The reforms that would lift growth and create jobs have gone virtually untouched. Labour market flexibility, stronger competition, and higher female and youth participation have recurred as priorities through successive IMF reviews but have run up against public-sector privilege and entrenched interests.

    The resulting stagnation shows in the numbers. Growth, projected at 2.7% through 2026, sits well short of what the Economic Modernisation Vision demands: a doubling of GDP by 2033 – implying sustained growth at roughly twice the current rate – in order to create one million jobs.

    The labour market is where the failure is sharpest, and where a narrower deficit changes nothing. Unemployment among Jordanians fell to 21.2% in the fourth quarter of 2025, the lowest since early 2020, but barely changed from 21.4% the previous quarter.

    Within that is a widening gender split: male unemployment fell a full point year on year to 17.2%, while among Jordanian women it rose to 34.8%, up 2.6 points. The modernisation plan promises the opposite – a doubling of female labour force participation from 14% to 28% by 2033, from a base among the lowest in the world.

    The distance between that participation target and the worsening female jobless rate illustrates how far the structural agenda still has to travel.

    Gulf capital and the Aqaba corridor

    With domestic reform slow, Amman leans on external capital to meet its infrastructure needs and stimulate the economy – though even that is faltering. Foreign direct investment ran at $1.3bn in the first three quarters of 2024, or 3.3% of GDP, down from $1.6bn a year earlier, and eased further through 2025.

    The most strategically significant deal of 2026 binds Jordan to a bet on regional logistics: the April signing with the UAE of a $2.3bn agreement to build the 360-kilometre Aqaba Port Railway, structured as a 50/50 joint venture.

    The rail project was first signed in September 2024 and sits within a broader $5.5bn investment framework agreed in 2023. MEED understands that the first-section construction contract is now being finalised and second-section bids are under evaluation, with financial close expected in early 2027.

    The Jordanian half is held by the Jordan Phosphate Mines Company, Arab Potash, the Government Investments Management Company and the Social Security Investment Fund. On the UAE side are Abu Dhabi sovereign investment platform L’Imad Holding, with Etihad Rail as the venture’s executing arm.

    The line will carry around 16 million tonnes of freight a year – some 13 million tonnes of phosphate and 2.6 million tonnes of potash – from the mines at Shidiya and Ghor Al-Safi to Aqaba’s terminals.

    The corridor is designed to extend north from Aqaba toward Amman, Syria and Turkey, and south to Saudi Arabia, positioning Aqaba – Jordan’s sole port – as a Red Sea logistics node at a time of acute concern over supply-chain chokepoints.

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    Dependence on external finance is a standing caveat, however. Jordanian projects have stalled at this stage before, conflict or no conflict: the estimated $2.6bn expansion of the refinery at Zarqa, 25 kilometres northeast of the capital, has been stuck over financing since bids were received in 2021.

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    The next two years point to continued consolidation under the IMF programme, Gulf-backed infrastructure edging towards financial close and growth holding near 3% at best.

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    Dubai Aviation Engineering Projects (DAEP) will award contracts worth over AED55bn ($15bn) by the end of this year for construction works at Al-Maktoum International airport.

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    16 June 2026

     

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    US-based HKN Energy is starting operations on the ground at Syria’s Rmeilan fields in Al-Hasakah Governorate, according to industry sources.

    The development comes as Syria is trying to fast-track the conversion of memorandums of understanding (MoUs) signed with oil companies to concrete contracts.

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    The Syrian government took control of the Rmeilan oil fields earlier this year after a military operation.

    The group of fields is considered to be one of Syria’s largest oil assets and contains more than 1,300 oil wells.

    The field is said to have produced up to 120,000 barrels a day (b/d) before civil war broke out in Syria in 2011.

    Output later fell by nearly 85% after hundreds of wells went offline, either due to war damage or lack of maintenance.

    Prior to the military operation by Syria’s army earlier this year, the field was held and administered by the Kurdish-led Syrian Democratic Forces (SDF).

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    A series of agreements signed in recent months has attracted some of the world’s largest energy companies, raising expectations that investment and production could accelerate.

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    Speaking at the conference in Washington earlier this month, Qablawi said he was planning to sign a contract with ConocoPhillips today, 16 June.

    He said it would be the largest contract signed by SPC since its establishment in October last year.

    Qablawi also said he hoped to convert an MoU with the US-based oil company Chevron into a signed contract before the end of July.

    Qablawi said the country was forecasting increases in both oil and gas production and predicted it would produce 1 million b/d by 2030.

    The chief executive said that previously unexplored blocks in the country held “huge” reserves that could be developed.

    Chevron is interested in making investments in onshore production in the country, according to Qablawi.

    Downstream projects

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    The maintenance will dramatically increase the refinery’s capacity to 130,000 b/d, according to Qablawi.

    Currently, it is operating at a rate of 90,000-95,000 b/d.

    The refinery is expected to be brought back online in October this year.

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    Under current plans, the front-end engineering and design (feed) for the new refinery will start in the fourth quarter of this year.

    “Syria will be exporting refined products within three years [of starting the feed],” Qablawi said. “After we have finished the construction of the new refinery.”

    Gas development

    In April, SPC signed a formal contract with Saudi Arabia’s ADES to increase gas production in central Syria.

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    • Qamqam
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    • Al-Tiyas
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    The deal aims to increase Syria’s domestic gas production by up to 50% within a year.

    Speaking on 9 June, Qablawi said that ADES was mobilising for that project.

    Pipeline planning

    Syria is involved in several major pipeline projects, including plans to restore the pipeline from Kirkuk in Iraq to Baniyas in Syria.

    Qablawi said that under current plans, the contracts for this pipeline would be tendered using the build-operate-transfer (BOT) contract model.

    “We are going to pick the best company for Syria to construct this pipeline,” he said.

    Syria has awarded an engineering, procurement and construction contract for an extension to the existing Arab Gas Pipeline.

    The new section extends 185 kilometres from Aleppo to Homs and is being fully funded by SPC.

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    Wil Crisp