meed-logo

line1 line2 line3
SIGN IN / REGISTER

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.”

https://image.digitalinsightresearch.in/uploads/NewsArticle/10937444/main.gif
Mehak Srivastava

Register for MEED's guest program now to access this article.

Click here to register
Exclusive from Meed
Related Articles
  • UAE GDP projection corrects on conflict

    24 April 2026

    https://image.digitalinsightresearch.in/uploads/NewsArticle/16554417/main.gif
    MEED Editorial
  • April 2026: Data drives regional projects

    24 April 2026

    Click here to download the PDF

    Includes: Commodity tracker | Top 10 global contractors | Brent spot price | Construction output

    MEED’s May 2026 report on the UAE includes:

    > COMMENT: Conflict tests UAE diversification
    > GVT &: ECONOMY: UAE economy absorbs multi-sector shock
    > BANKING: UAE banks ready to weather the storm
    > ATTACKS: UAE counts energy infrastructure costs
    > UPSTREAM: Adnoc builds long-term oil and gas production potential
    > DOWNSTREAM: Adnoc Gas to rally UAE downstream project spending
    > POWER: Large-scale IPPs drive UAE power market
    > WATER: UAE water investment broadens beyond desalination
    > CONSTRUCTION: War casts shadow over UAE construction boom
    > TRANSPORT: UAE rail momentum grows as trade routes face strain

    To see previous issues of MEED Business Review, please click here
    https://image.digitalinsightresearch.in/uploads/NewsArticle/16553627/main.gif
    MEED Editorial
  • Firms announce 129MW Dubai data centre

    24 April 2026

    Dubai’s Integrated Economic Zones Authority (DIEZ) has signed a joint-venture agreement with Netherlands-headquartered data centre developer Volt to build a new artificial intelligence (AI)-ready data centre in the emirate.

    Planned for Dubai Silicon Oasis, the development will take the form of a campus covering up to 60,000 square metres.

    The project will be delivered in two phases, starting with 29MW of immediately available capacity, followed by a second phase adding a further 100MW of committed power.

    Under the arrangement, DIEZ will supply the land and essential infrastructure, while Volt will finance and develop the project, lead construction, and manage the design, leasing, implementation and day-to-day operations.

    French firm Schneider Electric, which has its regional headquarters in Dubai Silicon Oasis, will support the development by supplying advanced electrical systems, power distribution capabilities and smart data centre infrastructure.

    The GCC currently has more than 174 active data centre projects, representing over $93bn in investment, led by international players such as AWS, Google and Huawei, alongside regional developers including Khazna and Moro, supported by government-led localisation strategies.

    More than a dozen large-scale facilities valued at over $100m each are currently under tender, with further packages expected to reach the market over the next six to 12 months.

    The UAE is one of the leading data centre markets, with hyperscale campuses, sovereign cloud initiatives and edge data centre deployments underway.

    Data centre development is closely aligned with the UAE’s digital economy and AI roadmap, as well as the wider smart city programme.

    Priorities include hyperscale and colocation facilities to support cloud service providers; edge data centres to reduce latency and enable 5G and IoT use cases; energy-efficient designs using advanced cooling, modular construction and renewables; and strategic partnerships between global hyperscalers, local developers and utilities.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/16548972/main.JPG
    Yasir Iqbal
  • Iraq signs upstream oil contract

    24 April 2026

    State-owned Iraqi Drilling Company (IDC) has signed a contract with China’s EBS Petroleum for a project to drill 17 horizontal wells in the southeastern portion of the East Baghdad field.

    Mohamed Hantoush, the general manager of IDC, said the contract signing came after a “series of successful achievements” by the company at the field.

    The achievements included the completion of a project to drill 27 horizontal wells and another project to drill 18 horizontal wells, according to a statement released by Iraq’s Ministry of Oil.

    In January, Iraq’s Midland Oil Company (MOC), in collaboration with EBS Petroleum, completed the country’s longest horizontal oil well in the southern part of the East Baghdad field.

    The well, which was called EBMK-8-1H, reached a total depth of 6,320 metres, and had a 3,535-metre horizontal section, making it the country’s largest horizontal well ever drilled.

    Senior officials from the Iraqi Oil Ministry and representatives of EBS Petroleum attended the well’s completion ceremony.

    EBS Petroleum is a subsidiary of China’s ZhenHua Oil, which is focused on Iraq.

    ZhenHua Oil is the operator of the field and is working with Iraqi partners to oversee the field’s development.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/16543675/main4942.jpg
    Wil Crisp
  • Jordan tenders oil and gas terminal project

    24 April 2026

     

    Jordan’s Aqaba Development Corporation (ADC) has tendered a project for the development of the facilities at the Aqaba Oil and Gas Terminal.

    The project has been divided into two packages, and a bid deadline has been set for 15 June 2026.

    The oil and gas terminal is located south of the city of Aqaba in Jordan’s Southern Industrial Zone.

    The scope of Package 1 includes:

    • Rehabilitation of petroleum product pipelines of various sizes and their accessories (such as supports, structures and valves), including rectification of painting defects
    • Inspection and repair of pipe welds
    • Rectification and overall maintenance of the product booster pump
    • Inspection, maintenance, testing and commissioning of liquefied petroleum gas (LPG) booster pumps
    • Rectification of two overhead cranes
    • Rectification and calibration of instrumentation, including pressure indicators and valves

    The scope of Package 2 includes:

    • Rehabilitation of control rooms and security rooms, replacing them with concrete control rooms, including infrastructure works and all required services
    • Removal of unused tanks and equipment previously used for exporting crude oil
    • Rehabilitation of the existing gate in order to improve safety and security with the installation of a tire killer
    • Carrying out maintenance and repairs for the oil berth dolphins and trestle with inspection
    • Maintenance, repair and reinstallation of oil berth concrete slabs
    • Removal and extension of the jetty platform
    • Installation of a lighting system at pipelines beside booster pumps
    • Installation of stripping pumps at the LPG terminal
    • Replacement of drain line path for slop tank of LPG booster pumps
    • Rehabilitation of the existing closed drain drum
    • Rectification of cone sealing issue of all truck loading arms
    • Conversion of manual valves to motor-operated valves
    • Remote operation of shut-off valves on the main pipeline alongside and near the entrance gate
    • Upgrading of the firefighting system

    The last date for questions and clarifications related to the project will be 13 May 2026.

    The Aquaba Oil and Gas Terminal was built to meet demand for petroleum products and LPG imports into Jordan.

    It is operated by state-owned Jordan Oil Terminals Company (JOTC), which was established in 2015 as a private shareholding company.

    Earlier this year, Abu Dhabi’s AD Ports Group signed an agreement with ADC to manage and operate the Aqaba multipurpose port.

    AD Ports is managing and operating the port under a 30-year concession agreement.

    Under the agreement, AD Ports and ADC will establish a joint venture to oversee port operations.

    AD Ports will hold a 70% stake in the joint venture, with the remaining 30% held by ADC.

    AD Ports Group will also invest AED141m ($38.4m) in the joint venture.

    The signing ceremony was held at the Aqaba Special Economic Zone Authority headquarters in Aqaba on 5 February.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/16543632/main.jpg
    Wil Crisp