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
  • Populous wins Bahrain Sports City contract

    21 April 2026

     

    US-based engineering firm Populous has won a BD5m ($13.5m) contract for the Sports City development at Sakhir in Bahrain.

    The contract was awarded by Bahrain’s Ministry of Works, Municipalities Affairs & Urban Planning.

    The scope covers pre-contract consultancy services, including finalising the masterplan and internal infrastructure, completing phase 1A design works and preparing tender documents.

    Populous is a specialist sports venue designer that formerly operated as part of HOK Group.

    The contract was first tendered in 2021, when Populous emerged as the sole bidder.

    At the time, it was reported that Sports City would include Bahrain’s largest sports stadium and a multi-purpose indoor sports arena.

    The project is expected to provide renewed impetus to Bahrain’s construction and transport sector, which has struggled in recent years, with the total value of awarded contracts falling for a third consecutive year.

    According to regional project tracker MEED Projects, about $400m-worth of contracts had been awarded in Bahrain by the end of October last year – less than half the $1.2bn recorded during the same period the previous year.

    The sector has yet to return to pre-pandemic levels. Before 2020, Bahrain consistently awarded more than $2bn in contracts annually, peaking at nearly $4bn in 2016.

    Bahrain’s construction industry is forecast to record average annual growth of 4.9% in 2026-29, supported by investments in transport infrastructure and renewable energy projects aligned with Bahrain’s Economic Vision 2030.

    Vision 2030 includes the BD11.3bn ($30bn) Strategic Projects Plan, unveiled in October 2021, encompassing 22 national infrastructure projects. It also includes plans to create five new cities by 2030: Fasht Al-Jarm, Suhaila Island, Fasht Al-Azem, Bahrain Bay and the Hawar Islands.

    Growth over the forecast period is also expected to be driven by investments under the National Renewable Energy Action Plan, which targets a 30% reduction in carbon emissions by 2035, compared to 2015 levels, and aims to achieve net-zero emissions by 2060.

    READ THE APRIL 2026 MEED BUSINESS REVIEW – click here to view PDF

    Economic shock threatens long-term outlook; Riyadh adjusts to fiscal and geopolitical risk; GCC contractor ranking reflects gigaprojects slowdown.

    Distributed to senior decision-makers in the region and around the world, the April 2026 edition of MEED Business Review includes:

    > GCC CONTRACTOR RANKING: Construction guard undergoes a shift
    To see previous issues of MEED Business Review, please click here
    https://image.digitalinsightresearch.in/uploads/NewsArticle/16487784/main.jpg
    Yasir Iqbal
  • Entries now open for MEED Projects Awards 2026

    21 April 2026

    Enter the awards

    The MEED Projects Awards in association with Mashreq 2026 have officially opened for entries, inviting companies, developers, contractors and project teams to submit their projects for the region’s most prestigious construction awards.

    For over 15 years, the MEED Projects Awards have celebrated the Middle East and North Africa’s most ambitious and transformative projects, recognising technical excellence, innovation, sustainability and delivery impact. Past editions have highlighted landmark developments that set new benchmarks for the region’s built environment, including internationally recognised projects such as Burj Khalifa and Louvre Abu Dhabi.

    “The MEED Projects Awards are the gold standard for recognising outstanding achievements in construction across Mena, showcasing the region’s technical and design excellence while bringing the industry together to celebrate and connect over the very best projects of the year,” said Ed James, head of content and research at MEED.

    “As a long-standing partner of the MEED Projects Awards, Mashreq is proud to support a programme that is recognised for its independence, credibility and industry impact. These awards celebrate projects that set benchmarks for excellence and contribute meaningfully to the region’s development,” said Arun Mathur, executive vice-president and global head of contracting finance at Mashreq.

    Winners are chosen through a rigorous, independent judging process, led by a panel of more than 50 senior industry experts representing developers, contractors, engineers and project specialists. The awards celebrate projects across a wide range of sectors, including Building, Transport, Energy, Water, Healthcare, Education, Hospitality, Culture, Industrial, Power, Small Projects and Developments.

    Being shortlisted or winning a MEED Projects Award places a project among the region’s elite, offering regional recognition, global exposure and industry credibility.

    Submissions are now open, with full category details and entry guidelines available on the official entry platform.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/16487756/main.gif
    MEED Editorial
  • Work advances on Saudi Maaden mine renewables project

    21 April 2026

     

    Local contractor Arabian Qudra Company is advancing construction works on an integrated solar photovoltaic (PV) and battery energy storage system (bess) project at the Al-Baitha bauxite mine in Saudi Arabia.

    The off-grid facility will integrate an 8MWp solar PV array with a 30MWh bess, allowing the mine to operate almost entirely on renewable energy.

    Emerge, a joint venture of Masdar and EDF Power Solutions, is developing the project, including managing financing, design, procurement, construction, operation and maintenance.

    Last August, MEED reported that Maaden Bauxite & Alumina Company (MBAC), a subsidiary of Saudi Arabian Mining Company (Maaden), had signed a 30-year power purchase agreement with Emerge to supply its Al-Baitha bauxite mine with renewable energy.

    Arabian Qudra Company was subsequently appointed as the engineering, procurement and construction (EPC) contractor, with works beginning at the start of 2026.

    The firm is a subsidiary of Abunayyan Holding Company, a privately owned Saudi industrial group.

    The project is expected to generate around 17,300MWh of electricity annually and provide a continuous 24/7 power supply. It will reduce carbon dioxide emissions by approximately 13,800 tonnes a year.

    According to projects tracker MEED Projects, construction is expected to be completed in early 2028.

    Maaden Solar 1

    Maaden is also in the early stages of developing Maaden Solar 1, potentially the world’s largest solar process heat plant. 

    MEED previously reported that US-based GlassPoint had partnered with Saudi Arabia’s Ministry of Investment as a first step towards construction of the planned $1.5bn project.

    In 2025, Spain-headquartered Cox Energy signed a collaboration agreement with the client to participate in the project. The client had been expected to invest approximately $31.1m in the first phase of the project.

    Once complete, Maaden Solar 1 will be a 1,500 megawatt-thermal (MWth) facility. A timeline for the project remains unclear, with construction not expected to begin until at least 2027.

    READ THE APRIL 2026 MEED BUSINESS REVIEW – click here to view PDF

    Economic shock threatens long-term outlook; Riyadh adjusts to fiscal and geopolitical risk; GCC contractor ranking reflects gigaprojects slowdown.

    Distributed to senior decision-makers in the region and around the world, the April 2026 edition of MEED Business Review includes:

    > GCC CONTRACTOR RANKING: Construction guard undergoes a shift
    To see previous issues of MEED Business Review, please click here
    https://image.digitalinsightresearch.in/uploads/NewsArticle/16487404/main.jpg
    Mark Dowdall
  • Egypt to build Olympic Village project on Red Sea

    21 April 2026

    Egypt has moved to back a major new sports development on the Red Sea coast, officially assigning a 225-acre plot for a planned Olympic Village in the Red Sea Governorate.

    The site is located opposite the resort destination of El-Gouna, giving the project access to an established tourism corridor.

    The development is intended to strengthen Egypt’s ambition to become a hub for international sports tourism, with facilities designed to support large-scale regional and global championships.

    Plans include stadiums and purpose-built arenas designed to meet Olympic-level requirements, enabling the complex to accommodate multiple sports and event formats.

    To support visiting delegations and spectators, the Olympic Village is expected to include on-site hospitality facilities, including a hotel.

    The project is intended to operate as an integrated, self-contained destination capable of staging regional and international tournaments, while also leveraging the Red Sea’s year-round appeal for camps, friendlies and seasonal training programmes.

    According to UK analytics firm GlobalData, Egypt’s residential construction sector is expected to grow by 8.3% from 2026 to 2029, supported by investments in the housing sector and the government’s focus on addressing the country’s growing housing deficit amid a rising population.

    The commercial construction sector is expected to register real-term growth of 6.6% in 2026-29, supported by a rebound in the tourism and hospitality markets and an improvement in investment in office buildings and wholesale and retail trade activities.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/16485900/main.jpg
    Yasir Iqbal
  • Algeria launches oil and gas licensing round

    21 April 2026

    Algeria has launched a new bid round offering seven exploration blocks to international companies.

    The round was launched by the National Agency for the Valorisation of Hydrocarbon Resources (Alnaft), which manages and regulates the upstream oil and gas sector in the country.

    The blocks are located in the regions of Ouargla, Illizi, Touggourt and El-Bayadh. Both oil and gas assets are included.

    The blocks on offer are:

    • Est Bordj Omar Driss 1
    • Illizi Centre 1
    • El-M’Zaid Nord
    • El-Borma 2
    • El-Hadjira 3
    • El-Benoud Est
    • Touggourt Sud

    Technical evaluation of bids will cover exploration, development and production optimisation plans.

    All bids – except those for Est Bordj Omar Driss 1– will also be assessed against financial criteria, including the bidder’s participation rate in financing upstream operations.

    Successful bidders will access the assets through contracts with Sonatrach, either via production service agreements or participation agreements, depending on the block.

    Algeria is currently seeing an uptick in demand for its gas exports due to the disruption to exports from Qatar and the UAE in the wake of the US and Israel’s attack on Iran on 28 February.

    READ THE APRIL 2026 MEED BUSINESS REVIEW – click here to view PDF

    Economic shock threatens long-term outlook; Riyadh adjusts to fiscal and geopolitical risk; GCC contractor ranking reflects gigaprojects slowdown.

    Distributed to senior decision-makers in the region and around the world, the April 2026 edition of MEED Business Review includes:

    > GCC CONTRACTOR RANKING: Construction guard undergoes a shift
    To see previous issues of MEED Business Review, please click here
    https://image.digitalinsightresearch.in/uploads/NewsArticle/16478927/main.png
    Wil Crisp