PwC Net Zero Future50 - Middle East

Climate tech is defined as technologies explicitly focused on reducing greenhouse gas emissions, or addressing the impacts of global warming. The sectors of focus are based on the PwC climate tech taxonomy. Learn more at PwC State of Climate Tech.

The PwC Middle East Climate Tech report 2023 identified two trends happening within climate technology for the region. First, Middle East investors are investing heavily in climate technology around the world, bucking the global investment slowdown. The report shows that the Middle East players spent about US$5 billion on climate tech-related transactions globally in the year to end-September 2023, almost triple their estimated spending of $1.8 billion in 2022. Secondly Looking inwards, since 2018, all investors globally have spent about US$1.85 billion on climate tech funding inside the Middle East. In respect to the sectoral priorities, easily the largest share of the funding has gone to companies working on technologies relating to Energy, Mobility and Transport, which are key sources of carbon emissions. These sectors received about US$1.4 billion of the US$1.85 billion total funding since 2018. Spending on Food, Agriculture and Land Use accounts for most of the rest. With the help of these investments climate tech innovators in the Middle East are helping reduce emissions and accelerate decarbonisation.

Like the climate investment sectors, companies in the Net Zero Future50 - Middle East are concentrated in a few sectors: Industry, Manufacturing and Resource Management (IMRM) make up about 22% of the total list, with Energy a further 20%. These are followed by the Food, Agriculture and Land Use (FALU) sector with 18%. Companies in these three sectors, therefore, account for about two-thirds of the total. The prevalence of the Food, Agriculture and Land Use plays more to the need for domestic sustainability and food security for the region.

Of the 50 companies selected in the Future50, 26% have female-only founders, while 32% have mixed-gender founders. The female share is even higher – at 36% – if you exclude companies not headquartered in the Middle East but only have operations in the region.

Our analysis also shows that almost half of the founders of the companies in the Future50 are between 30 and 39 years of age, and a third is in the 40 and 49 year old age category, which bodes well for the region as, globally, the most successful exits of high venture capital-backed, hi-tech and patented start-up is around 46 years old.¹

The COVID-19 pandemic led to a sharp drop in greenhouse gas emissions globally, but the fall was temporary. In 2021, the emissions were back – above pre-pandemic levels – rising across all sectors. By the end of 2022, the global economy produced 36.8 gigatonnes of carbon dioxide (Gt of CO2) – an increase of 0.9% over 2021 and 6% higher than in 2020.²

While the emissions growth continues, it has slowed down due to declining economic growth in some countries, higher interest rates and inflation, and disruptions to traditional fuel trade flows. At the same time, there has been progress in addressing climate change, including deploying clean energy technologies, such as renewables, electric vehicles (EVs), and heat pumps. The International Energy Agency estimates that these technologies helped prevent an additional 550 metric tonnes (Mt) in CO2 emissions. Yet the goal of reaching net zero emissions by 2050, as set out in the 2015 Paris Agreement, remains elusive. And for the Middle East, climate change has very tangible consequences, including growing water shortages and drought risks.

The issues have prompted significant pledges by governments in the Middle East and North Africa region (MENA), committing to net zero emissions goals or announcing a range of other targets aimed at reducing fossil fuel dependency. This is a particularly complex topic for the region, given its role as a major producer of hydrocarbons. At the same time, the two successive COP summits taking place in the region - COP28 in Dubai, UAE, in November 2023, a year after the summit in Sharm El-Sheikh, Egypt – highlights the central importance of the region’s efforts to mitigate climate change.

To help understand the potential abatement of the eight sectors we analysed Middle East greenhouse gas (GHG) emissions to better understand which industries in the region have the biggest potential for impact through decarbonising technologies. We utilised data from across multiple external climate data sources³ and introduced mapping to align to the PwC State of Climate Tech taxonomy to understand their relative emissions contribution.⁴

Leveraging established global methodology we assigned potential reduction impact across the five emitting sectors: Built Environment; Energy; Food, Agriculture and Land Use (FALU); Industry, Manufacturing and Resource Management (IMRM); and Mobility and Transport. We also looked to external sources to assign ‘a potential to remove GHG emissions’ to cross-sector themes such as GHG Carbon Capture and Storage, and Climate Change Management and Reporting, which have been given a Net Zero Future50 allocation based on their potential to remove GHG emissions. We also allocated an indicative abatement potential for Financial Services.⁵

The approach shows that the Middle East Energy and Industry, Manufacturing and Resource Management sectors account for third quarters (75%) of GHG emissions, which is reflected in the Future50 where the same two industries lead the sectoral representation of the report with almost half (42%) of companies featured are from these sectors.

The Future50 allocation to the Food, Agriculture and Land Use sector is higher than estimated emissions at almost 20%, despite only contributing 2% of GHG emissions in the region. This reflects the climate and sustainability challenges in a region that faces food security challenges and is vulnerable to supply chain disruption. Food agricultural technology can help make food supplies more reliable, stimulate innovation, cut deficits and benefit the environment at the same time.