MENA’s Climate Tech Policy: Catalysing Innovation through Global Best Practices
Introduction: Why Now for MENA?
The Middle East and North Africa (MENA) is on the front line of climate change. With extreme heat, water scarcity, and economic dependence on fossil fuels, the region faces urgent risks. At the same time, it is uniquely positioned to become a climate innovation leader. As global investment in climate tech reaches new highs and policies shift to support sustainable growth, MENA has an opportunity to build a thriving clean tech ecosystem tailored to its own context.
For climate tech founders, these changes are crucial. Policy direction in the region is starting to evolve - not yet as advanced as in the US or Europe, but with increasing momentum. Understanding this landscape early can give startups a competitive edge, shaping go-to-market strategies, funding opportunities, and partnerships. This article offers a roadmap to help founders navigate the current state of climate tech policy in MENA, learn from global models, and identify emerging opportunities for growth.
Climate Tech & ESG Policy Worldwide
Around the world, regulation and investment are reshaping the climate tech market.
The European Union’s Green Deal sets out an ambitious target of climate neutrality by 2050. Accompanying this is a comprehensive framework of ESG (Environmental, Social, and Governance) reporting standards under the Corporate Sustainability Reporting Directive (CSRD), now coming into force for large businesses. This is already impacting supply chains and procurement - key considerations for founders selling into European markets.
In the US, the Inflation Reduction Act (IRA) has sparked a surge of clean tech investment. Its $369 billion in tax incentives and grants is shaping the direction of both early-stage innovation and industrial deployment. According to PitchBook, climate tech venture funding in the US grew 39% year-on-year in Q1 2024.
Australia and New Zealand are also pushing ahead, mandating climate-related financial disclosures aligned with the TCFD. Meanwhile, countries in Asia - including Japan, China, and South Korea - are backing national net-zero targets with large-scale investment programmes, subsidies, and industrial policy.
For founders, these policies matter not just in their home market but for expansion strategies, funding eligibility, and investor expectations.
MENA’s Climate & Innovation Landscape
MENA is one of the most climate-vulnerable regions on Earth. According to a study by MIT, parts of the Gulf could experience heat extremes that are unlivable without air conditioning by 2050. Water scarcity, food security, and urban resilience are all pressing concerns.
Yet there are also positive signs. The UAE’s Net Zero by 2050 strategy has helped build momentum around solar energy, smart city projects, and sustainable mobility. In Saudi Arabia, mega-projects such as NEOM are incorporating clean energy and circular economy principles at scale. Egypt, Morocco, and Jordan are also expanding their renewable capacity.
On the policy front, ESG disclosure frameworks are still in early stages, but the direction is becoming clearer. The Saudi Capital Market Authority, for example, has published voluntary ESG disclosure guidelines for listed companies. For climate tech founders, these frameworks could evolve into compliance requirements or create new funding and partnership opportunities.
The UAE has recently enacted a groundbreaking climate law: Federal Decree‑Law No. 11 of 2024 on the Reduction of Climate Change Effects, which officially came into force on May 30, 2025. It's a first for the MENA region - a legally binding framework requiring all public and private entities (including free‑zone companies) to:
Measure, monitor, and report greenhouse gas emissions, following methodologies approved by the Ministry of Climate Change and Environment
Assess climate-related risks and implement adaptation plans
Develop strategies to reduce environmental impact and promote resilience
Participate in the national carbon credit registry and emissions trading mechanisms
There are significant penalties for non-compliance, ranging from AED 50,000 to AED 2 million, with the possibility of doubled fines for repeat offences.
Learning from Global Best Practices
Startups operating in or entering MENA can benefit by tracking policy trends - not only in the region but globally. Successful frameworks elsewhere offer ideas that could shape local developments in future.
Some relevant models include:
ESG Regulation: In many regions, mandatory climate disclosures for large companies have opened new markets for data, monitoring, and reporting tools. As MENA progresses toward similar standards, startups with ESG-aligned products or services could see rising demand.
Public-Private Partnerships: Countries like Singapore have shown the power of government-led programmes to scale startups via funding, infrastructure, and co-development. Similar structures are emerging in the Gulf and may present routes to pilot or deploy climate tech.
Targeted Funding Mechanisms: Europe’s Horizon and France’s France 2030 programme show how grant and equity co-financing can stimulate R&D. If adapted in MENA, these tools could help overcome the region’s early-stage funding gap.
Talent & Migration Policies: With technical talent in high demand, regions like Canada have introduced green visas and incentives for skilled professionals. Similar developments in MENA would benefit startups competing for climate-literate talent.
Strengthening the Local Ecosystem
A strong local ecosystem is vital for climate innovation. For founders, this means access to accelerators, co-working labs, funding, and relevant policy engagement - not just infrastructure or capital.
Some actions currently underway in MENA include:
Startup Hubs: Initiatives like Hub71 in Abu Dhabi and the KAUST Innovation Fund in Saudi Arabia are anchoring innovation communities focused on cleantech, mobility, and water.
Renewable Energy Megaprojects: The UAE’s Noor Abu Dhabi and Saudi Arabia’s Sudair Solar Project demonstrate scale and ambition. Startups that can plug into these initiatives - from smart grid software to storage optimisation - are well positioned.
Regional Collaboration: The Arab Coordination Group’s $24 billion climate funding pledge is a potential source of scale-up capital, particularly for cross-border projects.
Sector-Specific Needs: Water reuse, extreme heat adaptation, desert agriculture, and emissions measurement are all areas where local context creates opportunities for founders with relevant solutions.
Areas of Opportunity in MENA Policy
While policy in the region is still evolving, there are clear areas where future changes could benefit climate tech startups - and where founders should keep a close watch:
Climate Targets: Countries with clear decarbonisation goals often see greater investor and corporate interest in climate solutions. Saudi Arabia’s 2060 net zero pledge and the UAE’s 2050 target are early signals.
Innovation Sandboxes: These offer startups the chance to trial new business models or technologies in a regulated environment. Bahrain has introduced them in fintech, and similar approaches could emerge in climate sectors.
Tax Incentives and R&D Credits: While not yet widespread in MENA, these are likely to feature in future strategies. Founders should track announcements from investment ministries and national funds.
Education & Skills Development: Partnerships with universities, vocational programmes, and regional talent visas may unlock technical expertise or hiring pathways.
Pan-MENA Coordination: Shared ESG standards or funding platforms could reduce complexity and open regional scale for startups.
Case Studies: What’s Working and What’s to Watch
Masdar City, UAE
A showcase for sustainable design, Masdar City integrates solar energy, low-carbon transport, and green building. While its growth has been slower than initially hoped, it remains a hub for regional and international cleantech startups and events.
Yellow Door Energy
Dubai-based Yellow Door has deployed over 100MW of solar across the UAE and Jordan. Its 2022 $400 million raise shows strong investor appetite for regionally focused, commercially proven climate tech.
Germany’s Feed-in Tariffs
Germany’s structured feed-in-tariff model helped scale its renewable sector by giving certainty to developers and investors. MENA could consider variations of this to stimulate distributed energy or storage.
U.S. IRA Funding Wave
The IRA model - combining tax credits, loan guarantees, and manufacturing incentives - has triggered global copycat strategies. Founders in MENA may benefit if sovereign funds or regional authorities adopt similar tools.
Challenges for Startups to Navigate
While the momentum is clear, several hurdles remain for founders:
Fragmented Regulations: Different policies across countries - or even emirates - can complicate regional expansion.
Early-Stage Funding Gaps: Many funds target late-stage or infrastructure deals. Seed and Series A climate tech investment is still limited.
Talent Shortages: Engineers, scientists, and commercial staff with climate experience are in high demand.
Heavy Oil & Gas Presence: Fossil fuel incumbents remain powerful stakeholders, which can shape the pace of policy change.
Perceived Risk: International investors may hesitate without stronger regulatory clarity or de-risking tools.
Startups need to be proactive in understanding this context, building local partnerships, and staying close to policy developments that may create or close market opportunities.
The Road Ahead
The policy landscape in MENA is still maturing - but it is moving. Climate tech founders should treat this as a dynamic opportunity. Monitoring policy changes, joining ecosystem platforms, and shaping dialogues with regulators will be essential to staying ahead.
There is a growing appetite for clean technology across governments, corporates, and financiers in the region. Those who position themselves early will be best placed to benefit from this shift.
Final Thoughts: A Time of Transition
MENA stands at a turning point - and so do the climate tech startups operating within it. By learning from global examples, identifying opportunities in local policy evolution, and embedding their solutions into regional needs, founders can play a pivotal role in shaping a more sustainable economy.
Whether building in Cairo, Riyadh, Amman, or Abu Dhabi, the message is the same: the time to act is now, and the region is increasingly open for climate innovation.
FAQ: Nexus Climate and How We Can Help
What is Nexus Climate’s role in supporting climate tech founders in MENA?
Nexus Climate works closely with early-stage climate startups to help them navigate markets, access funding, and engage with policy trends. We support founders with insights, partnerships, and practical tools to scale their impact.
Can Nexus help startups understand the policy landscape in the region?
Yes. Nexus monitors policy developments across MENA and Europe, offering briefings and guidance to help startups align with current and emerging regulations.
Do you provide funding for early-stage ventures?
Nexus invests directly in startups and helps unlock additional capital, including grants and blended finance. We work with founders to structure investment rounds, connect with co-investors, and de-risk commercial deployment.
How does Nexus support growth beyond the Gulf?
Our reach extends across MENA and Europe. We actively support startups looking to scale regionally or expand into international markets with aligned regulatory environments and funding instruments.
Does Nexus work with corporates and governments too?
Yes. We work across the climate innovation ecosystem - not just with startups but also with corporates, accelerators, and government programmes to build the conditions for scale.
How can I get in touch?
Please do contact us to discuss collaboration, investment, or ecosystem support.
