Green Financial Instruments in the GCC: Trends, Deployment, and Collaboration Pathways

This chapter is part of a joint study group titled “Pathways to Euro-Arab Gulf green partnership: how renewable energy-based manufacturing value chains can expand EU-GCC cooperation in green transition and climate diplomacy” under the EuroMeSCo network. WANA Institute’s Research and Studies Specialist Samer Fakhoury contributed to a chapter titled “Green Financial Instruments in the GCC: Trends, Deployment, and Collaboration Pathways”
The chapter analyses how green financial instruments can accelerate the GCC’s transition from hydrocarbons to sustainable growth and enable deeper EU–GCC cooperation. It classifies tools into debt, equity, blended finance, and carbon markets and evaluates each by attractiveness, ease of implementation, and risk. Debt instruments and blended finance currently lead due to mature standards and strong investor demand; equity and carbon markets are promising but constrained by market depth, verification integrity, and policy alignment. For EU–GCC collaboration, aligning with EU Taxonomy, deploying blended finance, building robust MRV systems, and establishing mutual certification for green hydrogen and carbon markets would de-risk capital, enhance credibility, and secure market access.
The recommendations call for regional standardisation (especially green sukuk), incentives for Sustainability-Linked Bonds/Loans, phased compliance carbon markets, and a regional accreditation body to scale credible, investable pipelines.