Green finance is expected to play a significant role in achieving the Sustainable Development Goals (SDGs) and the Paris Agreement. Studying the green finance activities in Bahrain, Egypt, Kuwait, Iraq, Oman, Qatar, Saudi Arabia, and the United Arab Emirates shows that nearly all the key financing mechanisms and policy measures that encourage climate-compatible development are being used in at least one country. There remain, however, untapped opportunities in each country to capitalise on new tools or policies that shift finance towards investments that support a green and fair transition.

While most of the finance required for a low carbon transition will come from the private sector, this report focuses on opportunities for governments and quasi-government agencies to shape the ways in which finance can be mobilised and channelled. The recommendations of the report are divided between 1) the enabling environment and 2) financial and economic tools and combine the insights and knowledge of experts across the region with extensive literature review and author analysis. The national recommendations respond to unique domestic circumstances and focus on areas where action is currently limited or absent, rather than suggesting that existing initiatives be strengthened or scaled up. The regional recommendations target areas where collaboration would deliver stronger returns than if the measures were pursued by each country individually. For almost all interventions, case studies are used to demonstrate that the tool or approach has been successfully deployed in the region.

The instruments explored in this report include inclusive loans, guarantees and risk insurance, international climate finance, debt instruments such as green bonds, green sukuk and debt-for-environment swaps, and carbon pricing instruments. The report considers the role of state-owned enterprises (SOEs) and sovereign wealth funds because of their investment power and centrality to economic transformation in several countries.

The recommendations of this report extend the findings of a related study titled "Aligning Policies with Green, Resilient and Just Recoveries in the Middle East". Taken together, governments in the GCC countries plus Egypt and Iraq have an opportunity to mobilise finance and implement policies that reduce risks and capitalise on the opportunities afforded by a fair and environmentally sustainable transition. These opportunities must be taken to strengthen social, economic and ecological resilience, and achieve sustainable development.