The Middle East is facing a heat wave crisis: The region is warming twice as fast as the global average with temperatures soaring above 50 degrees Celsius in Kuwait, Saudi Arabia, and Iran. As temperatures rise, it has become the epicenter of a 30-year increase in global heat-wave deaths.

This year has been particularly brutal: In June, during this year’s Hajj—the annual Islamic pilgrimage to Mecca, Saudi Arabia—more than 1,300 people died because of the blistering heat. 

Beyond heat-related deaths, the Middle East is among the world’s most vulnerable regions to the impacts of climate change, including water scarcity, high temperatures, droughts, and floods.

Though states such as Qatar and Kuwait have invested billions to bring in tourists, investment in climate-focused startups has begun lagging in the region. Climate tech investment in the Middle East declined by more than 80% in 2023 to $152 million, compared to about $1 billion in 2022. Sulaiman Amin, managing director of Abu Dhabi-based clean startup accelerator Catalyst, says this is due in part to risk-averse investors who want a more rapid return than many climate ventures can deliver.

“Investments in hardware are usually very cap-ex heavy and need manufacturing cost, which is another risk to traditional venture capital,” Sulaiman says. “You can’t just have a software service and expect [to fix] climate change. You need engineers who work with their hands, who actually build things, to get this stuff done.”

Although startup founders agree that an investment gap exists, they also say that things are beginning to improve as international efforts to tackle climate change grow. For instance, last December, the UAE hosted the COP28 United Nations Climate Change Conference, which brought world leaders and climate experts from 197 countries together in Dubai to spur investment in climate tech.     

Karan Khimji, cofounder of 44.01, a company that uses a process called mineralization to capture CO2 from the atmosphere, says COP28 brought needed attention from investors. What currently exists, he says, “is a small amount of capital compared to the challenge that we face.” More recently, though, “we’ve been able to access some of that support, which has been really tremendous for us,” he says.

A significant amount of support in Dubai is coming from UAE’s Abu Dhabi National Oil Company (ADNOC), which earlier this year allocated $23 billion for decarbonization and lower-carbon projects, including 44.01. The investment enabled 44.01 to launch its pilot project in the Emirate of Fujairah, where carbon dioxide will be permanently mineralized within rock formations.

44.01 is one of fewer than 50 climate-tech startups that have come out of the MENA region—a fraction of the 5,000 that have emerged in Europe and the U.S. Looking to spur innovation, Abu Dhabi’s Hub71 startup incubator established Hub71+ ClimateTech, which is focused on helping climate startups scale globally by providing financial support and mentorships. Funded by a 2.5 million AED (roughly $680,000) investment from ADNOC, the program provides participants with an initial 250,000 AED (around $68,000) cash incentive from Hub71 in exchange for equity, along with other incentives. 

Hub71 also partners with Catalyst to provide services—from pitch deck assistance to accounting help—that support climate-tech startups in their growth stages which Sulaiman calls the “make it or break it time” for these companies. Sulaiman says that Catalyst’s support goes far beyond capital investment. Along with providing extensive mentoring and access to a global network of climate experts and business partners, companies are also given no-cost office and manufacturing spaces.

“Climate-tech companies need a mixture of patient capital and a mixture of smart capital,” he says. “They need a little bit more time to complete their prototypes or their POCs or their pilot projects to get into that sweet spot of generating a certain amount of revenue before they hit the market, and they go to more advanced investors.”

Dubai isn’t the only country in the region investing to get more climate-focused startups off the ground. Saudi Arabia’s many green initiatives are driving investors and giga projects to invest in startups working in the climate-tech space. With the country aiming to reach net zero emissions by 2060—a goal Climate Analytics’ Climate Action Tracker deems “critically insufficient,” in part because the path to achieving it is unclear—its climate ventures have brought in $68 million in VC investment from 2018 through the first half of 2023.

The country’s King Abdullah University of Science and Technology (KAUST) is one of the key players behind this milestone. Through its existing technology ecosystem, KAUST accelerates early-stage startups with funding, training, and mentorship. 

“The whole idea from KAUST’s perspective is [to] bridge the gap from the intellectual property standpoint all the way toward deploying it in the hands of people that actually make use of it,” says Nawaf Al Gain, director of innovation ecosystems at KAUST. 

Once climate startups in the region start getting deployed, though, they have to be staffed—another hurdle amid an existing skills gap. Despite receiving 25% of the world’s solar energy, and three-quarters of its land being suitable for wind farms, the Middle East lacks existing talent in renewable energy and similar sectors. Michael Salvador, cofounder and CEO of Mirai Solar, which makes photovoltaic shades that convert blocked sunlight into energy, says it’s been something that’s slowed his company’s growth.

“There’s no solar industry in Saudi, as you would see it in other countries, [which] makes it very difficult to find people with the right technical background,” Salvador says, adding that there is a large opportunity to reskill workers for climate-focused jobs. “We hire people with other backgrounds. But we have to put a lot of effort into training and into education.”

Catalyst’s Sulaiman says that for climate tech to take off in the region, there needs to be effort from governments to make it happen.

“It’s just a matter of time before all of our climate tech companies really do take off,” he says. “[But] we’re going to need the support from the government to push policy and regulation for adoption of new climate technologies.”

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