Low-cost financing can help power a green energy transition while saving the world $50 trillion in its goal to reach net zero by 2050, according to a report.
Governments, financial institutions and investors must jointly find ways to reduce the risk of investing in green projects by developing blended and low-cost finance solutions to attract private sector funding, global consultancy Deloitte said.
This will help countries balance economic growth and climate neutrality, especially in emerging economies.
Major investments of $5 trillion to $7 trillion per year are needed through to 2050 in the energy sector to drive the transition but less than $2 trillion is currently spent each year, according to the report.
This highlights underinvestment in green projects and the high return rates required because private investors perceive sustainability projects as riskier than alternative investments.
Taking swift action means that the projected savings of $50 trillion through to 2050 can reduce the annual investment needed by more than 25 per cent, Deloitte said in its Financing the Green Energy Transition report.
“Just as we are continually developing solutions and technology to rapidly decarbonise, we must take definitive steps to remove financial barriers in order to accelerate a just energy transition, especially in developing economies,” said Jennifer Steinmann, Deloitte's global sustainability and climate practice leader.
“Decisive and co-ordinated policy support and hand in hand action across the global finance ecosystem are critical to guiding investments toward green projects and supporting the growth of sustainable economies.”
The report comes a day before the Cop28 UN climate summit in Dubai on Thursday, when world leaders will focus on accelerating the world’s transition to more sustainable forms of energy.
In a sluggish global economy, a major question is how to pay for it, and climate finance will be a key topic during the global gathering.
“If investments do not scale up rapidly, the world will fail to meet its climate objectives,” Deloitte said in its report.
Less than half of green investments are currently made in developing economies, mostly due to greater risks and stricter public budget constraints for energy transition projects. These projects are seen as less bankable, which means their risk-return profile does not meet investors' criteria to inject capital.
However, to reach net zero, nearly three quarters of green investments would need to be made in developing economies by 2030, according to the report.
“To further lighten the financial burden on the Global South, governments, financial institutions and international organisations must implement concessional finance – a loan made on more favourable terms than the borrower could obtain in the market – through innovative financing structures that mobilise private capital for climate action,” said Hans-Juergen Walter, Deloitte's global financial services industry sustainability and climate leader.
“Major financial institutions, such as development banks and multilateral funds, play a pivotal role in this context.”
Call to action
Governments, financial institutions and industries must work together to develop mechanisms and tools that will unlock private finance at attractive costs to accelerate the energy transition, the report said.
“Two key efforts chiefly aimed at emerging economies will be to de-risk projects to lower the cost of capital and to remove barriers constricting the flow of private capital toward green projects,” Deloitte said.
Without concessional finance in developing economies, a net-zero scenario would cost more than $7 trillion per year through to 2050, or $200 trillion in total by midcentury, the report showed.
About 70 per cent of those investments would take place in low and middle-income economies.
Making green projects more bankable can “unleash private finance” and bring investment spending down by $2 trillion every year. This amounts to $50 trillion in total by midcentury, which is about half of the global annual gross domestic product today, the report said.
Concessional funding using better financing structures can reduce the cost of the energy transition by nearly 40 per cent for developing countries, lowering global investment needs to $5.5 trillion per year.
The green transition can increase the world economy by $43 trillion between 2021 and 2070, the report said.
Required investment levels remain below 6 per cent of global GDP annually, whereas a current policy pathway – aligned with plus 3°C of global warming – would entail almost 8 per cent of global GDP loss by 2070, the report said.
“To reach climate goals, some 70 per cent of green investments would need to happen in the Global South by 2030. This can only be possible with international co-operation and the active participation of development finance institutions and multilateral development banks,” the report said.
Living in...
This article is part of a guide on where to live in the UAE. Our reporters will profile some of the country’s most desirable districts, provide an estimate of rental prices and introduce you to some of the residents who call each area home.
What vitamins do we know are beneficial for living in the UAE
Vitamin D: Highly relevant in the UAE due to limited sun exposure; supports bone health, immunity and mood.
Vitamin B12: Important for nerve health and energy production, especially for vegetarians, vegans and individuals with absorption issues.
Iron: Useful only when deficiency or anaemia is confirmed; helps reduce fatigue and support immunity.
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Timeline
2012-2015
The company offers payments/bribes to win key contracts in the Middle East
May 2017
The UK SFO officially opens investigation into Petrofac’s use of agents, corruption, and potential bribery to secure contracts
September 2021
Petrofac pleads guilty to seven counts of failing to prevent bribery under the UK Bribery Act
October 2021
Court fines Petrofac £77 million for bribery. Former executive receives a two-year suspended sentence
December 2024
Petrofac enters into comprehensive restructuring to strengthen the financial position of the group
May 2025
The High Court of England and Wales approves the company’s restructuring plan
July 2025
The Court of Appeal issues a judgment challenging parts of the restructuring plan
August 2025
Petrofac issues a business update to execute the restructuring and confirms it will appeal the Court of Appeal decision
October 2025
Petrofac loses a major TenneT offshore wind contract worth €13 billion. Holding company files for administration in the UK. Petrofac delisted from the London Stock Exchange
November 2025
180 Petrofac employees laid off in the UAE
Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
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