The department will work closely with ADGM and Abu Dhabi stock market on green bonds and sukuk.
The Department of Energy in Abu Dhabi has begun a green bonds accelerator programme with a view to establishing the emirate as a regional hub for the issuance of green bonds and sukuk to finance sustainable projects across the Middle East and Africa.
The DoE will work closely with Abu Dhabi Global Market, Abu Dhabi Securities Exchange (ADX) and other stakeholders to develop a clear framework for green bonds, according to Mohammed bin Jarsh Al Falasi, undersecretary of DoE.
"The issuer of a green bond will be established in Abu Dhabi, with the money from any green bond potentially supporting sustainable and efficiency projects both inside and outside the emirate," said Mr Al Falasi.
The overall global green bond market is currently worth over $200 billion (Dh734.50bn) with the Middle East and Africa market estimated to be worth over $1bn to $2bn, with significant growth expected in future.
In a report issued last year, consultancy Deloitte said Islamic finance can play a significant role in financing solar and other alternative energy projects in the Middle East as countries put an emphasis on green energy to meet increasing demand.
"The adoption of green sukuk as one of the alternatives to several traditional financing techniques will rise due to factors such as an increasing number of solar projects, lower capital costs, favourable green energy policies, along with a preference towards Sharia-compliant instruments," the report said.
It highlighted a number of major renewables projects in the UAE including schemes at Dubai’s Mohammed bin Rashid Al Maktoum Solar Park, such as the 950 megawatt solar PV (photo volataic) phase III expansion and the 700MW CSP (concentrated solar power) phase IV development, which received investments of $940 million and $3.8bn, respectively. In Abu Dhabi, about $870m was invested in the 1,177MW Noor Abu Dhabi solar PV plant in Sweihan, which began commercial operation last year.
"The new initiative will raise confidence among investors. There is a big appetite for green financing," added Mr Al Falashi.
The Department of Energy on Wednesday also signed a Memorandum of Understanding with Japan's Marubeni Corporation for studying the possibility of introducing hydrogen as a fuel in transportation, as well as in power generation.