Dubai is discussing the option of launching a green sukuk (Islamic bond) to help fund some of its renewable energy plans.

The financing of renewable energy projects is seen as an issue because banks are often nervous about funding such initiatives. It has resulted in organisations seeking more innovative ways to fund renewable energy developments.

However, at ministerial level in Dubai, the launch of a green sukuk is being discussed. “There are internal talks in the Supreme Council of Energy to create a green fund,” said Hany Ayesh, director of Etihad Energy Services Company. “At this point it has not been finalised.”

“Financing of energy efficiency has been a real struggle,” said Alice Cowman, CEO at the UAE-based Clean Energy Business Council, speaking on the sidelines of MEED’s Clean Energy Forum conference held in Dubai on 22-24 September. “I think Dubai has recognised that; that’s why you are seeing the Esco [energy services company] model. Even with the Esco model, financing is still tricky.”

Cowman said the Council has been working with Dubai ministries to promote a green sukuk as a new way of financing clean energy projects.

“We have been encouraging that idea for quite a while and have a green sukuk working group,” she said. “We are trying to promote this idea of green sukuk as a low-cost capital markets way to finance energy efficiency and renewable energy projects.”