The Middle East and North Africa are no longer on the sidelines of the energy transition. The MENA Energy Outlook 2026 by Dii Desert Energy shows the region has reached a turning point. Renewable capacity jumped 44% in 2025 to about 43.7 GW. Solar PV led the surge, accounting for 34.5 GW.

The growth is unprecedented. MENA took five years to rise from about 14 GW in 2020 to 30 GW in 2024. Then, in just one year, it added nearly 15 GW. This was not gradual progress. It was a rapid scale-up driven by cheap solar power, competitive auctions, and a booming project pipeline.

Falling costs are at the core of this shift. In 2025, solar and wind tenders set new global records. Solar PV prices dropped to around 1.09 US cents per kWh. Wind fell to about 1.33 US cents per kWh. These prices are reshaping expectations for large-scale clean energy worldwide.

Policy, Pipeline, and Project Momentum Poised for Scale

The region’s renewable energy project pipeline has ballooned to ~202 GW — a figure that now nearly matches aggregated national targets out to 2030. That pipeline isn’t theoretical; it includes 38 GW under construction and a deep roster of gigawatt-scale solar programs ready to move into execution.

Under Dii’s updated scenario framework for 2030, three pathways emerge:

• A Conservative baseline: 165 GW total renewables.
• A Balanced transition: 235 GW, roughly aligned with national ambitions.
• A Green Revolution: 290 GW, representing full regional potential.

Even the conservative outlook reflects a dramatic acceleration — the result of policy clarity, cost competitiveness, and private capital intent on capturing the region’s unparalleled solar resource.

Saudi & UAE Leading Deployment

Saudi Arabia has emerged as a standout. Operational capacity nearly tripled in one year, reaching around 11.7 GW, and it now stands as a regional leader not only in volume but in setting cost benchmarks.

Meanwhile, the UAE continues to punch above its weight with flagship projects. Masdar and Emirates Water and Electricity Company (EWEC) have begun the construction of a 5.2 GW solar park integrated with 19 GWh of battery storage – one of the largest renewable + storage complexes globally. This project is intended to deliver baseload clean power at scale, significantly reducing reliance on gas-fired generation.

• READ MORE: MENA’s Renewable Energy Boom: Solar Capacity to Hit 180 GW by 2030 

Solar: The Uncontested Leader

Solar is the centerpiece of the MENA transition — and for good reason.

• Market share: Solar PV dominates the region’s current renewable fleet, making up roughly 79% of deployed renewables with 34.5 GW.
• Pipeline strength: Of the total 202 GW pipeline, solar accounts for the majority — around 130 GW — leaving wind and storage to complement its growth.
• Economics: First-of-their-kind auction prices have pushed levelized costs to historic lows, intensifying private-sector interest and reducing capital-cost risk for long-duration financing.

This solar dominance aligns with broader global forecasts that see solar accounting for most of renewable growth in the decade ahead, especially as project cost declines continue to outpace projections.

The critical driver here is not just sunshine but economics: solar power in MENA is now among the cheapest baseload energy available, challenging even entrenched natural gas generation in many markets.

From Panels to AI: MENA’s New Demand Drivers

One of the most interesting insights in the Outlook is the emergence of AI infrastructure as a renewable energy demand driver.

The report highlights that data centers — spurred by the rapid adoption of AI — are becoming “super offtakers” of clean energy. These facilities require long-term, high-capacity power contracts, which in turn improve the bankability of large renewable power purchase agreements (PPAs).

This is a structural shift. Traditionally, renewable PPAs in the corporate sector were dominated by manufacturing and export industries. Now, the AI ecosystem’s appetite for reliable, low-carbon power is helping unlock financing and long-duration contract structures that support gigawatt-scale solar and storage.

In effect, AI is not just a user of clean power — it’s becoming a market catalyst, compressing risk premia and enabling developers to sell projects at scale with predictable cash flows. This is exactly the type of demand signal that carbon markets and corporate net-zero strategists value most: stable, creditworthy offtake linked to decarbonization commitments.

Energy Storage: The Key to 24/7 Clean Power

Solar’s growth creates a natural need for storage solutions, and MENA is responding. Battery Energy Storage Systems (BESS) are rising fast — with about 25 GWh operational today and projections showing ~156 GWh by 2030 (a more than six-fold increase).

This shift is pivotal: storage enables firm, dispatchable renewables, bridging gaps between peak solar output and evening demand. It also reduces grid stress and curtails reliance on fossil peaking units — which, in carbon accounting terms, lowers actual emissions and improves marginal grid intensity.

The shift toward BESS over thermal energy storage reflects global trends in cheaper lithium-ion systems and increased merchant storage markets, signaling that long-duration storage will be a defining piece of the region’s decarbonization story.

• READ: Sungrow Powers ENGIE’s €290M Vilvoorde Battery Park, Europe’s Largest of Its Kind 

Carbon, Climate, and Forecasts

MENA’s transition — led by solar — has direct implications for carbon reduction pathways:

• The region’s power sector emissions are highly carbon-intensive today. Replacing fossil generation with low-carbon solar and storage can materially reduce grid emissions intensity.
• Large-scale deployment and low costs improve the economics of displacement, especially for gas. That in turn strengthens the case for deeper cuts aligned with Paris Agreement goals.

However, challenges remain. Natural gas still dominates power generation in many countries and will likely remain part of the mix through 2030. That underscores the importance of carbon pricing, power market reform, and long-term PPAs to accelerate coal-to-solar displacement and enable hydrogen sectors to scale.

MENA: Forecast to 2030 and Beyond

• Balanced transition (235 GW): Renewable power capacity grows significantly, narrowing the gap to climate targets and improving energy security.
• Green Revolution (290 GW): If finance, supply chains, and permitting keep pace, MENA could exceed current national goals and unlock deeper emissions reductions.

Global modeling from other sources also suggests that solar and wind could respectively represent the majority of electricity growth in the next decade — a pattern that amplifies the MENA trajectory.

MENA has shifted from potential to performance, driven by low-cost solar, strong project pipelines, and rapid growth in energy storage. New demand from AI is adding fresh momentum.

This progress creates fertile ground for carbon markets. Large, contract-backed renewable projects offer credible, long-term emissions reductions. As power markets mature, MENA is emerging as a key player in energy security and global decarbonization.

• READ MORE: BYD and Saudi Arabia Tandem for World’s Largest Battery Energy Storage Project

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Canada’s climate journey is entering a more uncertain phase. Emissions are trending lower, investments continue to flow, and clean technologies remain in play. Yet momentum is clearly weakening. That is the central message of Climate Action 2026: Retreat, Reset or Renew, the third annual report from the RBC Climate Action Institute.

The report paints a nuanced picture. Progress has not stopped. But it has slowed. Policy reversals, economic pressures, and shifting public priorities are weighing on climate ambition at a time when speed matters most.

Canada now faces a defining question: retreat from climate action, reset its approach, or renew its commitment with a sharper focus.

Emissions Are Falling, but Not Fast Enough

Canada’s total greenhouse gas emissions are projected to be 7% lower in 2025 than in 2019, according to RBC’s estimates. That marks real progress, especially after years of volatility during and after the pandemic.

However, this pace remains well short of what Canada needs to hit its longer-term targets. The country has committed to reducing emissions by 40% to 45% below 2005 levels by 2030 and by 45% to 50% by 2035. Current trends suggest those goals will be difficult to reach without stronger policy signals.

Several sectors have reduced emissions intensity:

• Electricity: down 27%
• Buildings: down 19%
• Oil and gas: down 19%

These gains reflect cleaner power generation, improved efficiency, and gradual technology upgrades. Still, absolute emissions reductions remain modest, especially in sectors tied to economic growth and population expansion.

Climate Action Barometer Hits a Turning Point

For the first time since its launch, the Climate Action Barometer declined. This index tracks climate-related activity across policy, capital flows, business action, and consumer behavior.

The drop was broad-based. No single sector drove the decline. Instead, multiple pressures hit at once.

Key factors include:

• The removal of the consumer carbon tax
• The rollback of electric vehicle incentives
• Economic uncertainty and rising trade tensions
• Alberta’s restrictions on new renewable energy projects

Together, these shifts weakened confidence. Businesses delayed or canceled projects. Consumers pulled back on major clean-energy purchases. Climate policy slipped down the priority list for governments focused on affordability and job creation.

While climate action remains above pre-2019 levels, the trendline has clearly flattened.

Capital Flows Hold Steady, but Growth Has Stalled

Climate investment in Canada has leveled off at around $20 billion per year. That figure has barely moved in recent years.

Public funding remains a stabilizing force. Nearly $100 billion in incentives for clean technology and climate programs is already budgeted for deployment through 2035 by Ottawa and the largest provincial governments.

However, private capital is showing signs of caution. Investment declined compared to 2024, driven largely by cooling sentiment toward early-stage climate technologies. Policy uncertainty has amplified investor risk concerns, especially in capital-intensive sectors like renewables and clean manufacturing.

Some bright spots remain. Wind projects on Canada’s East Coast have supported investment flows, even as renewable development slowed elsewhere.

Carbon Pricing Changes Ease Pressure

The federal government eliminated the consumer carbon tax in April 2025, refocusing carbon pricing solely on industrial emitters. The change had a limited impact on national emissions coverage, as only around three percent of agricultural emissions were subject to consumer pricing.

For farmers, the move delivered meaningful financial relief. Many agricultural operations rely on propane to dry grain or heat livestock facilities. Few cost-effective, lower-carbon alternatives exist in rural regions, making the tax a direct burden on operating costs. Removing it eased pressure without significantly weakening the overall emissions policy.

Still, the decision lowered Canada’s climate policy score and sent mixed signals to investors and businesses evaluating long-term decarbonization strategies.

• RELATED: Canada’s Carbon Pricing Reset in 2026: Will Industry Step Up or Stall Climate Progress?

EV Slowdown Signals Shifting Consumer Priorities

Consumer behavior has become a significant hindrance to climate momentum. Electric vehicle adoption slowed sharply in 2025. EVs accounted for just eight percent of total vehicle sales in the first half of the year, down from twelve percent during the same period in 2024. Passenger EVs now make up only about four percent of Canada’s total vehicle stock.

Higher interest rates, the removal of purchase incentives, and uncertainty around future mandates all contributed to the pullback.

• The federal government also delayed the Electric Vehicle Availability Standard, which was set to require EVs to represent 20% of new vehicle sales by 2026. That pause further weakened confidence across the market.

At the same time, not all clean technologies lost ground. Heat pump adoption edged higher, supported by new efficiency funding, particularly in Ontario. The province’s $10.9 billion commitment to energy efficiency programs could support further uptake, even as other consumer-facing climate actions slow.

Public priorities have also shifted. Only about a quarter of Canadians now identify climate change as a top national issue. Cost of living pressures, healthcare access, and economic stability dominate public concerns, reshaping how households weigh climate-related decisions.

Buildings Sector Becomes the New Battleground

The RBC Institute’s 2026 “Idea of the Year” focuses squarely on Canada’s buildings sector, which has quietly become one of the country’s most challenging emissions sources. Emissions from buildings rose 15% between 1990 and 2023 and now represent a larger share of national emissions than heavy industry.

Today, buildings account for roughly 18% of Canada’s greenhouse gas emissions when electricity-related emissions are included. Progress remains slow. Emissions from the sector are projected to fall by just one percent in 2025, a pace that leaves Canada far from its net-zero target for buildings by 2050.

New construction adds to the risk. If projects continue to follow prevailing building codes, emissions could rise by an additional 18 million tonnes over time, locking in higher emissions for decades.

Responsible Buildings Pact Points to a Reset

Against this backdrop, the Responsible Buildings Pact offers a potential reset. Launched in 2024 under the Climate Smart Buildings Alliance, the initiative aims to accelerate the adoption of low-carbon designs and materials across the construction sector.

The pact focuses on scaling the use of mass timber and low-carbon concrete, steel, and aluminum. These materials can significantly reduce embodied carbon in new buildings while strengthening domestic supply chains. The approach is particularly timely as Canadian producers face constraints from U.S. trade tariffs, limiting access to lower-emissions materials.

If widely adopted, the pact could transform how Canada builds homes, offices, and infrastructure. By embedding emissions reductions into construction decisions today, the sector could deliver long-term climate gains while supporting industrial competitiveness.

Electricity Progress Slows After Early Success

Canada’s electricity sector remains one of its strongest climate performers. Emissions have fallen an estimated 60% since 2005, surpassing Paris Agreement targets. Coal phase-outs continue to drive reductions, with more than six terawatt-hours of coal power expected to be removed from the grid this year.

Still, progress slowed in 2025. Uncertainty surrounding Alberta’s renewable energy policies led to the cancellation of 11 gigawatts of planned capacity, roughly half of the province’s existing generation. At the same time, natural gas use rose sharply, offsetting some of the emissions gains from coal retirements.

Canada now faces a dual challenge: doubling electricity capacity while fully decarbonizing it by 2050. Estimates suggest the required investment could exceed $1 trillion, underscoring the scale of the task ahead.

Climate Action at a Defining Moment

The RBC report makes one point clear. Canada has not abandoned climate action, but it has lost momentum. Emissions are lower, capital remains available, and technology continues to advance. Yet policy clarity has weakened, consumer confidence has faded, and investment growth has stalled.

With just 25 years left to reach net zero, the choices made now will shape Canada’s emissions trajectory for decades. Renewed coordination between governments, businesses, and consumers will be essential, along with policies that balance economic realities without sacrificing long-term climate goals.

Canada still has time to reset and renew. What it cannot afford is continued drift.

• ALSO READ: Canada to Launch Sustainable Investment Taxonomy in 2026 to Guide Green and Transition Finance

The post Canada’s Climate Momentum Slows in 2026 Despite 7% Emissions Drop, RBC Report Finds appeared first on Carbon Credits.

Some of the world’s biggest tech companies and space startups are racing to build data centers in space. These orbital data centers are meant to support the massive computing needs of artificial intelligence (AI). Companies see space as a place to get abundant solar energy and natural cooling without the limits of Earth’s power grids. This idea moved from theory to early testing in late 2025–2026 and gained spotlight at the AIAA SciTech Forum 2026 in Orlando, Florida, last week.

Several tech giants, including Google, SpaceX, and Blue Origin, are exploring space‑based computing. At the same time, startups like Starcloud have already launched prototypes with advanced AI hardware into orbit. These efforts reflect growing interest in solving energy, cooling, and infrastructure challenges that terrestrial data centers face.

Why the Tech Giants Look to Space

AI needs more computing power than ever. Traditional data centers on Earth use huge amounts of electricity and water for power and cooling. In the U.S., data centers used over 4% of total electricity in 2024 and could increase to between 6.7% and 12% by 2028 if current trends continue.

At the same time, global data center electricity demand may nearly double by 2030 to about 945–980 terawatt‑hours per year due to AI and cloud services.

• Space offers two major advantages: near‑constant solar power and natural cooling.

Solar panels in orbit can be up to 8x more efficient than on Earth because there is no atmosphere to block sunlight. Heat can also be released directly into space by radiation, without the need for water‑based cooling systems.

These factors could lower energy costs and help AI computing scale without straining terrestrial power systems. Companies see space as a place where solar energy is abundant, and energy from the sun is almost always available, especially in certain orbits.

What the Tech Giants Are Doing

Google: Project Suncatcher

Google has announced a research initiative called Project Suncatcher. The project aims to put AI computing hardware into orbit using solar‑powered satellites.

The tech giant plans to launch two prototype satellites equipped with its own AI chips by early 2027 to test whether they can run in space. The goal is to create blueprints for future space‑based data centers.

Google says these satellites will use Tensor Processing Units (TPUs), chips designed for AI tasks, and connect via laser links instead of traditional wires. The company’s CEO said that using solar energy in space could help support the AI industry’s rapidly rising computing needs.

• SEE MORE: Google’s Bold Climate Actions: AI in the Amazon and Solar Power in Space!

Starcloud: First AI Model in Orbit

Starcloud, a startup backed by Nvidia and venture capital firms, has achieved an important milestone. In late 2025, the company launched a satellite called Starcloud‑1 carrying an Nvidia H100 GPU. This satellite successfully trained and ran AI models, including a version of Google’s Gemma model, in orbit. This marked the first AI model training in space.

Starcloud aims to expand this capability with future satellites. The company has proposed building a large space data center with about 5 gigawatts (GW) of solar panels spread over several kilometers. The design would deliver more compute power than many terrestrial data centers with efficient energy use.

SpaceX and Blue Origin

Elon Musk‘s SpaceX and Blue Origin are also exploring space data centers. SpaceX plans to use its Starlink satellite network and future satellites that could carry AI compute hardware.

Reports suggest SpaceX may launch upgraded Starlink satellites with terabit‑class capacity starting in 2026. Musk has also talked about using reusable rockets to place larger compute hubs into orbit at scale.

Blue Origin, backed by Jeff Bezos, reportedly has a team working on technology for orbital data centers. The aim is to develop systems that can support AI workloads beyond Earth. These efforts build on Blue Origin’s long history in rocket and space technology.

Global Competition: Startups and Nations Join In

Space data centers are attracting attention beyond the big tech names. Multiple startups and international players are racing to build compute infrastructure in orbit.

Companies like PowerBank Corporation and Orbit AI are planning space‑based nodes or cloud services powered by solar energy. Moreover, Axiom Space has outlined plans for data center modules on its private space station by 2027.

• MUST READ: PowerBank and Orbit AI to Launch the First Orbital Cloud for Space-Based Digital Network

Outside the U.S., China is also advancing space compute projects. The Three‑Body Computing Constellation aims to deploy thousands of satellites equipped with high‑performance GPUs and AI models. The long‑term goal is to provide a combined computing capacity of 1,000 peta‑operations per second (POPS) — a measure of compute power far beyond many ground‑based supercomputers.

This global competition highlights how nations and companies see orbital data centers as strategic infrastructure for AI and other advanced computing tasks.

Challenges and Engineering Hurdles Above the Atmosphere

Building data centers in space is not easy. Engineers must solve many technical problems before full‑scale orbital centers become common.

• Radiation: Space radiation can damage GPUs and other chips. Orbital data centers need heavy shielding and backup hardware.
• Cooling: Space has no air or water. Systems must use radiative cooling, which is complex but essential.
• Debris: Crowded orbits raise collision risks. Large structures could worsen the Kessler syndrome.
• Costs: Launching hardware is costly. Firms expect costs to fall to about $200 per kilogram by the mid-2030s, improving feasibility.

Potential Benefits: Solar, Cooling, and Scaling

Despite the challenges, space‑based data centers offer potential benefits that are hard to match on Earth. More remarkably, the market is set for rapid growth as demand for AI compute expands.

Analysts expect the market to rise from about $1.77 billion in 2029 to nearly $39.1 billion by 2035. This shows an annual growth rate of about 67.4%. This surge is driven by rising AI workloads, growing satellite constellations, and the need for more sustainable, high-performance computing beyond Earth-based limits.

Major advantages of orbital data centers include:

Continuous Solar Power

Satellites in certain orbits can receive sunlight almost 24 hours a day. This could allow data centers to run on clean solar energy constantly, without interruptions from night, clouds, or weather. Solar panels in orbit operate at efficiencies up to eight times those on Earth’s surface.

Natural Cooling

The vacuum of space can help with cooling. Heat radiates into cold space at temperatures as low as 4 Kelvin (−269°C). This natural cooling eliminates the need for water‑intensive cooling systems used by terrestrial data centers.

Compute Scaling

As AI models grow larger, so too does their compute demand. Space data centers could provide new capacity that is not limited by Earth’s land, water, or grid constraints. If prototypes prove successful, large orbital systems might be scaled over the next decade.

Future Outlook: Will AI Go Beyond Earth?

Tech companies and startups are actively exploring space‑based data centers to meet the rapidly rising computing requirements of AI. Google’s Project Suncatcher, Starcloud’s prototypes, and efforts by SpaceX and Blue Origin show that orbital compute infrastructure is moving from concept to early reality.

Space offers nearly constant solar energy and natural cooling, which could ease the energy and environmental pressures associated with traditional data centers. Still, radiation, heat management, space debris, and launch costs are major challenges ahead.

The next few years — especially prototype launches around 2027 — will show whether space data centers can become a practical part of the future AI infrastructure landscape.

• READ MORE: Orbital Data Center Guide: Everything You Need to Know About This Next-Gen Space Computing Technology

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