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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Mitsui O.S.K. Lines, also known as MOL, one of Japan’s biggest shipping companies, announced its first carbon removal results under its long-term environmental plan. This move marks a real step beyond reducing emissions. MOL aims to reach net-zero greenhouse gas (GHG) emissions by 2050 under its Environmental Vision 2.2.

Shipping emissions are hard to cut, so removal methods help tackle the remaining CO₂. MOL’s actions also reflect the global growth of the carbon removal market. Companies and countries are investing more in solutions that take CO₂ out of the air for long-term storage. This trend is rising as climate targets push industries to go beyond emission cuts.

DAC, Ocean Capture & Rocks: A Trio of MOL’s First Carbon Removal 

In fiscal 2024, MOL announced its first verified carbon removal achievements. This progress builds on its Environmental Vision 2.2 strategy. The shipping giant secured measurable removal commitments using several technologies.

In its LinkedIn post, the company notes:

“In FY2024, MOL reported credits equivalent to 2,000 tons of CO₂ emissions- marking the company’s first tangible achievement in CDR… As MOL continues to diversify its CDR portfolio, it remains committed to finding and scaling the most effective solutions- both natural and technological- to advance toward a decarbonized future.”

MOL partnered with Climeworks, a leading Direct Air Capture (DAC) company. Through this partnership, the company agreed to procure 13,400 tonnes of CO₂ removal by 2030 using Climeworks’ DAC systems.

• MOL is the first shipping company globally to set up this type of DAC purchase. DAC pulls CO₂ directly from the air and stores it permanently.

MOL also signed an offtake agreement for 30,000 tonnes of carbon removal credits from Captura’s Direct Ocean Capture technology. This method removes CO₂ from seawater, which draws CO₂ from the air over time.

In addition, MOL made a deal with Alt Carbon for 10,000 tonnes of carbon removal credits. These credits come from enhanced rock weathering in India. Enhanced weathering helps pull CO₂ from the air into minerals in soil, a type of removal considered higher quality and more durable. This deal is the first of its kind between a Japanese shipping company and an Indian climate tech firm.

MOL is also buying enhanced rock weathering removal credits through another multiyear offtake. This brings added diversity to its removal portfolio. These deals help the company support different removal paths rather than relying on a single method.

• SEE MORE: MOL Becomes the First Japanese Shipping Firm to Retire Tech-Based CDR Credits Through NextGen

Why Shipping Needs Removals

The global shipping industry carries about 90% of traded goods by volume. It also produces roughly 3% of global CO₂ emissions. If trade grows, emissions could rise unless action is taken.

The International Maritime Organization (IMO) aims for shipping emissions to drop. The targets are: 20-30% reduction by 2030, 70-80% by 2040, and net-zero by 2050, all compared to 2008 levels.

Even with cleaner fuels like ammonia or hydrogen, some emissions will remain hard to avoid. Energy efficiency and fuel switches help, but they cannot remove all CO₂ from long ocean voyages. Carbon removal fills this gap. It helps shipping companies offset their leftover emissions while future fuel solutions scale up.

• RELATED: Shipping Toward Net Zero: Maritime Turns to Green Hydrogen and Ammonia

MOL’s Environmental Vision 2.2 plan aims to remove 2.2 million tonnes of CO₂ by 2030. This goal covers all its removal initiatives. This creates demand for early‑stage removal solutions and helps scale emerging technologies.

Partnerships on the Horizon: Forests, Carbon Credits, and Cross-Industry Moves

MOL’s carbon removal work includes broader moves with partners and industry players. The company is supporting carbon credits to cut emissions and expand negative emissions. All credits are third-party certified and independently verified to ensure quality and impact.

In January 2025, MOL and Marubeni Corporation started Marubeni MOL Forests Co. This joint venture will create, trade, and retire nature‑based carbon credits. Its first project aims to plant around 10,000 hectares of new forest in India. This will generate credits from afforestation and reforestation. These forests will start producing removals around 2028. Nature‑based solutions help store carbon while boosting biodiversity and soil quality.

Also, MOL signed a deal with ITOCHU Corporation. This agreement aims to promote environmental attribute certificates. These certificates help cut Scope 3 emissions in transportation. This work is the first Japanese model linking shipping and aviation in environmental certificate use. Scope 3 emissions come from supply chains and end‑use.

Another related program is the NX‑GREEN Ocean Program by Nippon Express, launched in February 2025. It uses carbon inset certificates tied to low‑carbon shipping by MOL vessels. These certificates help companies reduce their Scope 3 freight emissions. The program shows how removal and decarbonization can work together for supply chains.

Together, these partnerships show MOL’s expanding role. The company is connecting technical and natural removal solutions with marine decarbonization and cross‑industry climate efforts.

Riding the Carbon Market Wave

The global carbon removal market is growing fast. Corporations and governments are investing more in long-lasting removal methods. These include DAC, ocean capture, enhanced weathering, and nature-based solutions. This growth matches scientific calls for big removals to keep warming under 1.5°C.

MOL is helping to expand the removal market by investing in multiple technologies. A joint venture for a NextGen CDR Facility, including MOL and other buyers, aims for over 1 million tonnes of certified removals by 2025. These projects include DAC and biomass removal with long-term storage. Early demand helps drive down costs over time and encourages more technological development.

Shipping companies are also investing in emission reduction technologies. These include more efficient ship designs, alternative fuels, and onboard carbon capture systems.

Global shipping firms continue to align with the IMO’s decarbonization goals through technology upgrades, fuel changes, and climate partnerships. This includes work on hull design, logistics efficiency, and fuel alternatives such as ammonia and hydrogen. Those efforts reduce emissions intensity and support long-term climate targets.

Challenges Ahead: Cost, Permanence, and MRV

Despite progress, carbon removal faces challenges.

• High Costs and Early Stage Technology: Direct Air Capture and ocean capture remain expensive and are still early in deployment, making them less appealing than traditional emission reductions.
• Need for Strong MRV and Certification: Measurement, Reporting, and Verification systems must stay robust to ensure credits reflect real and lasting CO₂ removal. Independent certification is critical for market trust.
• Nature-Based Risks: Forest and land projects require careful planning. Carbon storage can be reversed if forests burn, degrade, or are mismanaged. High-quality MRV standards help protect long-term carbon value.

Sailing Toward 2050: MOL’s Vision for Net-Zero Maritime

Despite challenges, experts say removals will be necessary for sectors that cannot eliminate emissions by 2050. Shipping, aviation, and heavy industry will likely cut emissions and use durable removals to meet climate goals.

For MOL, investing in removal markets, partnerships, and strong MRV frameworks positions the company as a leader in maritime decarbonization. The first results under Environmental Vision 2.2 show how shipping firms can add new climate solutions to their sustainability plans.

By partnering with DAC, ocean capture, and enhanced weathering technologies, and by investing in nature-based solutions, MOL is expanding its climate action beyond traditional emission cuts.

As shipping and corporate climate planning evolve, carbon removal will remain a key part of long-term strategies. MOL’s progress with Environmental Vision 2.2 shows how companies can blend technology, nature, and market forces to achieve bold climate goals.

• READ MORE: Maritime Decarbonization: Japanese Shipping Giant NYK Partners with 1PointFive for DAC Credits

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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

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