The Cabinet approved the UAE federal budget for 2026, describing it as the largest in the country’s history and emphasizing sustainable development and economic growth. The budget sets expenditures at Dh92.4 billion, a 29.2% increase from 2025, with 48% of spending directed to infrastructure and construction.

The Selected Issues paper discusses United Arab Emirates’ (UAE) focus on reforms for productive and greener growth.[2] This paper aims to quantify the potential long-term growth and productivity gains from ongoing structural reform efforts.[2] Using the IMF’s DIGNAR model, the related annex shows that green investments and reforms undertaken under the UAE’s 2050 Strategies could almost double potential non‑hydrocarbon GDP growth, indicating a strong positive impact of scaled‑up green investment on long‑term real growth.[1] Developing and scaling up private green and sustainable finance, as well as creating an enabling environment for smooth energy transition, would reduce direct fiscal costs, increase efficiency of green investments, and preserve public financial wealth while delivering on growth and Net Zero ambitions.[2]

The UAE government aims to invest 600 billion dirhams by 2050 to meet the growing energy demand and drive the sustainable growth of the national economy. The strategy aims to increase the share of clean energy in the total energy mix from 25 percent to 50 percent by 2050, and to reduce the carbon footprint of power generation by 70 percent, thereby saving 700 billion dirhams by 2050. It also seeks to increase energy consumption efficiency of individuals and companies by 40 percent.

Using the IMF’s DIGNAR model we show that green investments and reforms undertaken under the 2050 Strategies could almost double potential non‑hydrocarbon GDP growth.[1] A well‑coordinated and prioritized reform agenda would support the growth dividend of larger green investments.[1] While the growth impact of additional investments would be hump‑shaped, implying higher productive gains of public investments in the short‑term with diminishing returns, successful implementation of the UAE’s ambitious 50‑year reform agenda would improve the investment climate for green energy, attract more private investment and skilled labor.[1] Accelerating energy transition reforms would put additional pressures on public finances; frontloading investments in adaptation and mitigation would mean higher non‑oil primary deficits during the transition period, resulting in lower net public financial wealth, but alternative financing strategies (including relying more on green and sustainable private finance) would help preserve wealth while delivering growth and Net Zero ambitions.[1]

The UAE Cabinet approved the 2026 federal budget, with expenditures of Dh92.4 billion ($25.2 billion), up 29.2% from the previous year. The government said the budget focuses on sustainable development, economic stability and growth.

The UAE fiscal position remains sustainable and aligned with intergenerational objectives.[6] The paper discusses federalism and fiscal operations in the UAE, noting that current and projected public finances allow room for continued investment spending while maintaining sustainability.[6] It underscores that careful calibration of federal and emirate‑level spending and saving can support long‑term growth and diversification objectives, including investment in energy‑related projects, without jeopardizing fiscal sustainability.[6]

The Government of the United Arab Emirates (UAE) continues to pursue economic diversification and regulatory reforms to promote private sector development, reduce dependence on hydrocarbon revenues, and build a knowledge economy buttressed by advanced technology and clean energy.[5] In March 2025, the UAE committed to a 10‑year, $1.4 trillion investment framework focusing on AI, frontier technologies, energy, and manufacturing.[5] In March 2025, the Cabinet approved National Investment Strategy 2031 aiming to more than double total foreign investment inflows from $30.5 billion in 2023 to $65.3 billion by 2031; the strategy focuses on key sectors such as industry, logistics, financial services, renewable energy, and information technology.[5] The report notes that the UAE does not yet offer green investment incentives, indicating that future targeted incentives for renewable energy would represent a change in policy direction.[5]

Renewable energy has emerged as the top recipient of greenfield FDI over the past decade in the United Arab Emirates, while digital sectors account for a growing share.[9] The OECD analysis links strong renewable energy investment to the UAE’s broader growth and diversification strategy, highlighting that investment in solar and other renewables has attracted substantial foreign capital and supported non‑oil sector expansion.[9] The report notes that targeted investment policies in sectors such as renewable energy can enhance productivity, innovation, and long‑term growth, provided they are embedded in a sound overall investment climate.[9]

The UAE has set a balanced federal budget of AED92.4bn for 2026, a 29% jump in both revenue and spending, underpinned by new tax measures and an expected uplift from hydrocarbons. The plan channels funds towards social services and strategic investments aligned with the ‘We the UAE 2031’ vision. Details of the 2026 federal budget are limited, but the direction is clear: the government is accelerating progress towards its long-term development plan, which targets a doubling of GDP and greater leadership in technology, human capital, and international engagement. The largest increase by headline category is for ‘Financial Investments’, rising by AED12.5bn (0.6% of GDP), or 431%, supporting outward FDI ambitions.

According to the specialist energy platform, the first half of 2026 saw the launch of solar, wind, electricity storage and specialised industrial complexes with investments exceeding billions of dollars, with Egypt and the UAE topping the list of markets most attractive to new investments in clean energy. The cooperation agreement between Emirates Water and Electricity Company and Masdar occupies a prominent place among the largest renewable energy deals in the first half of 2026, with targeted projects including development of more than 30 GW of solar projects and more than 8 GW of battery electricity storage systems, supporting the UAE’s goals of achieving carbon neutrality and enhancing energy security.

The report says financial incentives and regulatory frameworks can encourage renewable energy plants to maximize generation and accelerate deployment. It specifically recommends incentives such as tax credits, feed-in tariffs, and direct subsidies to shorten payback periods and attract investors.

The UAE is working to implement renewable energy and energy efficiency programs. Under its National Energy Strategy, the UAE invests $54 billion to meet growing energy demands.

The UAE continues to consolidate its position as a global centre for investment in clean energy and deployment of sustainability solutions through a package of projects announced for financing and implementation during 2026 by a group of national companies specialised in this field. The installed renewable energy capacity in the country exceeded 7.7 GW, with projects under implementation that will raise total capacity to more than 23 GW by 2031. Renewable energy capacity grew by 117% between 2022 and 2025, reflecting the effectiveness of national policies and the acceleration of strategic projects aimed at building a more sustainable and efficient energy system, which supports economic development and energy security.

The budget includes Dh92.4 billion in expenditure, a 29.2% increase from 2025, and the government says it will prioritize sectors supporting citizens' well-being and sustainable economic growth. It also says the UAE plans to invest between Dh150 billion and Dh200 billion by 2030 to meet energy demand and support clean energy initiatives.

Representatives of the Central Bank of the UAE and the IMF met to discuss how they could partner on sustainable financing ahead of COP28, which will be hosted by the UAE.[3] The two parties discussed the CBUAE’s agenda for green financing and how both organisations could align with the Emirates’ strategy for sustainable growth.[3] The article quotes UAE officials emphasising that these ties support efforts "to establish sustainable growth in various sectors" and to "encourage sustainable development," suggesting that green and sustainable financing is seen as a lever for longer‑term economic growth.[3]

Modest global growth continues, but the outlook is highly uncertain—reflecting in part the need for countries to shift rapidly toward renewable energy.[8] In remarks at the World Governments Summit, the IMF Managing Director commended the UAE for strengthening its fiscal framework and highlighted that well‑designed fiscal policies can support both the energy transition and sustainable growth.[8] The speech notes that investing in renewable energy and modern infrastructure, within a robust fiscal framework, can boost productivity and potential growth over the medium term while maintaining macroeconomic stability.[8]

This document outlines the Work Programme for the International Renewable Energy Agency (IRENA) for the biennium 2026-2027 and the associated budget. The proposed programme focuses on supporting member countries, including the UAE, in accelerating the deployment of renewable energy, modernising power systems, and advancing green hydrogen, through policy advice, capacity building, and project facilitation. The 2026-2027 programme highlights the macroeconomic benefits of renewable energy transitions, including potential increases in GDP, employment, and welfare, compared to business-as-usual fossil-fuel-based energy systems.

The main sectors that represent opportunities for renewable energy in the UAE include solar and wind power generation, waste-to-energy, and green hydrogen. The Ministry of Economy and Tourism notes that renewable energy projects contribute to economic diversification, attract foreign direct investment, and create jobs in advanced industries and services. These projects are aligned with national strategies to increase the share of clean energy and support sustainable, long-term economic growth.

The UAE has stepped up engagement in Latin America through comprehensive economic partnership agreements (CEPAs) with Chile, Costa Rica and Colombia, and major infrastructure and energy investments in Peru and other markets. The report notes that the UAE’s outward investment strategy increasingly targets sectors such as renewable energy, electricity transmission and logistics, both to diversify the economy and to position UAE firms as global leaders in the energy transition. These investments are framed within the broader ‘We the UAE 2031’ vision, which aims to double the UAE’s GDP by 2031 through strategic spending and investment in high-growth sectors.

The UAE Cabinet approved the federal general budget plan for the fiscal year 2026 with estimated revenues of 92.4 billion dirhams and balanced expenditures, in a step that confirms the commitment to sustainable development and strengthening financial stability. Indicators show continuous growth in the UAE, as the Central Bank announced that the economy is expected to grow by 4.9% in 2025, up from previous forecasts of 4.4%, supported by increased oil production and strong growth in the non-oil sector. This economic growth enhances the UAE’s ability to invest in long-term developmental and strategic projects, including in areas such as energy, infrastructure, and digital services.

The report argues that linking new generation capacity to demand investment can reduce investment risk and help local economies and power markets grow. It also notes that government incentives for renewable projects can improve project payback and accelerate deployment.

The IMF said that the UAE could "benefit from a green transition by attracting new investment, creating jobs, and reducing its reliance on oil and gas exports."[10] The briefing notes that seizing economic opportunities in the green transition would support the UAE’s diversification and long‑term growth objectives.[10] It emphasises that strengthening policies and investments in renewable energy and related sectors can enhance growth prospects while contributing to climate goals.[10]

The recent collaborative review of the UAE's fiscal outlook and public finance priorities by the Ministry of Finance and the International Monetary Fund reaffirms the nation's unwavering commitment to economic stability and prudent financial management.[4] The fiscal priorities identified in these reviews actively support the UAE's overarching vision to diversify its economy away from oil.[4] This strategic focus fosters innovation and new sectors: government investment and policy support for non‑oil sectors like technology, tourism, logistics, and renewable energy create fertile ground for new businesses and job creation, underpinning more stable and sustainable growth trajectories.[4]

A recent report by the International Renewable Energy Agency indicates that combining sun, wind and battery storage can provide stable electricity for more than 95% of demand hours. The report argues that countries investing heavily in integrated renewable systems, including grid modernisation and flexibility, can achieve lower long-term energy costs and support higher economic growth, as reliable clean power underpins industrial development and innovation.

The UAE is consolidating its position on the new energy map with investments of AED 550.8 billion, according to coverage by Al Ittihad. These investments span domestic and international renewable energy projects, including solar, wind, green hydrogen and grid-related infrastructure, aimed at supporting sustainable economic growth and enhancing the country’s role in global clean energy markets.

A specialist report on UAE in 2026 notes that early betting on renewable energy is one of the most important success factors, stating that Masdar’s project portfolio reaches 65 GW with investments exceeding 45 billion dollars. It adds that these global projects and investments pave the way for the future of clean energy and strengthen the UAE’s economic position by creating new markets and revenue streams beyond traditional hydrocarbons.