UAE leverages AFCA to unlock private investment in climate resilience

The UAE has taken a cautious but deliberate step to turn its climate goals into real, investable actions by launching a national Adaptation Finance Capacity Assessment (AFCA). This effort is aimed at testing how ready the country is to mobilize, allocate, and sustain financing for climate adaptation as risks become more pressing.

The assessment, which was developed in partnership with the Global Green Growth Institute (GGGI), based in South Korea, was revealed during a session focused on climate risks and resilience at Abu Dhabi Sustainability Week 2026. According to the Ministry of Climate Change and Environment, AFCA examines how adaptation funding is currently organized across the public sector, private companies, and civil society. It’s built around six main pillars and aims to pinpoint opportunities to boost flows of capital into adaptation projects while improving the coordination among institutions.

“The launch of this Adaptation Finance Capacity Assessment marks an important milestone in the UAE’s journey toward climate resilience. The insights gained from this assessment will help us integrate adaptation finance into our national development strategies, turning plans into tangible actions that make a real difference,” said Dr. Amna bint Abdullah Al Dahak, the Minister of Climate Change and Environment, speaking at the event.

The assessment recognizes that the UAE benefits from solid fiscal and institutional foundations. It highlights the country’s disciplined and transparent budgeting systems as well as its highly effective public financial management framework, both of which set regional and even global standards. These strengths, the report suggests, could make it easier for the UAE to design and roll out financing tools that direct funds into resilience measures like infrastructure upgrades, water management, coastal defenses, and heat adaptation.

That said, AFCA also points out some gaps that could hinder the long-term impact of adaptation investments. It recommends deeper institutional embedding of adaptation finance mechanisms and calls for better data collection and risk disclosure to help markets evaluate climate exposure more accurately. One concrete idea mentioned is the development of a unified, open-access national climate risk platform. Such a platform, the report argues, could help insurers and banks “better price climate risks and reward resilience efforts,” which in turn could unlock more private sector investment into adaptation measures.

Dr. Sang-Hyup Kim, the Executive Director at GGGI, commented that the findings “show the UAE has a strong initial position but also reveal opportunities for improvement.” Speaking during Abu Dhabi Sustainability Week, he suggested that further institutionalizing adaptation finance mechanisms could enhance the long-term impact and effectiveness, making resilience efforts more sustainable.

The AFCA arrives at a time when Gulf countries are facing mounting climate threats. Urban areas in the UAE are experiencing higher temperatures, more frequent episodes of extreme heat, and evolving flood risks that put stress on infrastructure and supply chains. For investors and climate-tech companies working in the region, this assessment signals a clear political intent to move away from isolated, one-time funding commitments towards ongoing, integrated financing aligned with national development plans.

Industry insiders generally welcomed this whole-economy perspective. The report emphasizes the importance of increasing private sector involvement, knowledge sharing, and collective action. That’s in line with what investors are increasingly demanding: clearer project pipelines, standardized risk data, and bankable project structures. International firms and climate funds usually seek consistent project flows, transparent procurement, and revenue models that reduce both physical and transition risks before they commit large-scale long-term capital.

Officials from various federal and emirate-level agencies were present at the AFCA launch. They indicated that the input from these discussions will help shape the UAE’s National Adaptation Plan, aiming to translate the AFCA’s findings into concrete, financed projects. The ministry also notes that the assessment is designed to complement broader national strategies so that adaptation becomes an integrated part of fiscal and infrastructure planning.

The recommendations in AFCA echo lessons learned from other countries that have successfully integrated adaptation into their broader strategies. Best practices typically include defining clear national adaptation priorities, establishing robust climate risk data platforms, offering fiscal incentives or guarantees to attract private investment, and using blended finance options to reduce initial risks for commercial investors. The call for an open risk data platform reflects a broader push for transparency, reducing information asymmetry among public planners, banks, and insurers, and facilitating better decision-making.

Next steps, as implied by AFCA, might involve testing blended finance models in priority sectors, enhancing project preparation facilities, and refining regulations to reward resilience investments. For the UAE, such efforts could leverage government balance sheets and public investment tools to support early-stage resilience projects, while also establishing standards and metrics to enable larger private sector participation.

Finally, AFCA also highlights a key political reality: that financing adaptation is not just a technical matter but a governance challenge. Effective institutional mandates, inter-agency cooperation, and clear long-term responsibilities will be crucial to turning capital into resilient infrastructure. The ministry has expressed openness to a “whole-of-economy” approach, but turning that vision into practice, especially across federated emirates, will demand ongoing effort and coordination.

For climate tech companies and financiers active in the UAE, the AFCA offers both reassurance and guidance. It confirms a commitment at the national level to embed adaptation finance into planning, but also underscores the practical work needed to make projects attractive for investment. If the UAE follows through on the AFCA’s recommendations, it could pave the way for clearer avenues for private capital to scale up resilience solutions, not just within the country, but across the Gulf region too.

Source: Noah Wire Services