Demand for green Islamic bonds gain momentum in GCC states

Investor appetite for green sukuk is growing in the Arabian Gulf countries despite the lukewarm economic growth amidst the ongoing pandemic. Saudi Arabia’s electric transmission monopoly, Saudi Electricity Company (SEC), issued a multi-tranche $1.3 billion green sukuk and reported an order book of more $5.2 billion, indicating the immense appetite for sustainable Islamic bonds. The proceeds of SEC’s sukuk will be used to finance green projects relating to energy efficiency and renewable energy. Currently, Saudi Arabia is almost exclusively reliant on fossil fuels for power generation and has a high energy usage per capita because of its reliance on air conditioning and desalinated water. The green sukuk market is still in its infancy, with only a handful of issuances taking place.