Under Bahrain Economic Vision 2030 the kingdom has sought to create a new paradigm for economic growth, reflecting the country’s diversification away from hydrocarbons and its growing commitment to environmental preservation. These efforts span various sectors and are guided by national policies, international partnerships and a commitment to global treaties and sustainability frameworks. Alongside Bahrain’s national goals, such as reaching carbon neutral emissions by 2060, progress can be seen in the transition to renewable energy, sustainable urban development and environmental, social and governance (ESG) financing, and in water conservation and waste management.
Oversight & Strategy
The origins of Bahrain’s sustainability initiatives can be traced back to the UN Millennium Development Goals in 2000, which set a timeframe for completion by 2015. The Covid-19 pandemic and the COP26 UN Conference on Climate Change in October-November 2021 then acted as catalysts for further policy and strategy developments, in a move to boost economic sustainability. In October 2021 Bahrain announced its commitment to reaching carbon neutrality by 2060. The central premise of this is the adoption of a circular carbon economy in tandem with offsetting schemes, the latter of which include various carbon-capture technologies and widespread tree planting. Bahrain’s afforestation plan aims to double the number of trees and quadruple the number of mangroves in the country by 2035. A key aspect of achieving the kingdom’s environmental goal involves reducing emissions by 30% by 2035 through the decarbonisation of the economy, while also providing both individuals and businesses access to clean and sustainable energy.
Bahrain Economic Vision 2030 is closely linked to the kingdom’s carbon-neutral initiative, as the former features sustainability as one of the three pillars for long-term economic growth, with the others being competitiveness and fairness. Since Bahrain Economic Vision 2030 launched in 2008, the kingdom has reduced emissions while expanding the national economy. The aim of the vision – to make the private sector the driver of Bahrain’s economic growth – emphasises sustainability in government finances, investment in future-oriented projects, and improving human capital through education and training in applied sciences.
Institutions
Several ministries and government bodies oversee and implement the kingdom’s sustainability policies. The Ministry of Sustainable Development was established in June 2022 to coordinate and promote efforts to achieve sustainable development. Noor bint Ali Alkhulaif, the minister of sustainable development, is also the chief executive of the Bahrain Economic Development Board, reflecting the importance of sustainability and synergy between economic planning and investment attraction. The Supreme Council for the Environment (SCE) is responsible for environmental protection and sustainable development, as well as for monitoring ecological conditions and ensuring compliance with international standards. The Ministry of Oil and Environment incorporates energy and environmental strategies, and plays a role in advancing renewable energy projects and promoting energy efficiency.
In addition, the Ministry of Finance and National Economy contributes to sustainability efforts by managing economic policies that support sustainable and inclusive growth, while the Ministry of Housing and Urban Planning is involved in urban development projects that incorporate green building standards and smart city technologies. These ministries, along with other governmental and non-governmental organisations, collaborate to achieve Bahrain’s sustainability goals, aligning with the objectives of Bahrain Economic Vision 2030 and the kingdom’s eco-friendly policies.
Legislation
Bahrain has enacted several notable pieces of legislation and regulations to ensure that sustainability is central to the kingdom’s development, balancing economic growth with environmental stewardship. One significant regulation introduced in December 2023 is Blueprint Bahrain, the national action plan to achieve carbon neutrality by 2060. Meanwhile, the National Energy Strategy (NES), which was established in November 2023, seeks to curtail carbon emissions by 30% by 2035 and achieve carbon-neutral emissions by 2060. These initiatives build on the National Energy Efficiency Action Plan (NEEAP), launched in 2017, which defined objectives to minimise energy consumption across 22 economic segments. The NEEAP is crucial in boosting energy efficiency, which is expected to help lower overall greenhouse gas emissions and reduce Bahrain’s dependence on fossil fuels.
Another important piece of legislation is the Environment Law, a new version of which came into effect in September 2022. Under the law, entities are required to obtain a licence from the SCE for any new construction projects or any modifications to existing ones; environmental protections and the preservation of the kingdom’s cultural heritage are also enshrined within the legislation. In addition, the National Renewable Energy Action Plan (NREAP) aims to increase the share of renewables in Bahrain’s energy mix to 20% by 2035. The NREAP also acts as the kingdom’s key piece of legislation to meet its commitments under the Paris Agreement. In this context, these initiatives support Bahrain’s carbon-neutral strategy and attract green investment, fostering a sustainable economic environment that is in line with Bahrain Economic Vision 2030.
Sustainable Development
Since the inception of the UN Sustainable Development Goals (SDGs) in 2015, Bahrain has made significant progress towards its targets, in particular those related to the environment – SDG 6 (clean water and sanitation), SDG 7 (affordable and clean energy), SDG 13 (climate action), SDG 14, (life below water) and SDG 15 (life on land). Through the NREAP and the NEEAP, the kingdom is focused on enhancing water efficiency, boosting the share of renewables in the national energy mix, and implementing comprehensive action plans to mitigate and adapt to the effects of climate change.
While Bahrain has taken various steps towards achieving its environmental goals, the kingdom still faces challenges in relation to the implementation of its green initiatives, as outlined by its Voluntary National Review 2023 on SDGs. The country has invested in advanced desalination and wastewater treatment technologies to ensure water security, aligning with SDG 6, while renewable energy projects are being developed to meet the targets under SDG 7. However, achieving these goals is challenging due to the high costs of constructing renewable energy infrastructure, in comparison to the existing hydrocarbons infrastructure that is already in place. In terms of SDG 13, Bahrain has committed to reducing its carbon emissions through a number of efficiency-related initiatives, as well as through ramping up the proportion of renewables in the country’s energy mix. For SDGs 14 and 15, Bahrain has implemented marine and land conservation programmes to ease pressure from urbanisation and industrialisation. Bahrain is also working towards meeting its SDG commitments through efforts across the economy, as well as through public-private collaboration and cooperation with various international entities.
Business Support
There are several efforts under way to encourage green financing in Bahrain’s public and private sectors. These include the ESG reporting requirements implemented by the Central Bank of Bahrain (CBB), and initiatives from the Bahrain Association of Banks, Bahrain Bourse and the Labour Fund. “There are three ways in which banks can assist their clients to boost their ESG criteria,” Abdulrahim Abdulhameed, sustainability manager at the National Bank of Bahrain (NBB), told OBG. “First, collaboration with the Bahraini government to incentivise the company to adopt more sustainable practices, particularly for small and medium-sized enterprises (SMEs); second, through bank-led initiatives to reduce interest rates for businesses that reduce emissions; and third, through sustainable finance frameworks and other measures implemented by government regulators.”
Along with Saudi Arabia and the UAE, Bahrain’s ESG framework is among the most comprehensive in the region. Its first ESG reporting disclosure requirements were introduced by Bahrain Bourse in June 2020 with the launch of the exchange’s ESG Voluntary Reporting Guidelines to encourage disclosures among listed companies and stakeholders. Bahrain Bourse’s efforts to promote sustainable practices were recognised in 2023 when the magazine World Finance named it the most sustainable stock exchange in the GCC. In its 2023 reporting guidelines, the CBB listed 10 environment-related key performance indicators: climate risk mitigation; emissions intensity; emission targets; energy consumption; energy intensity; energy mix; environmental oversight; greenhouse gas emissions; waste generation; and water usage.
As part of Bahrain’s wider diversification agenda, the manufacturing sector is identified as a priority in the economic pivot away from hydrocarbons. Offering companies the opportunity to seek green accreditation for their products is a key element in this strategy. As such, in December 2023 Bahrain’s Ministry of Industry and Commerce began the Green Factory Label programme. This certification is provided to factories that meet one of the programme’s sustainability standards, such as factories that reintegrate 10% of their industrial waste back into their production cycle, or those that source at least 10% of the energy needed to operate their facilities from renewable sources. Other standards include emissions monitoring and a carbon capture unit. If facilities meet at least one criterion, they can access financing with subsidised rates. More broadly, the initiative is expected to aid factories in boosting their export opportunities for international clients that are looking for accredited manufactured goods.
Financial Initiatives
Banks in Bahrain have opportunities to help finance the energy transition, supporting the shift towards a more sustainable future. They can finance renewable energy projects, such as solar and wind. One example of this is the Arab Banking Corporation’s December 2023 multimillion-dollar agreement with UAE-based Yellow Door Energy to refinance 25 solar photovoltaic assets on shopping malls in Bahrain, Oman and the UAE that generate more than 42 MW of energy. Additionally, the issuance of green bonds and other sustainable finance instruments presents an avenue for attracting investors that are focused on environmentally friendly projects, in line with global trends that are moving towards green, social, sustainable and sustainability-linked bonds.
Banks can also support energy efficiency initiatives by financing projects that reduce energy consumption and carbon emissions in buildings, industries and infrastructure, including retrofitting existing structures with advanced technologies. In addition, banks can offer advisory services, helping businesses and governments structure and finance energy transition projects, navigate regulatory frameworks and access funding. Food security projects are another area in which banks can align lending activities with the broader national agenda for sustainable development and economic resilience. For example, NBB has helped finance agriculture initiatives, such as the BD3.3m ($8.8m) Al Amin Gardens hydroponic farming project developed by Bahrain Agriculture Development Company.
Progress in corporate sustainability initiatives has been notable but varied, depending on the size of the business entity. “Companies in Bahrain largely fit into one of two camps,” Abdulhameed told OBG. “The larger entities now see conducting sustainability matters as central to their business strategy, but they are also looking to increase financing to build on that. Room for improvement lies with SMEs, which mostly still see sustainability as more peripheral to their core business.”
Green Transition
Bahrain Economic Vision 2030 sets ambitious goals for environmental protection and sustainable energy, with a dual focus on reducing carbon emissions and promoting renewable technologies. This country’s successful 6% reduction in CO signalled effective policy implementation. However, future progress hinges on the implementation of the NEEAP and more wide-ranging policies, such as the introduction of a green building code for new construction projects. Significant challenges remain, including the need to generate 280 MW of renewable energy by 2025, with this figure increasing to 710 MW by 2035. Such an increase entails boosting the share of renewables in the energy mix to 5% by 2025 and 20% by 2035.
To address these challenges, Bahrain’s renewable energy plan focuses on the development of solar, wind and waste-to-energy technologies, with solar power the primary source. While the government is central to this transition, private and foreign entities are expected to further facilitate the pivot towards renewables. In May 2024 Masdar, an Abu Dhabi-based clean energy company, announced that it had entered the Bahraini market by partnering with the national energy company, Bapco Energies, to develop nearshore and offshore wind projects across the kingdom – with a total capacity of up to 2 GW. This collaboration marks Masdar’s first project in Bahrain, supporting the NES. Other projects include a 100-MW solar farm at the Askar landfill site, a project to install 50 MW of solar panels on government buildings and potential floating technologies to optimise urban areas for solar infrastructure.
As renewable energy projects become operational, Bahrain is systematically shutting down outdated power plants, including the Sitra and Riffa 1 plants, with plans to close additional facilities at Al Hidd and Riffa 2 in 2025-26. However, due to the current limitations of renewable energy sources in terms of providing night baseload power, Bahrain plans to construct an additional gas-fired power plant – although the new facility is expected to be the country’s last. The kingdom has also launched a programme to convert excess heat from Aluminium Bahrain (Alba) into electricity, and is considering district cooling – the centralised production and distribution of cold water to buildings through a closed network – to improve air conditioning efficiency by up to 50%. Alba is home to the world’s largest single-site smelter outside of mainland China, meaning the potential amount of energy that could be captured and converted to electricity is substantial.
Urban Development
While sustainable urban development has been a top priority for the construction and real estate sector in Bahrain during recent years, the importance of sustainable development extends to all areas of urban expansion. The National Detail Land Use Plan outlines Bahrain’s vision for future development. This plan focuses on promoting sustainable urban growth across the country by implementing 10 key strategies to create well-rounded urban communities that support balanced and sustainable development throughout the kingdom.
Bahrain has no informal housing, as the government has worked hard to rehabilitate older neighbourhoods, while all major towns have programmes addressing informal development. Potable water networks cover 80% of the population, and 100% of the population was connected to the sewage network by 2020. Additionally, all municipal solid waste was collected and managed in controlled facilities by the start of the 2020s.
In that regard, an important part of the progress being made in sustainable urban development stems from mitigation efforts in areas such as waste management and water conservation, with access to potable water a leading factor in Bahrain’s future growth due to its arid climate. The kingdom’s Water Resources Council has helped support the substantial progress that has been made in domestic water conservation efforts. The government takes a multi-faceted approach to water management, with demand-side measures such as education campaigns from the Electricity and Water Authority, as well as engineering solutions including treated sewage effluent and greywater recycling. To address solid waste challenges, the Ministry of Works is leading a project to analyse waste for recycling, agricultural conversion or electricity production through incineration at the Askar landfill. The country is also exploring plasma gasification to convert waste into valuable by-products like hydrogen and electricity.
When it comes to new developments, the government’s Estidama Sustainable Building Rating System guides developers in achieving green building certification, focusing on energy efficiency, water conservation, indoor air quality and waste management. In addition to this, the kingdom has also invested in research and partnerships with international experts to advance green building technologies. The country encourages developers to pursue Leadership in Energy and Environmental Design certification, and several buildings have achieved this international standard. In 2019 Bahrain introduced a Green Building Manual to promote sustainable construction by improving building performance, reducing resource consumption and emissions and enhancing public health.
Outlook
Bahrain’s path towards sustainable development is marked by significant progress, yet challenges remain as the kingdom aims to balance economic growth with environmental obligations. The country’s carbon-neutral commitment and its alignment with Bahrain Economic Vision 2030 demonstrate a strategic shift towards a diversified, resilient and environmentally conscious economy. Bahrain’s proactive approach, seen in initiatives like the NEEAP and the Green Factory Label programme, highlights its progress in implementing policies aimed at reducing carbon emissions in line with its international obligations, as well as facilitating growth in different facets of the green economy.
However, the kingdom’s ambitious targets – such as a 20% share of renewable energy sources in the national mix by 2035 – are set to require additional efforts in the development of green infrastructure, as well as technological advancements and green finance development. Continued collaboration between the government, private sector and international partners will be crucial to scaling up efforts. While challenges persist, Bahrain’s strategic vision and ongoing initiatives signal a positive outlook for achieving its long-term sustainability goals, while also ensuring economic growth.
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