Middle East at crossroads: Lead green transition or double down on fossil legacy?

A groundbreaking study has assessed the real-world impact of Saudi Arabia’s and the broader Middle East’s green policy efforts, revealing how environmental governance, economic growth, natural resources, and innovation are influencing the region’s transition toward sustainability. Published in Sustainability (2025) under the title “Assessing the Saudi and Middle East Green Initiatives: The Role of Environmental Governance, Renewable Energy Transition, and Innovation in Achieving a Regional Green Future,” the research examines 13 countries between 1990 and 2023 using econometric models to trace long-run and short-run relationships between key environmental and economic indicators.

The study's findings present a dual narrative: progress in institutional and innovation-led efforts exists, but the region’s dependence on fossil fuels, combined with inconsistent governance and uneven human development, continues to constrain the scale and effectiveness of the green transition.

Can governance drive green innovation in resource-rich rconomies?

The study finds environmental governance to be the strongest and most consistent driver of green innovation in the region, confirming its positive influence both in the short and long term. Improvements in regulatory quality, institutional enforcement, and policy coordination are significantly associated with increased adoption of green technologies, environmental patents, and sustainability-focused economic activity.

Countries that have institutionalized mechanisms such as national environmental strategies, regulatory frameworks, and monitoring bodies have outperformed others in fostering green innovation. Saudi Arabia’s Vision 2030 and the Saudi Green Initiative (SGI), for example, are cited as transformative policies aligning national goals with sustainable development targets, although their implementation still faces structural limitations such as cross-border policy fragmentation and limited public engagement.

Conversely, the findings caution that while natural resource wealth can be leveraged for green transformation, in the absence of robust governance, it often perpetuates pollution-intensive growth. This dynamic echoes the well-known "resource curse" where fossil fuel revenues suppress the incentive for long-term innovation unless recycled into sustainability-focused investments. Nations that reinvest oil revenues into green R&D and infrastructure, mirroring Norway’s sovereign wealth model, are better positioned to escape this pattern and foster technological change.

Is economic growth an ally or adversary in the green transition?

Economic growth, measured by GDP per capita, plays a nuanced role. On one hand, it provides financial capacity for investments in renewable energy and clean technology. On the other, without strong regulatory frameworks, it can exacerbate environmental degradation. The study confirms a positive relationship between GDP growth and green innovation, especially when combined with governance support.

However, the relationship between human development and green innovation emerges as unexpectedly negative in the long term. The research explains this paradox by pointing to the developmental path of many rentier economies in the region, where economic advancement and improved living standards are often tightly linked to fossil fuel-driven industrialization. These conditions deprioritize environmental innovation in favor of immediate economic outputs. Furthermore, welfare improvements may reduce urgency to adopt clean technologies, underscoring the importance of aligning human capital development with sustainability-oriented education, training, and policy engagement.

Pollution, while widely acknowledged as a catalyst for environmental policy reform in some contexts, was not found to significantly promote innovation in this region. Instead, rising pollution trends are associated with diminished innovation performance, revealing that without preemptive regulatory enforcement, degradation may outpace remedial innovation efforts.

What are the implications for green policy and regional collaboration?

The findings hold major implications for green policy formulation in the Middle East. First, the integration of environmental governance, innovation, and renewable energy must be approached holistically rather than as separate pillars. Green innovation cannot be sustained without consistent legal frameworks, coordinated regional strategies, and a shift in resource management priorities.

Second, natural resource wealth, contrary to pessimistic forecasts, can be transformed into a lever for sustainability. The study shows that oil and gas revenues, if systematically redirected into green R&D, innovation ecosystems, and infrastructure, can drive a virtuous cycle of growth and environmental responsibility.

Third, population growth, often viewed as a stressor on environmental systems, is found to be positively associated with green innovation. Urbanization and demographic expansion are generating market demand and infrastructural needs that can accelerate the development of sustainable technologies, especially if supported by urban planning, smart grid systems, and innovation incentives.

Despite these positive trends, the study underscores the uneven progress across countries. While Saudi Arabia, Qatar, and the UAE show notable advancements, conflict-affected states like Syria and Yemen remain significantly constrained. Weak institutional structures, geopolitical instability, and underinvestment in basic infrastructure hinder their participation in the regional green transition.

To overcome these disparities, the authors recommend several targeted actions: strengthening environmental governance across all national jurisdictions, developing public–private partnerships for renewable energy, creating green investment funds from resource revenues, enforcing stricter pollution controls, integrating environmental education in human development strategies, and initiating regional platforms for knowledge exchange and coordinated innovation planning.