ABSTRACT
The financial sector plays a pivotal role in enabling the energy transition in both GCC countries and China, serving as a key intermediary for mobilizing the capital required to decarbonize their economies. On the one hand, vast investment is needed to support green infrastructure projects, such as renewable energy, clean transportation, and energy-efficient systems. On the other, carbon-intensive sectors—including oil and gas, iron smelting, and steel manufacturing—require substantial upfront capital to finance emissions reduction and modernization efforts, given their classification as hard-to-abate industries.
This chapter examines the financial sector’s role in supporting this dual transformation, contextualized within the global expansion of green finance and Environmental, Social, and Governance (ESG) investing. It analyzes key instruments used in green and transition finance and evaluates the opportunities and challenges for scaling sustainable finance in China and the GCC. The chapter also explores existing China–GCC cooperation in green and transition finance, and outlines strategic pathways for future collaboration, including policy alignment, cross-border investment, and the development of innovative financial instruments.
