Green finance is likely to continue its growth momentum in the GCC on the back of an increasing pipeline of renewable projects in the region. "We believe green finance in the GCC has the potential to play a bigger role in funding the region's ambitious pipeline of green projects" , Standard & Poor's said in a new report. "The region continues to make good progress toward green growth and transition to a low-carbon economy, setting new sustainability and resilient infrastructure targets that are creating demand for capital and new green financial vehicles. "The UAE and Saudi Arabia are ahead of the other GCC members in this area as the region's biggest energy markets. Deployment in the rest of the region is limited to demonstration and pilot projects," it added. Global green bond issuance rose 3 per cent to $167.3 billion last year from $155bn in 2017, according to S&P. The ratings agency said global green bond market is set to grow 8 per cent this year, with the GCC likely to see more activity due to efforts towards low-carbon transition. Regional economies led by Saudi Arabia, the world's top oil exporter, have pledged to add additional renewable capacities to grid as they look to spare crude for export markets and switch to cleaner sources for power generation. Saudi Arabia, for instance, aims to tender around 9.5GW of solar and wind capacities by 2023. Riyadh will tender at least 12 projects across the renewable value chain in 2019 alone. The government also plans to attract between $30bn and $50bn in new investment into renewables by 2030. Abu Dhabi, which accounts for 4.2 per cent of the world's oil production, plans to generate 7 per cent of its energy capacity through renewables by 2020. S&P noted in its report that despite the advances, the green finance market in the region is still at an early stage of evolution and lacks cross-border financing and presence of institutional investors such as pension funds, which are characteristic of more developed capital markets. "We believe that a combination of green and vanilla sukuk as well as conventional green bonds could provide the substantial funding support that is required for the realisation of the region's sustainability targets," said the report. "In particular, new and conventional green finance vehicles could lower the cost of capital for overseas cross-border financing and open up a wider pool of capital of Islamic and conventional investors," it added.