Green Steel in Construction: A New Era of Decarbonization Led by Aldar and EMSTEEL

The Middle East's construction industry is undergoing a seismic shift, driven by the urgent need to decarbonize and align with global climate goals. At the forefront of this transformation are Aldar Properties and EMSTEEL Group, two UAE-based giants whose collaboration on green steel initiatives is redefining the region's industrial landscape. Their joint efforts—centered on hydrogen-based steel rebar and carbon capture technologies—offer a blueprint for scalable ESG-driven investment opportunities, positioning the Middle East as a global leader in sustainable construction.

A Regional First: Green Steel in Action

In May 2025, Aldar Properties made history by becoming the first developer in the Middle East and North Africa (MENA) to use hydrogen-based steel rebar in a construction project. The material, supplied by EMSTEEL Group, is being used to build Abu Dhabi's first net-zero carbon mosque in the Sustainable City on Yas Island. This 1,595-square-meter structure, designed to achieve LEED Zero Carbon certification, is projected to reduce carbon emissions by up to 95% compared to conventional steel production. The project is not just a technical milestone but a symbolic one, demonstrating how faith-based infrastructure can lead in climate-conscious design.

EMSTEEL's role in this initiative is equally transformative. The company's green hydrogen pilot project, launched in collaboration with Masdar in October 2024, has already produced 5,000 tonnes of green steel using renewable hydrogen. This technology, which replaces natural gas with hydrogen in the iron extraction process, is certified by Avance Labs and validated by Bureau Veritas, ensuring compliance with global standards. EMSTEEL's broader decarbonization strategy includes a 40% reduction in steel unit emissions by 2030 and net-zero ambitions by 2050, aligning with the UAE's Net Zero by 2050 Strategic Initiative.

Strategic Sectoral Transformation: Beyond the Mosque

The mosque project is a microcosm of a larger trend. Aldar and EMSTEEL are expanding their partnership to scale green steel adoption across residential, commercial, and public infrastructure. By integrating hydrogen-based rebar into high-profile developments, they are creating demand for low-emission materials in a sector responsible for nearly 40% of global carbon emissions. This shift is supported by the UAE's National In-Country Value (ICV) program, which incentivizes local production of sustainable materials, recirculating economic benefits within the region.

EMSTEEL's carbon capture and storage (CCUS) partnership with ADNOC further underscores its strategic approach. The facility captures 800,000 tonnes of CO₂ annually from direct reduced iron (DRI) operations, storing it in ADNOC's oil fields for enhanced recovery. This dual-purpose model—reducing emissions while generating revenue—highlights the financial viability of decarbonization. Meanwhile, Aldar's circular economy practices, including 90% construction waste recycling, demonstrate how sustainability can be embedded across the value chain.

ESG-Driven Investment Opportunities: A Booming Market

The green steel market in the Middle East is projected to grow at a compound annual growth rate (CAGR) of 38% between 2025 and 2030, driven by ESG investment frameworks and regulatory tailwinds. Sovereign wealth funds (SWFs) like ADIA and PIF are increasingly allocating capital to sustainable projects, while green sukuk and bonds are becoming mainstream. For instance, the UAE's S&P/Hawkamah ESG Index and Saudi Arabia's USD7.9 billion in ESG sukuk issuance in 2022 reflect a maturing market for climate-aligned finance.

Investors should note the alignment of Aldar and EMSTEEL's initiatives with these trends. EMSTEEL's recent recognition as the 2024 Steel Sustainability Champion by the World Steel Association and its appointment as Co-Chair of the Alliance for Industry Decarbonisation (AFID) signal institutional confidence. Similarly, Aldar's integration of ESG metrics into supplier contracts and its LEED-certified property portfolio highlight its commitment to long-term value creation.

The Road Ahead: Scalability and Global Ambitions

For green steel to achieve its full potential, scalability is key. EMSTEEL's plans to expand its green hydrogen pilot to an “iron eco hub” in Abu Dhabi could position the UAE as a global hub for low-carbon steel production. This aligns with the country's National Hydrogen Strategy, which aims to establish the UAE as a leading producer of low-carbon hydrogen by 2031. Investors should monitor the company's progress in scaling green steel output and its partnerships with international firms to export technology and expertise.

Aldar's role as a developer is equally critical. By embedding green steel into its construction projects, the company is creating a market for EMSTEEL's products while reducing its own carbon footprint. This symbiotic relationship mirrors the broader shift in the construction industry toward decarbonization, where developers and manufacturers must collaborate to meet regulatory and consumer demands.

Investment Advice: Positioning for Growth

The convergence of ESG frameworks, regulatory support, and technological innovation makes green steel a compelling investment theme. For equity investors, EMSTEEL's stock offers exposure to a company at the forefront of industrial decarbonization, with a clear roadmap to reduce emissions and expand green hydrogen capacity. Similarly, Aldar's focus on sustainable real estate development positions it to benefit from the growing demand for ESG-compliant infrastructure.

Fixed-income investors can explore green sukuk and bonds issued by UAE and Saudi entities, which are increasingly financing projects like EMSTEEL's green hydrogen plant. Sovereign wealth funds and institutional investors should consider long-term partnerships with companies like Aldar and EMSTEEL, leveraging their expertise to build a low-carbon construction sector.

Conclusion: A Model for Global Decarbonization

The collaboration between Aldar and EMSTEEL is more than a regional success story—it is a model for how strategic sectoral transformation can drive both environmental and economic value. By leveraging ESG frameworks, innovative technologies, and regulatory support, the UAE is demonstrating that decarbonization is not a constraint but a catalyst for growth. For investors, the message is clear: the green steel revolution is here, and the Middle East is leading the charge.

As the world races to meet net-zero targets, the construction industry's transition to green steel will be pivotal. Aldar and EMSTEEL's initiatives offer a glimpse into a future where sustainability and profitability coexist, creating opportunities for investors who recognize the power of ESG-driven innovation.