SPECIAL FEATURE
The OPEC Fund Climate Action Plan target: 40% climate financing by 2030
OFQ : A recent report from the International Energy Agency says that US$4.2 trillion is needed to achieve the net zero target, and that US$3 trillion of that will have to come from the private sector. What can MDBs do better to attract private investors? TS: Opportunities to attract private sector investment have opened up in recent years. The demand to finance projects that involve climate risks is only growing, so we fully expect to mobilize private capital. Private capital will be especially instrumental to promote innovations in climate mitigation technologies. In addition to financing, one important point is risk mitigation. This can be risk sharing or de-risking. Looking at it more broadly, we need to create conditions where these investors come in and start doing business. No matter how big a pool the MDBs have, it’s dwarfed by private capital. If we look into climate financing in 15 years and it becomes mainstream and profitable, the private sector will take it. That’s perfect. Our partners will likely have other pressing priorities by then. Development is a journey and we aim to meet our partner countries’ needs every step of the way.
with the best practices of counterparts such as the ADB in terms of providing the transparency and impact investors expect. Getting there we have certainly benefitted from others’ experiences and will continue doing so. OFQ : Can you give us any ideas how we will be tightening up the evaluation criteria for projects? TS: It is essential that we track our projects comprehensively and to have really robust monitoring and reporting, not only in regards to financials but, as mentioned earlier, the full ESG and development impact. This is the standard we are aiming for and we want to make sure that we have tracked, processed and – finally – evaluated everything, from the very beginning of a project to its completion, and that we integrate lessons learned into the design of future projects. This is important for our own business, and also for transparency vis-à-vis our board and investors. OFQ : We said that 40 percent climate financing by 2030 would be ambitious. But it surely is not the end of the road? Do you envisage a future where the majority of OPEC Fund projects are in climate financing? TS: I think climate finance is and will become the development agenda by definition. If your focus is on development, everything now has to be not only climate-related, but climate-focused. The Maldives are being inundated by rising seas. Least developed countries in Africa, which are most affected by climate adversity, are realizing that climate financing can be an opportunity that may well enable them to produce the food and generate income needed to feed their people. We all realize that if we continue on the current trajectory, we’re not going to meet the 1.5°C climate target, and achieving the Sustainable Development Goals will slip out of reach. The consensus is that we all have to do more climate-focused financing, turn this challenge into an opportunity, and make it part
I think climate finance is and will become the development agenda by definition. If your focus is on development, everything now has to be not only climate-related, but climate-focused.
Tarek Sherlala, OPEC Fund, Assistant Director-General, Financial Operations
of all our mainstream activity. The groundwork is laid. It is now up to all of us to deliver.
15
Powered by FlippingBook