Chapter 5 | PROJECTS CONTRIBUTING TO THE OPEC FUND’S CLIMATE FINANCE
Purpose of the Loan
With one of the highest percentages of forest cover globally, making it one of only three carbon-negative countries in the world, Panama must protect and optimize its natural assets in order to successfully achieve its development goals. Most of Panama’s forests are within protected areas and indig- enous territories, which are crucial for forest conservation and climate change mitigation. Although the country’s per- capita GHG emissions have been increasing, they remain be- low the averages of Latin America and the Caribbean and the Organization for Economic Co-operation and Development (OECD) countries. Nevertheless, climate change significant- ly impacts productivity, innovation and health, necessitating enhanced adaptation measures. Panama’s water resources face considerable pressure, endangering economic activities in key sectors such as the transportation (which includes the canal), hydroelectricity, tourism and agriculture. 47 Panama is ranked 14th globally in terms of exposure to multiple impacts from climate change, primarily due to its extensive land area. 48 Recently, the country has witnessed heightened occurrences of climate-induced natural disas- ters, including heavy rainfall, windstorms, floods, droughts, landslides, tropical cyclones and El Niño-Southern Oscilla- tion-La Niña events. These events are projected to lead to adverse social and economic consequences such as crop failures, heightened heat stress affecting both agriculture and vulnerable populations, loss of biodiversity and forests, diminished water quality and availability and increased inci- dences of climate-related health issues. 49
The primary purpose of the PBL is to assist the Government of Panama through a fast-disbursing financial instrument that supports specific activities aimed at reducing and lim- iting GHG emissions and enhancing resilience to climate change. The loan aims to recognize and support the actions undertaken by the Government of Panama since 2020 in de- veloping and implementing public policies and instruments to address climate change and promote sustainable devel- opment. The National Climate Change Policy 2050 outlines a comprehensive strategy to reduce GHG emissions, adapt to climate change and enhance resilience across all sectors. Key goals include maintaining Panama as a carbon sink, net zero emissions, transitioning to a resilient and low-carbon economy, and reducing social and climate vulnerabilities. Panama’s ambitious commitment to combating climate change is also expressed in its latest Nationally Determined Contributions (NDCs). Among its regional peers, Panama stands out for its significant efforts in both mitigation and adaptation, with a particularly strong focus on adaptation measures. The OPEC Fund’s loan is strategically aligned with Panama’s NDCs, playing a pivotal role in advancing the country’s climate objectives through targeted pol- icy development. One of Panama’s key mitigation goals is a 24 percent reduction in total emissions from the energy sector by 2050 (and 11.5 percent by 2030). Additionally, the nation aims to restore 50,000 hectares of forest by 2050,
47 Climate Change Knowledge Portal – World Bank: https://climateknowledgeportal.worldbank.org/country/panama 48 Ibid. 49 Ibid.
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