Shop talk: OPEC Fund's first COP

The heat is certainly on for COP27 with the $100 billion pledge for emerging markets still unmet and new announcements that the 1.5 by 2050 global warming target is not going to happen. Uxolo sat down with Dr Abdulhamid Alkhalifa, the director-general of the OPEC Fund, to discuss why the institution is actively participating in a COP for the first time. We spoke about “turning speeches into action” and three new initiatives totalling almost $25 billion directed at: improving accessibility, private sector mobilisation, and coordinating partnerships.

Uxolo: To begin, could you tell me about the history of the OPEC Fund?

Dr Abdulhamid Alkhalifa (AA): The development institution was established back in 1976 with a global mandate to drive development, strengthen communities and empower people. The fund provides financing exclusively to non-members in low- and middle-income countries with loans, equity, grants, trade finance and risk-sharing solutions. Since its establishment, it has created a portfolio that has supported more than 4000 projects around the world in more than 125 countries in both the public and private sectors.

Uxolo: The OPEC Fund is actively participating in a UN Conference of the Parties for the first time - could you tell me why?

AA: Currently, there are 750 million people in the world that lack access to electricity. In addition, 1 billion people have unreliable access to electricity. Alongside this, climate change is an issue that everybody is suffering from right now; it is one of the developmental issues that will stay with us for a long time. 

 We have to develop a long term sustainable plan and we have to make sure that this global effort is done in a balanced way. The motto of COP27 is delivering for people and the planet, and we have to move on from only talks and speeches to action. 

Uxolo: In 2021, you announced the launch of the Climate Action Plan - this year, you announced that the OPEC Fund will double its annual approved climate finance commitments from 20% to 40%. How do you plan to achieve this?

 AA: This year we managed to put together the Climate Action Plan - you look at an institution like ours and we have 20% of financing in green investments. We will double our contribution for climate-related financing by 2030, as well as make sure all our interventions are sustainable. This is a target and it is an ambitious target. 

How are we going to do that? We will use all the financial tools we have available in adaptation, mitigation, and resilience investments in many sectors including: energy, water, food, agriculture, and even smart cities. 

 We have also set ourselves a target to help countries in formulating climate change policies. We recently supported Panama to help put together the right policies to combat climate change, but also these policies will help devise the right environment for the private sector to intervene as well - this is essential for sustainability. Our interventions in policy can make it more bankable for the private sector to intervene.

 Another very important element of what we are doing is coordinating partnerships. In my view, it is not just important how much you extend your financial resources to development initiatives but also how successful you are in bringing others with you. Our most recent partnership will be signed in Sharm El Sheikh with the African Development Bank who we will work with to promote climate financing.

Uxolo: Could you tell me more about the Climate Finance and Energy Innovation Hub due to be launched at COP27? I know that $100 million has already been earmarked for the promotion of clean cooking, could you tell me more about this?

AA: The Hub’s first exercise will be in promoting access to clean cooking; a capability that more than 2.6 billion people in the world lack, especially in Africa. In Madagascar, 90% of the population rely on wood and other materials. This not only highlights a lack of access to energy, but it also carries with it health issues, environmental issues, even climate issues. 

 We have put together this Hub with the UN Capital Development Fund, and Sustainable Energy for All (SEforALL). We are committing $100 million towards Malawi, Madagascar, Rwanda, and DRC and we plan to work with those countries and other partners to put together smart solutions and resolve this problem. Clean cooking is the first thing that we will work on but, going forward, we will also work on other technological and financial innovations. 

Uxolo: Could you tell me more about the Arab Coordination Group's (ACG) announcement on the new $24 billion climate-focused financial package?

AA: ACG is a strategic alliance of ten institutions including multilaterals and bilaterals set up in 1975 as a working group undertaking development finance. We coordinate actions, co-finance projects and pool resources towards key initiatives with the goal of providing effective and impactful development. In June this year, we announced a $10 billion package for immediate relief and long-term support in response to the burgeoning global food supply crisis. 

 Now we are taking another step. We will be unveiling a more than $24 billion climate finance facility at COP27. The facility will be directed towards mitigation, adaptation and resilience efforts in developing countries. Our aim is to come up with solutions in partnership with others to resolve not just financial but also technical climate issues. We will be working with the private sector on de-risking some of these projects based in low-income countries and small islands.