The OPEC Fund for International Development has called on multilateral development banks and development finance institutions to improve coordination and mobilise more public and private capital for climate projects, as tightening concessional financing limits the resources available to developing countries.
Speaking at the United Nations Framework Convention on Climate Change (UNFCCC) official side event at COP31, titled “Mobilizing Finance for Country-Led Climate Action,” OPEC Fund President Dr. Abdulhamid Alkhalifa said climate financing must be aligned with national development priorities and focus more heavily on implementation.
“Countries must lead, and financing must follow their priorities. We must move towards more coordinated approaches, bringing development finance institutions, multilateral development banks, bilateral partners and the private sector together from the earliest stages of project development,” Alkhalifa said.
He made the remarks during a discussion involving the presidents of the European Bank for Reconstruction and Development (EBRD) and the Black Sea Trade and Development Bank (BSTDB), as well as the Chief Executive Officer of Germany’s KfW, focusing on how development finance institutions can expand climate investment amid tightening concessional resources.
Three pillars for climate financing
Alkhalifa identified country ownership, stronger partnerships and greater financial leverage as three essential pillars for scaling up climate finance.
He said country ownership was necessary to ensure that climate investments address national priorities rather than being driven by externally determined financing agendas.
He also called for closer collaboration among development finance institutions, multilateral development banks, bilateral partners and private investors from the earliest stages of project development to improve coordination and financing arrangements.
On mobilising private capital, the OPEC Fund president highlighted the need for diversified financial instruments, including blended finance, guarantees and risk-sharing mechanisms, to attract investors to climate-related projects.
These instruments can help development finance institutions combine different sources of funding and address investment risks that may otherwise discourage private-sector participation.
Focus shifts to implementation
The discussions centred on how development finance institutions can scale investment and translate national climate commitments into projects with measurable development benefits.
Alkhalifa said the effectiveness of climate financing should ultimately be assessed by its impact on communities, citing the protection of coastal populations against storms and access to reliable electricity for children as examples of the outcomes such investments should deliver.
The OPEC Fund’s position places greater emphasis on aligning financing with country priorities, coordinating development partners and using financial instruments to attract additional investment.
The institution said stronger cooperation among public and private financing partners would be essential to accelerating country-led climate action and turning climate ambitions into tangible development outcomes.
