AN ENERGY TRANSITION THAT WORKS FOR EVERYONE
Energy stood at the cradle of the OPEC Fund when in 1976 some of the leading oil-producing countries in the world established the institution to spearhead South-South cooperation. Recognizing the critical role of energy for development, the OPEC Fund quickly combined funding of projects with finding ways to address energy poverty.
Almost five decades on, the world’s view on the generation and consumption of energy has radically changed. What has not changed is the continued global demand for energy. But what needs to change is how we meet this demand: New, innovative and resilient approaches are urgently required that combine secure access to energy with the global alignment to the targets of the Paris Climate Accord.
The OPEC Fund has continuously been responding to these developments and adapted its policies and engagements accordingly. All of its 12 member countries have signed the Paris Accord. While in the early days our financing supported investments mainly in power generation as well as the construction and rehabilitation of transmission and distribution lines, we have also intensified our activities to find – and fund – comprehensive solutions on the ground.
To date, the OPEC Fund has committed nearly US$3.3 billion in support of projects in the energy sector. Following a strong increase in recent years, renewables now account for almost a third of the Fund’s public and private sector operations in energy - including solar, wind, hydro-power and geothermal energy generation.
The OPEC Fund’s assistance provided through its financing facilities has added 1,179 MW of installed electricity capacity and helped build and rehabilitate 7,604 km of transmis- sion or distribution lines in partner countries. A substantial
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part of the focus has been on Africa as one of the most energy-deprived regions in the world. As a result, today the continent accounts for 49 percent of the Fund’s cumulative commitments in the sector.
In addition to loans to the public sector (which account for 77 percent of exposure in energy) and private sector (21 percent), in many cases the OPEC Fund is also able to offer carefully targeted grant funding. To date, the OPEC Fund has approved US$50 million in grants for some 140 projects.
Going forward the Fund is constantly screening engage- ments that can be scaled-up into full-sized projects. At the same time, the OPEC Fund is actively seeking strategic cooperations and partnerships to enhance its impact in the energy sector.
The OPEC Fund’s engagement is underpinned by the intro- duction of an ESG policy framework which will guide future lending operations and translate the Fund’s commitment into concrete results. Regular and transparent reporting will demonstrate the Fund’s accountability and reassure part- ners, clients and investors. The ESG policy ensures that the Fund’s lending activities comply with leading multilateral development banks’ standards.
In the coming years, as outlined in the 2022-2024 Business Plan, the OPEC Fund will continue to support partner coun- tries’ efforts aimed at achieving universal access to afforda- ble, reliable and modern energy services and promoting the productive use of energy. Given the central role of energy in achieving the Paris Accord, the OPEC Fund will also support global and national efforts towards a just, inclusive and equitable energy transition. In order to succeed, this fundamental shift must work for everyone and this can only
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