A multinational group of Arab countries including Abu Dhabi, Kuwait, Qatar, and Saudi Arabia have committed to invest $24 billion on climate mitigation and adaptation development by 2030.
The huge financial commitment comes amid a gathering of world leaders in Sharm el-Sheikh, Egypt for the 27th Conference of Parties (COP27). It's a multinational event organized by the United Nations to coordinate efforts to fight climate change -- and the focus at this event is on how developed economies can help the nations most impacted by climate change.
With the pledge, Arab states are planting a flag for their commitment to the energy transition -- one which will undoubtedly have a significant impact on the nations' oil-dependent economies.
While a large portion of the money is coming from the Arab nations directly, the countries are expecting that global institutions like the International Monetary Fund and the World Bank to play a role in supporting their investments.
The Arab nations and financial institutions are hoping to tap "concessional finance", which provides below market rate financing to developing countries, to accelerate various development projects.
One of the biggest sources of funding will come from the Islamic Development Bank, a multinational financial organization made up of 75 member states.
"This commitment comes while [Islamic Development Bank] is ramping up its level of climate finance in its operations which, in 2021, reached 31%. The Bank has made an ambitious target to have by 2025 at least 35% of its financing as climate finance," said Muhammad Al Jasser the President and Group Chairman of the Islamic Development Bank, in a statement. "[Islamic Development Bank] is also pledging to approve at least $13 billion in adaptation and mitigation finance during the period 2023-2030.”
The bank, which has about $70 billion at its disposal, will invest alongside sovereign wealth funds from the richest nations in the region and the fund managed by OPEC (the Organization of Petroleum Exporting Countries).
“The ACG’s sizeable financing represents decisive and collective action to address one of the world’s most urgent challenges. Climate action and development must be tackled simultaneously," said OPEC Fund Director-General Dr. Abdulhamid Alkhalifa, in a statement. "The OPEC Fund as a committed member of the ACG will contribute to this pledge with the implementation of our recently announced Climate Action Plan, which will double the share of climate financing to 40 percent of all new financing by 2030 and mainstream climate action into our project cycle.”