Jeddah (UNA-OIC) – President of the Islamic Development Bank (IsDB) Group Dr. Bandar Hajjar stated that the IsDB Group devoted special attention to developing clean energy projects in Member Countries, in order to achieve environmental sustainability and reduce the cost of the Group’s projects.
Hajjar added that the IsDB Member States enjoyed massive sources of clean energy, such as hydroelectric power, solar energy, and wind energy. He stated that the Bank Group’s renewable energy financing reached US$3.403 billion, including US$2.8 billion for 53 IsDB-financed projects, which represents approximately 20 percent of the Bank’s financing for the energy sector as a whole.
The Islamic Corporation for the Development of the Private Sector (ICD), an IsDB Group member, has provided US$133 million in financing for the sector, while the Islamic Corporation for Insurance of Investment and Export Credit (ICIEC), which is the IsDB Group’s insurance arm, has provided US$470 million in insurance for renewable energy projects in Member Countries.
With respect to the high priority that the IsDB Group attaches to this sector, Dr Hajjar pointed out that clean renewable energy was a main source of energy that all world governments were keen to provide. Besides being a clean and sustainable source of energy, renewable energy contributes significantly to achieving economic growth for world countries. Environmental scientists are relying on it extensively in combating global warming and preserving the planet from the impacts of climate change.
Touching upon the increasing global interest in renewable energy in recent years, especially given its low cost, the IsDB President said that solar energy projects had witnessed a significant decrease in cost, especially in the Arab Gulf countries, where the Kingdom of Saudi Arabia and the United Arab Emirates had reached record low prices for solar energy projects, making solar energy more competitive compared with other fuels available in the market.
Clean Energy and the Sustainable Development Goals
Hajjar cited as an example of the international interest in renewable energy the fact that all Member States of the United Nations agreed in 2015 to allocate a separate goal for the energy sector within the seventeen Sustainable Development Goals (SDGs). This goal (SDG7) underscores the importance of ensuring “access to affordable, reliable, sustainable and modern energy for all”. Three specific criteria have been set to monitor the extent to which this goal is achieved by the year 2030, including in particular the significant increase in the share of renewable energy in the global energy mix.
As a development institution aiming to promote socio-economic development in Islamic countries and communities around the world, the IsDB President says, “We attach great importance to the energy sector as a whole, the sector being a fundamental pillar in the development efforts made by the IsDB in all other sectors. Energy sector financing provided by the IsDB Group, including by the International Islamic Trade Finance Corporation (ITFC) and the ICD, has reached approximately US$56 billion, representing 40 percent of the Group’s financing since its inception.”
Also, the ICIEC, which is the IsDB Group’s insurance arm, has contributed US$22 billion in insurance for energy projects, he added.
Sustainable Energy Hub
Dr Hajjar affirms that, due to IsDB’s interest in renewable energy, it has been keen on consolidating and building partnerships with relevant international bodies in the sector, including the Sustainable Energy for All Organisation (SEforALL) with which the Bank has signed a partnership agreement to launch the “Sustainable Energy for All Middle East Hub” (SEforAll Middle East Hub) hosted by the IsDB as a platform for Member Countries to accelerate the achievement of SDGs in the energy sector. The platform was launched during the Organisation’s Annual Meeting in May 2018. He pointed out that the Hub’s mission was to serve as a platform for cooperation, to increase the awareness of Member Countries in the field of sustainable energy, in addition to mobilizing partnerships and encouraging incentive measures at the level of each country to achieve SDG7.
He added that, in order to increase the effectiveness of the SEforAll Middle East Hub, the IsDB also signed a partnership agreement with the United Nations (the Economic and Social Commission for Western Asia (ESCWA)) to join the Hub with the aim of enhancing regional cooperation in the fields of energy service delivery and increasing the share of renewable energy.
Dr Hajjar explains that, as part of the joint activities of the SEforAll Middle East Hub hosted by the IsDB, the IsDB cooperated with ESCWA in issuing a report to follow up the sustainable energy development goals in the Arab region, in order to track the progress made by those countries in reaching those goals, including their achievement of the required share of renewable energy within the energy mix. This report was issued in cooperation with ESCWA on the sidelines of the International Climate Change Conference (COP25) that was held in Madrid in December 2019. The report is an important tool to help Arab countries strengthen proactive policies to improve energy security and enhance their ability to adapt to climate change, in addition to the inclusion of the SDGs in regional and national energy policy processes.
Cooperation with Specialized Organizations
The IsDB President emphasized that the institutions with which the Bank was cooperating in this domain included the International Renewable Energy Agency (IRENA), which is an intergovernmental organization that aims to encourage the adoption of renewable energy worldwide and provide expertise for applications and policies in this field. The Bank has participated with IRENA in organizing numerous workshops and seminars on renewable energy. Aware of the impact of the spread of COVID-19, especially in remote areas, the Bank is currently considering cooperation with the Agency, using solar energy to provide health centers in remote areas with the energy they need to be able to operate.
He stated that, as part of its endeavor to disseminate and exchange knowledge in the renewable energy sector, the Bank has joined the membership of the “Renewable Energy Policy Network for the 21st Century” (Ren21). This organization aims to exchange knowledge in the renewable energy sector and develop relevant policies. The organization brings together several international and multilateral financing institutions, in addition to private sector companies, academic bodies, and government institutions.
History of the Bank’s Interest in Renewable Energy
It should be noted that the IsDB began to be interested in renewable energy since its inception. In 1976, the Bank agreed to finance the Song Lulu Hydropower Project in the Republic of Cameroon. The Bank’s interest in renewable energy and its financing continued in all types of energy, including hydroelectric energy, solar energy, wind energy, as well as other types of renewable energy. In line with the key pillars of its energy sector policy, the Bank is looking to increase the share of renewable energy in its energy portfolio by building partnership strategies with Member Countries in the energy sector.
In line with its efforts to expand its programs in the field of climate and renewable energy, the Jeddah-based Bank issued in late 2019 the first “green Sukuk” in the amount of one billion euros to finance clean energy and environmentally friendly projects. The Bank has set rules and conditions for the projects to be financed with these Sukuk in line with environmental requirements, which made the Sukuk attractive to investors interested in the clean energy sector.
The Bank is also working to help finance joint projects in the field of renewable energy in partnership between the public and the private sectors (PPP) in order to encourage the private sector to enter this important field. The latest reports on the sector indicate the difficulty of providing the necessary funds only through multilateral financial institutions in order to meet the world countries’ needs in terms of renewable energy and achieve the specific contributions announced by countries to reduce greenhouse gas emissions under the United Nations Framework Convention on Climate Change.
Increasing the share of renewable energy in the energy mix in Member Countries requires focusing the attention of those countries on including renewable energy in their strategic priorities, while developing clear action plans to implement these strategies. The Bank is making a great effort to urge countries to pay attention to renewable energy when developing partnership strategies with Member Countries, and to urge those countries to put in place laws and rules to pave the way for the private sector to contribute to this important field.