Arab Energy Fund commits $1 billion to energy transition and decarbonization

Arab Energy Fund commits $1 billion to energy transition and decarbonization

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Khalid Ali Al-Ruwaigh, CEO of The Arab Energy Fund

Khalid Ali Al-Ruwaigh, CEO of The Arab Energy Fund

The Arab Energy Fund, beforehand often called the Arab Petroleum Investments Corporation (APICORP), has introduced a big commitment of $1 billion to drive vitality transition and decarbonization efforts. APICORP is wholly owned by the ten member states of the Organization of Arab Petroleum Exporting Countries (OAPEC).

The Organization of Arab Petroleum Exporting Countries is a multi-governmental group headquartered in Kuwait which coordinates vitality insurance policies amongst oil-producing Arab nations. Member international locations embrace Algeria, Bahrain, Egypt, Iraq, Kuwait, Libya, Qatar, Saudi Arabia, Syria, and the United Arab Emirates. (Egypt’s membership was suspended in 1979, however it was readmitted in 1989. Tunisia ceased to be a member in 1987.) The headquarters are in Kuwait.

This funding, revealed at COP28 in Dubai, is what the oil and fuel corporations say is a part of a strategic shift in the direction of environmentally and socially accountable initiatives, together with technological developments for enhanced vitality efficiencies and creating new worth chains within the area.

APICORP targeted on the MENA vitality sector  deliberate funding of as much as US $1 billion over the following 5 years in the direction of advancing vitality transition with a concentrate on decarbonization and associated applied sciences. These may embrace hydrogen energy and storage breakthroughs and carbon sequestration technologies.

The Arab Energy Fund will rebalance its general portfolio with continued mortgage development and an enhanced concentrate on fairness investments whereas persevering with to innovate to develop its vary of financing and direct fairness options and knowledgeable advisory companies.

Khalid Ali Al-Ruwaigh, CEO of The Arab Energy Fund introduced at COP28: “The Arab Energy Fund transformative technique marks the establishment’s subsequent chapter, deeply rooted in our 50-year legacy and our distinctive function within the MENA vitality sector.

“It highlights our dedication to impact-driven options, leveraging our deep trade experience and regional entry to allow the evolving vitality panorama in the direction of a net-zero world. Our technique includes diversifying investments by championing technological developments for enhanced vitality efficiencies and driving sustained decarbonization efforts. Additionally, we’re extending our funding scope past the core worth chain, actively cultivating and shaping worth chains inside the area.”

He added: “Our new technique and title signify not solely our dedication to empowering the area’s vitality ecosystem but in addition resonate with our mission to create a significant affect by selling financial development, boosting native worth chains and native content material, via ability growth, and fostering data creation.”

Following the institution of its inexperienced bond framework in 2021, the establishment set a precedent in sustainable finance by issuing the first-ever inexperienced bond issuance by an energy-focused monetary establishment within the MENA area. The US-denominated five-year benchmark issuance raised a formidable US $750 million, over US $610 million of which has already been allotted to 11 initiatives within the area.

Currently, 18% of the establishment’s US $4.5 billion present mortgage portfolio, is devoted to supporting environmentally and socially accountable initiatives, fostering collaboration between the private and non-private sectors, and pioneering a path towards extra sustainable financing.

The Arab Energy Fund can be within the technique of enhancing its ESG Policy Framework, additionally launched in 2021, demonstrating the establishment’s sturdy dedication to incorporating accountable enterprise practices into its operations. This effort displays the establishment’s management in shaping a extra sustainable and accountable future for all.

As the MENA area’s solely multilateral affect monetary establishment, The Arab Energy Fund can be dedicated to backing the 2050 internet zero commitments made by its member international locations. The establishment has publicly affirmed the crucial want for collective local weather motion to align with the numerous objectives specified by the UN Paris Agreement.

In line with this dedication, the establishment launched a number of revolutionary monetary options which are thought-about regional firsts, together with its pioneering US $75 million Murabaha facility for voluntary carbon offsets and financing of distributed energy portfolios.

The Arab Energy Fund stands among the many highest-rated monetary establishments within the MENA area, boasting ‘AA’ score from Fitch, alongside ‘Aa2’ from Moody’s and ‘AA-‘ from S&P. This sturdy endorsement from the score companies and the strong regional assist from member international locations, together with substantial backing from the area’s vitality ministries, underpinned by sturdy liquidity and credit score profiles, positions the establishment as a key participant in championing a realistic and sustainable vitality future.

The Arab Energy Fund – previously the Arab Petroleum Investments Corporation (APICORP) – is a multilateral affect monetary establishment targeted on the MENA vitality sector established in 1974 by the ten Arab oil-exporting international locations.