Source: Trend International Data Agency
The European Bank for reconstruction and Development (EBRD) is strengthening its commitment to green finance, with more than 50 percent of its portfolio comprised of projects aligned with climate goals.
As Day.Az reports, EBRD Regional Director for the Caucasus Alkis Vrienios Drakinos said this in an exclusive interview with Trend.
“We position ourselves as a green bank, and we already have several achievements that confirm this,” Drakinos noted. “This is a commitment that we made under the Paris Agreement several years ago, and we have increased our efforts. We have achieved our goal for 2022-2023, and this year we plan to achieve even greater goals.”
The EBRD is working with other multilateral development banks (MDBs) to increase investment in climate change-related projects. “We have a common goal – to correctly calculate the amount of investment that is necessary to achieve our goals,” Drakinos explained. Together with other MDBs, the bank is committed to investing €120 billion annually in climate projects until 2030.
Though, this amount is only a fraction of the estimated €2.4 trillion needed annually to effectively combat climate change. “120 billion euros is just a small percentage, just 5 percent of the required investment,” Drakinos emphasized. “The remaining 95 percent must come from the private sector and governments.”
Drakinos noted the crucial role of governments in attracting private investment by creating favorable regulatory environments and market opportunities. “Governments must help the private sector by creating the necessary regulatory conditions and market opportunities to attract private investment. It is indeed the IDB and the EBRD that play a key role,” he said.
The EBRD is focused on working with governments to create regulatory frameworks that support private investment. “We have to work with governments to help them develop a regulatory regime that will facilitate private sector investment. Then we can mobilize the private sector to participate. Or else we won’t be able to achieve this,” he said.
Cooperation with Azerbaijan in the field of renewable energy sources
The regional director further spoke about the meaningful financial support that the bank is providing to Azerbaijan’s renewable energy sector, in particular through the development of two large solar parks in Bilasuvar and Neftchala.
“Two solar parks in bilasuvar and Neftchala will be built by a joint venture between Masdar (75 percent) and SOCAR Green, which demonstrates Azerbaijan’s commitment to supporting the green agenda and green ambitions of the country,” he noted.
The projects, with an investment volume of €160 million, are jointly financed by the EBRD, the Asian Development Bank (ADB) and the Asian Infrastructure Investment Bank (AIIB). “The AIIB, ADB and EBRD are joining forces to finance this project and bring it to life,” Drakinos emphasized.
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These solar parks are part of a wider renewable energy strategy supported by the EBRD in Azerbaijan. Through the Alyat solar project in 2022 and the khizi Absheron wind project in 2023,the EBRD has supported the creation of 1.2 gigawatts of renewable energy capacity in Azerbaijan over the past three years.
“we are fully aware that Azerbaijan is an oil-rich country and that the economy is still largely dominated by the fossil fuel sector,” Drakinos said. “However, we see strong political will and growing awareness of the global problem as azerbaijan positions itself as a country committed to renewable energy, Azerbaijan intends to become a strong player and partner in addressing the global challenge of climate change.”
The EBRD’s commitment to Azerbaijan goes beyond renewable energy. The Bank also promotes initiatives such as the green Cities program, which integrates sustainable practices into urban development projects, including water management systems.
“We take into account environmental elements and conditions in every financing we make,” explained Drakinos, highlighting the EBRD’s approach to ensuring the sustainability of its investments.
The EBRD monitors the progress of the new green corridor project
The Regional Director stressed that the EBRD is closely monitoring key regional developments, including the recent agreement between Azerbaijan, Kazakhstan and Uzbekistan to create a green corridor.
“We are working throughout the caucasus and are closely monitoring new regional developments,” Drakinos noted. “recently, Azerbaijan, Kazakhstan and Uzbekistan signed an agreement on the creation of a green corridor. It is indeed too early to talk about the details of the project, as we need feasibility studies and other estimates Though, the political will for cooperation between these three countries, combined with the potential for the use of renewable energy sources in Central Asia and the Caucasus not only for domestic consumption, but also for the european market, appears. very promising.”
He added that if the project turns out to be viable and acceptable for financing, the EBRD is ready to support it. “All three countries are current members of the bank, so we are well positioned to provide assistance. I look forward to further updates on this issue,” Drakinos said.
The EBRD is also monitoring the Black Sea cable project, which is part of the regional green energy corridor. “This is a major project that is becoming clearer as the feasibility study is almost ready,” Drakinos said.“As soon as it is presented to us, we will look at it. We are confident that this energy corridor project can create infrastructure for the transmission of renewable energy from the Caucasus to Europe.”
EBRD on key projects within the Middle Corridor in Azerbaijan and Georgia
Highlighting the bank’s active involvement in projects related to the Middle Corridor, an important trade route connecting Central Asia, Europe and other regions, Drakinos underscored the EBRD’s commitment to ensuring that all projects financed are compliant with the Paris Agreement.
“All projects that we finance in this sector necessarily include an environmental component,” he emphasized. “We do not support initiatives that do not comply with the requirements of the Paris Agreement, and we always include conditions to ensure compliance with them.”
Drakinos mentioned several current and potential projects along the Middle Corridor. In Azerbaijan, the EBRD is actively cooperating with the Azerbaijan Caspian Shipping Company (ASCO) to acquire ships and bulk carriers to strengthen trade links along this route. “this helps meet the demand for cargo transportation between Central asia, Europe and other regions in both directions,” he said.
In Georgia,the bank is supporting projects to improve the efficiency of the transport sector,including the modernization of the railway system and the development of the Port community system,a digital platform that optimizes port operations. “
This project will unite Georgian ports, making trade and cargo transfer between countries more efficient and faster. This is also an important part of the Middle Corridor concept,” Drakinos explained.
The EBRD is also interested in expanding the Baku port. “We have informed the Azerbaijani authorities of our readiness to consider expanding the capacity of the Baku port,which is part of the Middle Corridor,” Drakinos added.
The EBRD model supports climate finance
Last year we invested more than 6.5 billion euros in connection with climate initiatives, mobilizing about 25 billion euros from the private sector, the regional director noted.
“We have been able to successfully attract significant investment from the private sector,” said Drakinos. “For every euro we invested, we attracted more than three.”
Drakinos attributed this success to careful project selection and maintaining strong relationships with the countries in which the EBRD operates.
“Every project we finance is implemented in countries interested in it, since these countries are our shareholders. This reduces the risks associated with our projects. The projects we support receive the necessary support,which helps convince private investors. In our in turn, they can focus on the merits of the project itself,” Drakinos noted.
He emphasized the importance of collaborating with high-end sponsors. “The companies we fund have a proven track record of delivering prosperous projects. They are known for their ability to meet deadlines and stick to budget. There are no cost overruns accept in rare unexpected circumstances,” explained the regional director.
The EBRD’s model of attracting financing from both the bank itself and its partners, taking into account market conditions, tariffs and other financial factors, is the basis for success. “Financing of projects is also guaranteed thanks to tariffs and other factors. This is a proven model and we will continue to use it in the future,” concluded Alkis Vrienios Drakinos.
What specific renewable energy projects is teh EBRD currently supporting in Azerbaijan and how do they contribute to the country’s sustainability goals?
interview between time.news Editor and Alkis Vrienios Drakinos, EBRD Regional Director for the Caucasus
Editor: Good day, alkis! Thank you for joining us today to discuss the remarkable initiatives the European Bank for Reconstruction and Development (EBRD) is undertaking in the realm of green finance and renewable energy.
Drakinos: Thank you for having me! It’s a pleasure to share our insights and progress.
Editor: the EBRD recently announced that over 50 percent of its portfolio now comprises projects aligned with climate goals. Can you elaborate on what this means for the bank and for the regions you operate in?
Drakinos: Certainly! By positioning ourselves as a “green bank,” we’re not just acknowledging the pressing climate issues but actively responding to them. This commitment stems from our obligations under the Paris Agreement, and we’ve made significant strides towards our objectives for 2022-2023. Our goal now is to enhance these efforts and engage even more with countries in our region on sustainability initiatives.
Editor: That’s commendable. In your discussion, you mentioned a substantial target of investing €120 billion annually in climate-related projects by 2030, yet noted this is onyl 5 percent of the estimated €2.4 trillion needed each year. How do you see the role of private sector investment in reaching the overall funding needed?
Drakinos: The figures are indeed stark. While EBRD and other multilateral development banks are mobilizing their resources, it is crucial that the remaining 95 percent comes from the private sector and governments. To attract these investments, governments need to create favorable regulatory environments and market opportunities. This cooperative approach is essential for facilitating private sector engagement in climate finance.
Editor: It sounds like a multi-faceted strategy.Can you discuss the regional projects that the EBRD is currently undertaking, notably in Azerbaijan?
Drakinos: Absolutely. In Azerbaijan, we’re actively supporting the development of renewable energy through significant projects, including two large solar parks in Bilasuvar and Neftchala. This joint venture involving Masdar and SOCAR Green demonstrates Azerbaijan’s commitment to its green agenda. The total investment of €160 million is a crucial step in diversifying the country’s energy portfolio beyond its oil-rich legacy.
Editor: That’s notable progress! How does the EBRD support countries like Azerbaijan in aligning with global sustainability objectives while still being an oil-rich nation?
Drakinos: It’s a balance of acknowledging existing realities while promoting conversion. While Azerbaijan’s economy currently relies heavily on fossil fuels, we see a strong political will to embrace renewable energy. Through meticulous planning and support, we help countries leverage their existing resources while transitioning toward enduring practices. This includes not only renewable projects but also integrating sustainability into urban development initiatives like our Green Cities program.
Editor: Speaking of regional cooperation, I understand there’s an exciting new initiative involving Azerbaijan, Kazakhstan, and Uzbekistan to create a green corridor. Can you provide some insight into that?
Drakinos: Yes! This green corridor project represents a promising step in regional collaboration for renewable energy. Although it’s still early days, the political will between these countries is palpable, and we’re monitoring the feasibility studies closely. If it proves viable, the EBRD stands ready to provide the necessary support, enhancing energy cooperation not just for local consumption but potentially for export to european markets as well.
Editor: That’s forward-looking. Lastly, can you tell us about the Black Sea cable project and how it fits into EBRD’s broader vision for regional energy solutions?
Drakinos: The Black Sea cable project is indeed integral to our plans for a regional green energy corridor.We’re nearing completion of the feasibility studies, and as soon as we have a comprehensive outlook, we’ll evaluate how it aligns with our investment strategy. It’s vital for strengthening connectivity and renewable energy distribution across borders, solidifying both regional and European energy security.
Editor: It’s been enlightening hearing about the EBRD’s initiatives and perspectives. Thank you, Alkis, for your time and insights today. We look forward to following your progress in fostering sustainable growth and cooperation in the region.
Drakinos: Thank you! I appreciate the opportunity to discuss our work and look forward to sharing more successes in the future.