BAKU, Azerbaijan, December 5. The European Bank
for Reconstruction and Development (EBRD) is intensifying its
commitment to green financing, with over 50 percent of its
portfolio dedicated to projects that align with climate goals, said
Alkis Vryenios Drakinos, Regional Head of the Caucasus for the
EBRD, in an interview with Trend.
“We are positioning ourselves, and we already have a few
achievements in stating that we are becoming, or we are, a green
bank,” Drakinos noted. “This is a commitment we made for Paris
Agreement alignment a few years ago, and we have stepped up our
efforts. Since 2022 and 2023, we have achieved our goal, and this
year, we are doing even more”.
The EBRD is collaborating with other multilateral development
banks (MDBs) to amplify investment in climate-related projects. “We
have a joint ambition to get it right in terms of how much
investment will be necessary to achieve our collective goals,”
Drakinos explained. Together, MDBs are committing to invest 120
billion euros annually in climate projects until 2030.
However, this amount represents only a fraction of the estimated
2.4 trillion euros needed annually to combat climate change
effectively. “120 billion euros is only a small percentage – just 5
percent – of the total investment that we are talking about,”
Drakinos emphasized. “The remaining 95 percent needs to come from
the private sector and governments”.
Drakinos highlighted the critical role of governments in
mobilizing private sector investment by creating favorable
regulatory conditions and market opportunities. “What governments
need to do is help the private sector by establishing the
regulatory conditions and creating market opportunities to mobilize
private investment. This is where we as MDBs, and the EBRD in
particular, have a role to play,” he said.
The EBRD is focused on working with governments to establish a
regulatory framework conducive to private investment. “We must join
forces with governments and advise on how to create a regulatory
regime that is conducive to private sector investment. Then, as a
result, we can mobilize the private sector to participate because
otherwise, we will be unable to do it,” Drakinos added.
EBRD’s renewable energy impact in
Azerbaijan
Further, the regional director spoke about the significant
financial support the bank is providing to Azerbaijan’s renewable
energy sector through the development of two major solar parks in
Bilasuvar and Neftchala.
“These two solar parks in Bilasuvar and Neftchala will be
delivered and constructed by a joint venture between Masdar (75
percent) and SOCAR Green, showing Azerbaijan’s commitment to
supporting the green agenda and the country’s green ambitions,” he
noted.
The projects, which represent an investment of 160 million
euros, are being co-financed by the EBRD, the Asian Development
Bank (ADB), and the Asian Infrastructure Investment Bank (AIIB).
“AIIB, ADB, and EBRD are joining forces to finance this project and
make it a reality,” Drakinos emphasized.
These solar parks are part of a broader renewable energy
strategy supported by the EBRD in Azerbaijan. Following the Alat
solar project in 2022 and the Absheron Khizi wind project in 2023,
the EBRD has facilitated the development of 1.2 GW of renewable
energy capacity in Azerbaijan over the last 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 challenge, with Azerbaijan
positioning itself as a country committed to renewable energy.
Azerbaijan is set to be a strong player and partner in addressing
the global challenge of climate change”.
The EBRD’s commitment to Azerbaijan extends beyond renewable
energy. The bank is also advancing initiatives such as the Green
Cities program, which integrates sustainable practices into urban
development projects, including water management systems.
EBRD tracks progress of new green
corridor
The EBRD is closely monitoring key regional developments in the
Caucasus, particularly the recent agreement between Azerbaijan,
Kazakhstan, and Uzbekistan to establish a green corridor, the
regional director pointed out.
“We are involved across the entire Caucasus and are closely
monitoring new regional developments,” Drakinos said. “Recently,
the leadership of Azerbaijan, Kazakhstan, and Uzbekistan signed an
agreement for a green corridor. It’s still early to discuss the
specifics of the project since we need feasibility studies and
other assessments. However, the political will for collaboration
among these three countries, combined with the potential to channel
the renewable energy of Central Asia and the Caucasus not only for
domestic use but also for the European market, is very
promising”.
He added that if the project proves viable and bankable, EBRD is
ready to support it. “All three countries are operational members
of the bank, so we are well-positioned to assist. I am looking
forward to further updates on this,” Drakinos noted.
The EBRD is also paying close attention to the Black Sea cable
project, which is part of the region’s green energy corridor. “This
is a major project that is starting to become more understandable
as the feasibility study is almost ready,” Drakinos said. “Once it
is shared with us, we will be reviewing it. We know that this
energy corridor project can lay the infrastructure to transfer
renewable energy from the Caucasus to Europe”.
EBRD supports key Middle Corridor projects in
Azerbaijan and Georgia
Underscoring the bank’s active engagement in projects related to
the Middle Corridor, a vital trade route connecting Central Asia,
Europe, and beyond, Drakinos emphasized the EBRD’s commitment to
ensuring all financed projects align with the Paris Agreement.
“Whatever we finance in this sector will always include a green
element,” Drakinos noted. “We do not finance projects that are not
compatible with the Paris Agreement’s conditionalities. Therefore,
every project we support is aligned with the Agreement, and we
incorporate relevant conditions to ensure compliance”.
Drakinos highlighted several ongoing and potential projects
under the Middle Corridor framework. In Azerbaijan, the EBRD has
been actively financing the Azerbaijan Caspian Shipping Company
(ASCO) to acquire vessels and cargo ships, aiming to facilitate
trade along the route. “This is helping meet the demand for
transporting goods between Central Asia, Europe, and beyond, both
ways,” he explained.
In Georgia, the EBRD is working on projects to enhance the
efficiency of the transport sector, including support for the
railway system and the development of the Port Community System, a
digitalization initiative to streamline port operations. “This
project will link the ports of Georgia, making the transfer and
trading of goods between countries smoother and faster. It is also
part of the Middle Corridor concept,” said Drakinos.
The EBRD has also expressed interest in supporting the expansion
of the Port of Baku in Azerbaijan. “We conveyed our interest to the
Azerbaijani authorities regarding the expansion of the capacity of
the Port of Baku, which is part of the Middle Corridor. We
expressed our willingness to look into this when they are ready,”
Drakinos stated.
EBRD’s private sector investment model drives
climate financing
Last year, we invested over 6.5 billion euros in climate,
mobilizing around 25 billion euros from the private sector,
Drakinos pointed out.
“We have been successful so far in mobilizing a lot of
investment from the private sector,” Drakinos stated. “For every
euro we have invested, we have mobilized more than three”.
Drakinos attributed this success to careful project selection
and maintaining strong relationships with the countries where the
EBRD operates. “Every project that we finance is in countries that
are interested, as these countries are our shareholders. As a
result, the risk surrounding our projects is low. The projects we
finance are supported, which helps reassure private-sector
financial investors. They can then focus on the merits of the
project itself”.
He emphasized the importance of working with high-quality
project sponsors. “The people we are financing have proven track
records in delivering projects. They are known for meeting
timelines and staying within budgets. There are no cost overruns,
unless there are unexpected surprises, but these are rare,”
Drakinos explained.
The EBRD’s model of securing financing from both the bank and
its partners, along with ensuring tariffs and other financial
elements align with market conditions, has been a cornerstone of
its success. “The bankability of the projects is also guaranteed
because of the tariffs and other factors. We work in countries that
can afford to purchase at the prices we have secured. It’s a proven
model, and we will continue to use it in the future,” Alkis
Vryenios Drakinos concluded.
