BAKU, Azerbaijan, November 26. COP29 has provided an opportunity for MDBs, including the Asian Infrastructure Investment Bank (AIIB), to engage with a wide range of stakeholders regarding the work we’re doing in the climate space, said Seleha Lockwood, Senior Climate Strategy and Policy Specialist at AIIB in an exclusive interview with Trend.
"This COP, as well as previous COPs, provides an opportunity for MDBs, including the AIIB, to engage with a wide range of stakeholders regarding the work we’re doing in the climate space. It is also an opportunity for exchanging knowledge and for collaboration," she said.
Lockwood highlighted the release of a joint MDB statement at COP29, which outlined their accomplishments over the past year and outlined plans for the future. "This serves as a means of sharing information and demonstrating our openness to collaboration".
In 2023, MDBs achieved a milestone in climate finance, collectively mobilizing $125 billion. At COP29, they pledged to raise their annual climate finance contributions to $170 billion by 2030, including $120 billion for low- and middle-income countries and $50 billion for high-income nations.
"For MDBs, strengthening collaboration efforts at the country level is important as we help nations in formulating and operationalizing long-term climate strategies," Lockwood noted, emphasizing the value of targeted support in achieving sustainable development goals.
Lockwood also pointed to the importance of showcasing innovation and advancing new frameworks. "For this COP, MDBs presented a paper outlining our vision for supporting country-led platforms," she said. "We also worked throughout the year with other MDBs on a second paper, which introduces a common approach to results. This aims to go beyond merely reporting climate finance - a practice we will continue - to focus on outcomes and impact".
AIIB's core priorities in Central Asia
"The AIIB is focused on our mandate of 'infrastructure for tomorrow,' which includes green infrastructure as one of its key priorities. Other major aspects of our work are regional connectivity and private capital mobilization," said Lockwood. "While we have members in the Asia-Pacific and Central Asia regions, we also have a global membership, consisting of 110 countries".
She emphasized AIIB’s role in supporting regional and national efforts on climate, particularly in Central Asia. "In the context of the Asia-Pacific and Central Asia, as with other regions, we would like to support country efforts on climate and regional initiatives at COPs," Lockwood stated.
At COP29, the AIIB demonstrated its support for the regional Special Programme for the Economies of Central Asia (SPECA), an initiative aligned with its mandate. "As part of this initiative, and in line with our mandate, we prioritize support for both the public and private sectors".
The AIIB also led several discussions on key climate topics, including adaptation, the health-climate-nature nexus, biodiversity, and carbon markets. "At these events, AIIB showcased action on climate and plans ahead," said Lockwood. She highlighted the bank’s achievement in climate finance, which reached 60 percent of its annual investments in 2023, surpassing its 50 percent target. "Although we have exceeded our target, we remain committed to scaling our financing for adaptation and mitigation to support country plans".
Expanding its scope beyond project financing, AIIB introduced a new climate policy-based financing tool at COP29. "Our work now goes beyond project investments as well. We are expanding into climate policy-based financing to create an enabling environment and incentivize climate action and support governments in these efforts," she explained. "We shared this new instrument at COP29 with our clients across all our events that we organized and participated in".
AIIB's major solar investment in Azerbaijan
Further, Seleha Lockwood spoke about AIIB's recent major solar investment in Azerbaijan, which marked a significant step in the bank's climate action strategy. "We released a Climate Action plan last year, which emphasizes working closely with our clients and building meaningful partnerships. This particular investment in Azerbaijan exemplifies that approach, as we are collaborating with other MDBs and the country itself to support their energy priorities," she said.
The investment, totaling $160 million, will fund the development of two solar PV power plants: the 315 MWAC Neftchala Solar PV Power Plant and the 445 MWAC Bilasuvar Solar PV Power Plant. The project is being developed in partnership with Abu Dhabi Future Energy Company PJSC (Masdar), and will significantly contribute to Azerbaijan's renewable energy capacity.
"This project is a transformative investment that will significantly change the energy mix in Azerbaijan," Lockwood noted. "We are excited to be part of this initiative, which holds substantial strategic importance for the country’s future energy landscape".
The project is co-financed by the Asian Development Bank (ADB) and the European Bank for Reconstruction and Development (EBRD), with SOCAR Green joining Masdar as a local partner. Lockwood emphasized that this collaboration reflects AIIB's commitment to fostering regional cooperation and supporting countries in their climate goals. "The partnership with multiple MDBs and local players underscores the importance of collaboration in tackling global challenges like climate change," she said.
The solar investment is aligned with AIIB’s broader strategy to prioritize green infrastructure, in line with its commitment to the Paris Agreement. "Our strategy prioritizes green infrastructure and aligns with the goals of the Paris Agreement," Lockwood stated. "Since July 1, 2023, all of our project investments have been aligned with Paris goals, and this investment is no exception".
AIIB’s commitment to the project is already evident, as its investment operations team has been actively engaged on the ground in Azerbaijan since the first week of the initiative. "We are already on the ground, engaging with counterparts in Azerbaijan, ensuring that the project progresses smoothly," Lockwood added.
AIIB spotlights infrastructure finance innovation at COP29
Further, Seleha Lockwood spoke aboutthe side event "Breathing Life into Infrastructure Finance", hosted by AIIB on the sidelines of COP29.
"This event was organized with a partner, Our Common Air, as an official UNFCCC side event. The UNFCCC encourages such collaborations. The event, titled Breathing Life into Infrastructure Finance: Integrating Health, Air Quality, Climate, and Nature, was designed alongside other partners and aligned with our economics department's focus this year.
In this event we built on the findings of the economics department at AIIB on the interlinkages between health, nature and climate in infrastructure investment. We are also building on the concept of nature as infrastructure that AIIB focused on in our 2023 Asian Infrastructure Finance report. For example, instead of financing traditional grey infrastructure for flood control, nature-based solutions, such as mangroves, might offer better alternatives. This event highlighted the critical importance of the health perspective to action on nature and climate in infrastructure investment," she said.
The main takeaways emphasized the importance of considering health impacts when planning infrastructure investments and exploring opportunities within the healthcare sector to contribute to mitigation and resilience. The approach extends beyond healthcare systems to consider health holistically, considering nature solutions as well.
Our Common Air, focused on air quality and air pollution and that clean air needs to be considered an asset class, Lockwood added. "At AIIB, our analysis addresses air quality's relevance, but we go beyond that to examine water quality and other environmental aspects".
"The criticality of cross-sectoral and cross-government action on integrated climate, health and nature action was also discussed with the example of the Brazil Climate and Ecological Transformation Investment Platform. Addressing gender inequalities in the health, air quality, climate and nature space were emphasized. Note here that AIIB released its first Gender Action Plan this year. New financing products and approaches for financing the health, climate and nature nexus were raised such as debt for nature swaps.
The follow-up event, held at the Joint MDB Pavilion, centered on Infrastructure for Planetary Health. It built upon the initial event and delved into the interconnections between health, climate, and nature, in infrastructure investment. The first session on November 14 had a high-level strategic focus, while the Joint MDB Pavilion event provided a more technical discussion with specific examples of integrating climate, health, and nature," she added.
AIIB drives climate action with innovative financing
"At AIIB, we utilize various financing instruments to address gaps in funding for integrated activities related to climate, nature, and health," Lockwood stated. Highlighting a growing interest in innovative solutions, she noted, "As mentioned in the joint MDB nature and biodiversity session I recently participated in on November 21 within COP29, there is a growing interest in instruments like debt-for-nature swaps. AIIB is exploring such innovative financing approaches to address gaps and client needs".
One of the bank’s key strategies is co-financing and blended finance. This involves collaboration with philanthropic organizations and funds, alongside other financial entities, to reduce capital costs and amplify impact. "Many of our events include philanthropic organizations and funds offering grants or other instruments, which we blend with our financing to maximize impact," Lockwood explained.
AIIB is also leveraging capital markets to drive private sector participation. Lockwood cited the issuance of a 500 million Australian dollar adaptation bond as a prime example. "The projects underpinning this bond are aligned with climate finance tracking taxonomies for adaptation," she emphasized, noting the successful attraction of private sector interest.
The bank’s commitment extends to fostering regional partnerships. "We invest through local banks, as we have done, for instance, with TSKB in Türkiye," Lockwood noted. In 2022, AIIB signed a $200 million loan agreement with TSKB for climate change mitigation and adaptation projects, following a similar $200 million Sustainable Energy and Infrastructure loan in 2018. "Through this fund, and in line with the Paris Climate Agreement, TSKB will finance Türkiye’s investments in renewable energy, energy efficiency, and supporting industries," she added.
Another cornerstone of AIIB’s approach is its climate policy-based financing instrument, which facilitates direct collaboration with governments. "This involves identifying regional infrastructure financing gaps and determining appropriate tools - such as market incentives, carbon markets, or other mechanisms for climate action," Lockwood said. She emphasized that this strategy supports tailored solutions through upstream discussions with governments, ensuring that investments align with green infrastructure commitments.
"Our focus here is to work with public and private sector clients to identify the best options for financing infrastructure. This includes discussing holistic and multisectoral approaches to maximize adaptation, mitigation, and nature solutions, in projects and in climate policy-based financing, including country-led investment platforms," she said.
A core element of AIIB’s strategy involves innovation in financial instruments. "We are committed to exploring innovative financial approaches, diversifying our financing offer," she said. Highlighting climate policy-based financing as a crucial new tool, Lockwood added, "We aim to partner with others to explore instruments such as debt-for-nature swaps, build on the success of our adaptation bond, and use capital markets more creatively to channel financing into this critical area".
Global collaboration remains at the heart of AIIB’s operations. "Partnering with other strategic entities, such as other MDBs - whether those experienced in debt-for-nature swaps or those engaged with countries on climate plans - is a core principle of AIIB’s international operations," Lockwood noted. Despite its regional focus, AIIB’s global membership enables it to extend its efforts worldwide. "For example, we’ve had meaningful engagements in Brazil, reflecting how our international reach aligns with our objectives," she explained.
Lockwood further underscored AIIB’s commitment to shaping the climate agenda through cooperative efforts. "Our priorities and collaborations established at this COP are well-aligned with our Asian and global mandate and will continue to shape our efforts as we move forward from this COP to the next," she concluded.
