ADB to Invest in Pakistan’s Sustainable Aviation Fuel Project, Contributing Half of $90 Million

ISLAMABAD: A key beneficiary of the new push by the Asian Development Bank (ADB) will be a project in Pakistan aimed at producing sustainable aviation fuel from used cooking oil, said Sorensen. The ADB plans to contribute about half of the $90 million required for the project, with the agreement set to be finalized on November 20, according to the bank.

Based in the Philippines, the ADB has spent three years negotiating the guarantee agreement in collaboration with a group of Western governments and is hopeful that other nations will soon follow suit, Sorensen added.ADB President calls on the Prime Minister

The bank has also been sharing its insights with other financial institutions like the World Bank, the Inter-American Development Bank, and the European Investment Bank, as part of broader, cooperative efforts to scale up climate-related financing.

“We have been in extensive discussions with several other multilateral development banks (MDBs),” Sorensen noted.

While these deals represent the first use of sovereign guarantees for climate finance, such guarantees have been previously employed in other sectors, such as education.

Public lending institutions have also started to guarantee investments from third parties for climate projects. Earlier this year, the World Bank launched a platform to manage all such guarantees for loans and investments across its various arms, with the aim of expanding their use.

The program is progressing well, having guaranteed over $10 billion in 2023 alone, with plans to double that amount annually by 2030, said Axel van Trotsenburg, the bank’s senior managing director, in an interview with Reuters last month in Washington.

As climate change amplifies the risks of extreme weather and natural disasters globally, developing countries are projected to require over $2 trillion per year by 2030 to transition to clean energy and prepare for the impacts of a warming world.

Wealthier nations hope that a financing agreement at COP29 will move beyond relying solely on their donations for climate finance, and instead focus on development banks and private investors to provide the majority of the necessary funding.