An international charity funded by some of the world’s top oil producers is increasingly helping developing countries prepare for the impacts of climate change in a new strategy that experts say could keep the world hooked on fossil fuels.
The multibillion-dollar OPEC Fund for International Development is shifting away from its historical support for projects that increased demand for oil and gas, such as building new power plants or roads in low- and middle-income countries.
In 2024, more than a third of the charity’s financial support — a total of $217 million, mainly in loans — has gone to projects that help developing countries adapt to droughts, wildfires, floods, rising seas and other impacts of climate change, according to an analysis by POLITICO’s E&E News.
Between 2018 and 2021, the OPEC Fund reported directing less than 6 percent of its loans and grants toward such climate resilience efforts.
The surge in support for adaptation — while in line with broader international development trends — is drawing scrutiny given its ties to the Organization of the Petroleum Exporting Countries, a cartel of mainly Middle Eastern and African nations that have opposed efforts to limit climate change.
At the most recent international climate conference in the oil-and-gas-rich United Arab Emirates, OPEC urged its member states to reject any agreement that aimed to slash production of fossil fuels that are overheating the planet.
The Austria-based OPEC Fund, which is mainly funded and controlled by Saudi Arabia, is nominally independent of the cartel. But its support for climate resilience efforts in the developing world could also pay dividends for the oil-exporting countries that bankroll the charity.
OPEC members “want to make sure that there’s still demand for their products in the future,” said Niko Jaakkola, an economics professor at Italy’s University of Bologna who has studied how climate policies could affect the cartel. “How do you do that? You try and reduce the urgency of climate change in the global policy agenda.”
A spokesperson for the OPEC Fund said it is “entirely independent” of OPEC and emphasized that the fund’s financial priorities are driven by “recipient partner countries.”
The charity is working “to respond to the increasingly urgent impact of climate change and to help our partner countries increase their resilience to climate shocks,” spokesperson Nadia Benamara said in an email. “Development effectiveness considerations are at the forefront of everything we do.”
Resilience in vogue
The OPEC Fund’s embrace of resilience measures mirrors a trend of fossil fuel-aligned groups supporting efforts to limit the impacts of rising temperatures without addressing their main cause: the burning of oil, gas and coal.
The U.S. Chamber of Commerce — a powerful trade association that’s fighting Biden administration climate rules for utilities and publicly traded companies — this year released a report touting the economic benefits of “preparing for climate-related catastrophes.”
The conservative policy wishlist known as Project 2025 aims to zero out emissions-cutting programs at the U.S. Agency for International Development and other federal departments in favor of initiatives that respond to impacts of “climatic shifts.”
USAID should “strengthen the resilience of countries that are most vulnerable to climatic shifts,” says a section of the Project 2025 plan authored by Max Primorac, who served at the agency as a Trump appointee. He called for the agency to “cease collaborating with and funding progressive foundations, corporations, international institutions, and [nongovernmental organizations] that advocate on behalf of climate fanaticism.”
The Heritage Foundation, a conservative think tank where Primorac is now a senior research fellow, did not respond to a request for comment.
The Chamber said it supports many climate policy incentives but not rules that it says are burdensome for companies.
“There has to be an element of realism to what climate policy is. That means that there are times that we do oppose certain regulations,” spokesperson Matt Letourneau said. “We don’t see it as a conflict to be heavily engaged in resilience.”
Development that benefits oil producers
The OPEC Fund was established on a temporary basis by OPEC in 1976, a year after the cartel formed. The petrostates’ foreign aid program is intended to reinforce ties between OPEC countries and other developing nations “in their struggle to overcome underdevelopment,” the cartel said at the time.
Four years later, OPEC member countries made their checkbook diplomacy effort a legally independent international development institution.
The group is now a permanent observer at the United Nations, a status on par with intergovernmental groups like the African, Asian, Eurasian and Inter-American development banks. Its Vienna headquarters is in the former palace of an Austrian archduke who died after falling off a horse that was startled by an automobile.
Like the oil cartel, the dozen-nation foreign aid group is led by an official from Saudi Arabia, which has provided more than a third of the OPEC Fund’s equity. Its other top donors are Venezuela, Kuwait, Nigeria and Iran.
Over its nearly half-century, the OPEC Fund says it has committed over $27 billion to development projects in more than 125 countries.
Other development groups have historically focused on funding power plants and roads because they “are so critical to driving development in partner countries,” said spokesperson Benamara.
‘Climate action’ or ‘greenwashing’?
The OPEC Fund began to change its focus at the end of 2022 when it adopted a “climate action plan,” which aims to double the portion of its portfolio spent on climate-related projects to 40 percent by 2030. The plan also calls for including “low-carbon and climate resilience options” when the charity considers new projects.
“When the OPEC Fund set out its operations almost 50 years ago, energy poverty was one of the defining issues of our work,” OPEC Fund Director-General Abdulhamid Alkhalifa said in announcing the climate plan. “Securing energy access remains indispensable, but today it has to be combined with climate action.”
Some of the group’s recent deals include a $100 million loan to Paraguay to “strengthen the country’s sustainable economic development and increase its resilience to climate change” in part by developing a “national electric mobility strategy” and protecting water resources.
Another $25 million lending agreement with Nepal’s Global IME Bank is to enhance the country’s “efforts to mitigate climate change impacts,” according to the OPEC Fund.
OPEC Fund countries appear to be “greenwashing or managing their reputations,” said Jaakkola, the University of Bologna economist. They are “presenting themselves as responsible, despite being fossil fuel producers.”
The loan amounts are dwarfed by the amount the national oil companies of OPEC Fund members are spending to expand drilling. Saudi Aramco reported this month that in the first half of 2024 it spent more than $11.6 billion on oil and gas exploration.
Reporter Sara Schonhardt contributed.
