Economic experts in Jordan have showed the critical importance of strong technical support and capacity-building programs for both the public and private sectors in Jordan, emphasizing their key role in advancing green finance. This focus on technical assistance comes as His Majesty King Abdullah II directed officials to develop a unified, full national climate finance strategy, working closely with the private sector. The King stressed the necessity of deploying targeted technical support programs to empower both public and private entities in leveraging available climate funds and low-carbon technologies effectively. Experts indicate that the upcoming phase necessitates scaling up green financing by refining funding instruments, expanding institutional capabilities, and directing capital toward high-priority sectors within Jordan. This strategic direction aims to ensure that Jordan can effectively transition to a more sustainable and environmentally conscious economy, building on the foundational work already undertaken.
Obstacles to Bankable Green Projects
Many promising initiatives often stall before securing funding due to insufficient technical readiness and a lack of feasibility data, according to Raed Al-Tel, a professor of economics at the University of Jordan. Professor Al-Tel noted that such projects frequently do not advance to the funding stage, hindering the flow of capital into key green initiatives. He emphasized the necessity for specialized training programs designed to assist organizations in developing bankable green proposals. These programs should also guide entities in conducting full technical and feasibility studies, as well as establishing metrics to accurately measure both environmental and economic impacts. This full approach is seen as vital for transforming nascent ideas into viable, fundable projects, ensuring that they meet the rigorous standards required by financial institutions.
Maher Al-Mahrouq, Director General of the Association of Banks in Jordan, stated that the primary challenge in green finance is not a shortage of capital. "The challenge in green finance is not necessarily a shortage of capital sources-both local and international funds exist-but rather our ability to transform needs and ideas into qualified, bankable green projects," Al-Mahrouq said. He called for an integrated technical support ecosystem to serve various stakeholders, including government agencies, municipalities, and small- and medium-sized enterprises (SMEs). This ecosystem would aim to bridge the gap between initial concepts and fundable projects, ensuring that all sectors, regardless of size or governmental affiliation, have access to the necessary expertise and resources for successful project development.
Maen Ayasrah, Director of the Center for Energy and Environmental Sustainability at the Jordan Chamber of Industry, further stressed the importance of technical support, describing it as the vital bridge connecting industrial plants with financial institutions. Ayasrah’s perspective shows that effective technical assistance is key for translating industrial needs into formats that financial institutions can evaluate and fund, thereby unlocking significant investment potential. This bridge is essential for facilitating the transition of industrial operations towards more sustainable practices, ensuring that innovative green industrial projects can secure the necessary financial backing to come to fruition and contribute to national sustainability goals.
Financial Instruments and Investment Needs
Professor Raed Al-Tel advocated for a broader implementation of green bonds and incentives designed to encourage commercial lenders to finance sustainable projects in energy, water, and transport sectors. He also called for the establishment of supportive frameworks to facilitate private green investments, creating an environment where sustainable projects can thrive with strong financial backing. Financial and economic expert Majed Shafiq noted the potential benefits of utilizing alternative debt instruments, specifically mentioning green corporate bonds and Islamic green sukuk. These instruments offer innovative ways to attract capital for environmentally friendly projects, appealing to a wider range of investors and diversifying funding sources beyond traditional loans.
Achieving a resilient, low-carbon pathway for Jordan necessitates substantial financial commitment. Estimates from the World Bank indicate that Jordan requires approximately USD 9.5 billion in additional investments by 2030 to meet these objectives. These investment needs are further detailed in national green growth plans, which identify sector-specific requirements totaling USD 1.8 billion. This significant financial outlay shows the scale of the transformation required and the importance of mobilizing both public and private capital to achieve these ambitious environmental and economic goals.
Expert Perspectives and Strategic Alignment
Jordan has made positive strides, particularly in integrating renewable energy, according to experts. This progress serves as a foundational element for further advancements in green finance, demonstrating the nation's commitment and capability in transitioning towards a more sustainable energy mix. Maher Al-Mahrouq, Director General of the Association of Banks in Jordan, noted that the banking sector is actively embedding climate risk management into its credit decisions. This integration aligns with the Central Bank of Jordan’s Green Finance Strategy for 2023-2028, reflecting a concerted effort to incorporate environmental considerations into financial operations and decision-making processes across the banking sector. This strategic alignment ensures that financial institutions are not only compliant with national directives but also actively contribute to the green transition by assessing and mitigating climate-related risks in their portfolios.
Nawal Hasan, an economy and business expert, stressed that the sustainable management of resources is an economic imperative for the country. This perspective emphasizes that green initiatives are not merely environmental concerns but are fundamental to Jordan's long-term economic stability and growth, ensuring resource security and fostering new economic opportunities. Maen Ayasrah, Director of the Center for Energy and Environmental Sustainability at the Jordan Chamber of Industry, referred to World Bank estimates when discussing the nation's financial requirements for green initiatives, reinforcing the substantial investment needed to achieve these ambitious goals. The alignment of expert opinion with strategic national directives and international financial assessments shows the unified approach Jordan is taking toward green finance and sustainable development. The emphasis on technical support, strong financial instruments, and strategic planning is critical for Jordan to effectively harness its potential for green growth and achieve its climate objectives, paving the way for a resilient and prosperous future.
