INTERVIEW: Asian Infrastructure Investment Bank financing Central Asia’s green future

The China-based multilateral development bank, Asian Infrastructure Investment Bank (AIIB), has become a major player in Eurasia and a driving force between driving sustainable development in the region. bne IntelliNews sat down with Konstantin Limitovskiy, AIIB vice president for Investment Clients Region 2 and Project and Corporate Finance, to discuss the bank’s progress and projects. 

1. What do you consider to be the main challenge to meeting the 1.5C Paris Agreement target today? Investment in solar has gone faster than expected, but the reduction in burning fossil fuels has been disappointing.

Greenhouse gas (GHG) levels are at record highs, and projections suggest a potential temperature rise of 2.4-3.1°C this century. To avert this scenario, coordinated global action and robust financing for the energy transition are critical.

Transitioning to sustainable energy is especially financially demanding for developing economies, which face a complex balancing act: investing in green infrastructure amid economic constraints and existing fossil fuel dependencies. Achieving a net-zero pathway will require a sixfold increase in annual investments, estimated to reach trillions by 2035.

Multilateral development banks (MDBs) play a crucial role in bridging this funding gap. In 2023, MDBs collectively provided a record $125bn in climate finance. By 2030, MDBs aim to increase their annual collective climate financing to $120bn for low- and middle-income countries, including $42bn for adaptation, while also mobilising $65bn from the private sector.

2. Specifically, what are the main challenges Central Asia is facing in contributing to meeting the Paris goals and how much progress has it made? 

Central Asia grapples with limited access to climate finance, outdated infrastructure and heightened vulnerability to environmental impacts such as rising temperatures, desertification and melting glaciers, which jeopardise water supply, food security, energy stability and public health. Additionally, fossil fuel dependencies and financial constraints complicate the green transition.

Nevertheless, the region has made notable progress. Many Central Asian countries have adopted national climate strategies to reduce emissions by 2030, with a focus on renewable energy and climate adaptation. For example, Kazakhstan has pledged a 15% emission reduction by 2030 compared to 1990 levels. Collaborative efforts like the Regional Strategy for Climate Change Adaptation demonstrate a shared commitment to addressing regional climate risks, though international support and improved finance access remain essential.

AIIB actively supports Central Asia’s climate goals through projects that enhance climate resilience. In Kazakhstan, AIIB has approved two major renewable energy projects: the Zhanatas and Shokpar wind farms, each with a capacity of 100 MW. A third wind power project with a 220-MW capacity is under preparation. In Uzbekistan, AIIB is financing the Masdar 896-MW Solar PV Portfolio and developing the 200-MW Nukus II Wind and Battery Energy Storage System (BESS) Project. These efforts, in partnership with governments, MDBs and leading private entities like Masdar and ACWA Power, reinforce AIIB’s commitment to fostering climate-resilient infrastructure in the region.

3. Specifically, which forms of renewables are the main focus? Solar seems well developed already. Wind has great potential but remains underutilised. 

AIIB tailors its renewable energy investments to align with the natural resources and specific needs of its members, maintaining a diversified portfolio that includes solar, wind, hydropower, geothermal and bioenergy. For instance, the Bank invests in solar energy projects in Oman and Uzbekistan, supports hydropower initiatives in Tajikistan and Nepal, and prioritises wind energy projects in Kazakhstan, where significant untapped potential exists. In Azerbaijan, AIIB is actively exploring additional solar and wind projects to further enhance the country’s renewable energy capacity.

4. How does AIIB ensure that its investments align with the Paris Agreement and support low-carbon development?

AIIB ensures all new investments align with Paris Agreement standards as of July 1, 2023. This means projects must contribute to low-carbon, climate-resilient pathways. To further its climate commitments, AIIB aims to allocate at least 50% of its total financing to green infrastructure by 2025, a goal surpassed in 2023, with 60% of approvals directed toward green projects.

AIIB's Climate Action Plan emphasises a holistic approach, maximising co-benefits across climate mitigation, adaptation and nature preservation. Innovative solutions and emerging technologies enhance project value while ensuring sustainable outcomes. Through active private sector mobilisation and regional cooperation, AIIB strengthens its contribution to low-carbon development, fully aligned with the Paris Agreement.

5. What challenges does AIIB face in aligning its investments with the principles of the Paris Agreement, and how is the bank addressing these challenges moving forward? 

A major challenge is mobilising sufficient private sector financing. Developing countries require resilience investments of $14bn-300bn annually by 2030, yet current resilience finance stands at just $30bn. AIIB addresses this gap by diversifying its offerings – such as guarantees and innovative financing structures – and collaborating with peer MDBs to establish unified sustainability standards.

Promoting low-carbon infrastructure in regions prioritising short-term economic gains also remains challenging. AIIB's Climate Action Plan (CAP) 2024-2030 emphasises capital mobilisation, technology innovation and just transitions to tackle these issues. These efforts aim to strengthen institutional capacity and ensure sustainable infrastructure development.

6. Can you explain the main goals of AIIB’s Climate Action Plan?

AIIB’s CAP (2024-2030) seeks to mobilise substantial climate finance and deliver equitable solutions to meet its members’ sustainable development needs. A key objective is to approve at least $7bn in annual climate financing by 2030, ensuring alignment with Paris Agreement principles.

The CAP integrates nature-based solutions to enhance biodiversity, prioritises technological innovation for effective climate projects and supports localised climate solutions to address region-specific challenges.

7. What tools does AIIB use to mobilise funding for climate-related projects, especially in developing regions? 

AIIB employs several tools to scale climate finance. Firstly, AIIB places a strong emphasis on private capital mobilisation, or PCM. This is a core focus of our Corporate Strategy and Climate Action Plan. By attracting and mobilising private capital, we can drive significant policy and institutional reforms that support climate initiatives.

AIIB also offers a range of climate-related financing instruments, which include loans, equity investments and guarantees to support mitigation and adaptation projects. This diverse toolkit allows us to address various aspects of climate change effectively.

Partnerships are another cornerstone of our strategy. AIIB collaborates with other financiers and institutions, including regional cooperation partners and multilateral development banks. These partnerships enhance our ability to scale climate finance and foster regional cooperation.

In addition, AIIB is committed to promoting innovative financing solutions. We support the development and commercialisation of cost-effective technologies, financing their adoption at scale. This approach not only stimulates research and development but also ensures that proven technologies are widely accessible.

These mechanisms collectively enable AIIB to scale up its climate financing and attract greater private sector investment in mitigation, adaptation and nature-related solutions, with climate finance reaching 60% of total approved financing in 2023.

8. What specific projects is AIIB currently supporting in Central Asia and the Caucasus that focus on climate resilience and sustainability?

AIIB actively supports green infrastructure projects across Central Asia and the Caucasus, integrating climate-resilient standards to ensure long-term sustainability while mitigating environmental impacts. 

In Kazakhstan, AIIB has financed the Zhanatas Wind Farm and Shokpar Wind Power Plant, each with a capacity of 100 MW, advancing the country's 2060 carbon neutrality goal by transitioning from coal to renewable energy sources. AIIB is also preparing the Transport Resilience and Connectivity Enhancement Project in Kazakhstan, which incorporates climate-resilient measures into the design and reconstruction of roads.

In Azerbaijan, AIIB recently approved financing for its first private-sector renewable energy project – the 445-MWac Bilasuvar and 315-MWac Neftchala solar plants by Abu Dhabi Future Energy Company PJSC (Masdar) – which are expected to reduce GHG emissions by approximately 757,000 tonnes of CO2 equivalent annually.

AIIB’s pipeline includes climate-resilient infrastructure initiatives in other countries as well. In Uzbekistan, the Karakalpakstan and Khorezm Local Roads Network Reconstruction Project addresses climate risks such as high temperatures, heatwaves, and flooding. We are also working on several metro expansion projects in Central Asia and South Caucasus, which qualify as 100% climate mitigation finance under the Paris Agreement, focusing on enhancing transport efficiency, safety, and sustainability to promote cleaner urban mobility.

Additionally, AIIB is investing in nature-based solutions through urban projects that combine ecological restoration with infrastructure improvements. These initiatives align with AIIB’s mission to foster climate resilience, promote sustainable infrastructure, and support economic development while safeguarding environmental integrity across Central Asia and the Caucasus.