Green Finance in Iraq

Iraq is highly vulnerable to climate change, experiencing worsening droughts, floods, heatwaves, and dust storms that, which directly impact water scarcity, agriculture, public health, and economic development. These environmental pressures, combined with existing societal vulnerabilities from conflict, lead to significant internal displacement, escalating resource-based disputes, and strain on urban infrastructure.

A projected decrease in annual rainfall and increasing desertification are worsening water scarcity. This has led to severe droughts, with the worst in 40 years occurring in 2022, impacting agriculture and livelihoods.

Iraq`s severe water crisis stems from reduced flows of the Tigris and Euphrates rivers, caused by climate change and upstream dams and diversions in Türkiye, Syria and Iran, combined with poor internal water management, aging infrastructure, and increased pollution. This has led to widespread drought, displacement of families, rising water salinity, food insecurity, and protests. The government has cut farming plans and is working with international partners to implement new policies and raise public awareness to address the crisis and promote sustainable water use.

Despite its many climate change challenges, Iraq is a relatively small player in the field of multilateral funding of green transition projects. However, the chronology of funding in Iraq indicates a growing interest on the part of international institutions in supporting the green transition, as all three projects on record have come online only since 2023. Only two multilateral green financing facilities have contributed so far to the implementation of various mitigation or adaptation projects), in addition to other sources not reviewed here (i.e., bilateral and corporatist funding).

Research Methodology

In order to organize and present information to help the public track climate action, the first big challenge is to bring all the information currently available into a single, easily accessible format. This assessment is achieved by searching the websites of all major multilateral climate finance mechanisms. In order to enable searches across multiple criteria, a single matrix with consistent categories must be created.

To enable searching across multiple criteria, a single matrix with consistent categories had to be created. The total of projects in the country since 2010 had to be entered into the matrix under columns that classified them by development fields, sector (corporatist or public), mitigation or/and adaptation purposes, current project phase or status, type of financing, whether as grant, loan, equity (i.e., corporatist investment) or/and domestic contributions from public funds.

It is important to point out that this methodology covers only the projects supported by the major multilateral climate-finance facilities. Bi-lateral and corporatist investments are not tracked within the scope of this study. However significant those green-finance activities may be, they are much more difficult to track comprehensively and do not necessarily involve the same diligence in, and/or scrutiny of state performance to apply normative framework and extraterritorial obligations in cross-border cooperation. That requires another level of interrogation to be taken up in the future.

For consistency in quantifying the values of projects, currency conversions were calculated at the date of project approvals.

Climate Finance Partners

This review covers projects supported by green finance institutions and mechanisms of:

● Adaptation Fund (AF)

● MENA Transition Fund

● Global Environment Facility (GEF)

● Climate Investment Fund (CIF)

● European Bank for Reconstruction and Development (EBRD)

● Green Climate Fund (GCF) and

● World Bank (WB).

Iraq has received funding for only three projects in progress from two global financing mechanisms (GCF and GEF).

The Green Climate Fund has played the prominent role in financing projects related to agriculture and climate change adaptation, providing grants exceeding $29 million, in addition to additional contributions from other partners amounting to approximately $9.7 million. Iraq entered a partnership with the EBRD only recently in May 2025, marking the beginning of a new phase of economic and investment cooperation.

The World Bank appears in this profile as a facilitator by contributing US$5 million in co-financing grant funds from the Iraq Reform, Recovery and Reconstruction Fund (I3RF), which it manages on behalf of the country.

Targeted Development Areas

The matrix shows that agriculture was the most prominent sector benefiting from funding, followed by energy and natural resources. However, other development fields such as transportation and housing have not yet received the attention of the multilateral green-finance facilities.

The biggest project in Iraq’s multilaterally funded green-transition portfolio is the GLF-supported Strengthening climate Resilience of Vulnerable Agriculture Livelihoods in Iraq (SRVALI). While such agriculture-sector green-transition projects are rare across the region, the project aims to strengthen the climate “resilience” of vulnerable agricultural households in Iraq, focusing on water efficiency through modern irrigation infrastructure and the empowerment of Water User Associations (WUAs), promoting climate-resilient agricultural practices, and supporting the development of policies for water and energy management and renewable energy systems such as solar-powered irrigation.

In operation as of 2023 through 2031, the project promises permanent changes in Iraq involving reforms in agricultural water-management policies, improved irrigation technologies, and widespread integration of renewable-energy solutions and contributing to the country’s long-term food security and economic stability. The project claims also to promote gender equity by empowering women as key change agents, fostering inclusive and sustainable community development.

Public and Corporatist Sectors

Data reveal that all funded projects benefit the public sector, responding to Iraq`s need to strengthen its infrastructure and service institutions. The Green Climate Fund (GCF) issued its Iraq country program in April 2025, noting the country’s “knowledge infrastructure for communications and information technology networks, as well as the infrastructure for standards, metrology, and quality, are still weak and accompanied by little programmatic support to mobilize private sector investment.” In response, the program calls for increasing the opportunities for Iraq’s corporatist sector and nongovernmental organizations to engage in climate action.

Concluding observations

The matrix reveals that Iraq is well behind other countries in the region at attracting international funding. It becomes imperative to develop an integrated national strategy to direct external funding toward the most-needy sectors, ensuring sustainable and comprehensive development in the country.

The accompanying notes in the matrix indicate that some funding included additional external contributions that complement the overall funding value of the project. It also demonstrates a global trend to support Iraq in confronting climate change, but the unbalanced distribution across sectors suggests the need to re-examine national and international priorities. In particular, Iraq`s acute water crisis and external responsibility for shortages caused by upstream dam and water diversion projects underscore the duty of multilateral financing facilities to support all of mitigation, adaptation and remedying loss and damage in Iraq`s vital water and sanitation sector.

This inquiry into green-transition funding reveals that Iraq is well behind other countries in the region at attracting international funding. It becomes imperative to develop an integrated national strategy to direct external funding toward the most-needy sectors, ensuring sustainable and comprehensive development in the country.

Iraq`s climate change plan focuses on adaptation and mitigation, with its latest Nationally Determined Contributions (NDCs) (submitted in 2022 and updated in 2025) including a conditional 15% emissions reduction target by 2030, contingent on $100 billion in international funding. Key sectors for this plan are energy, especially renewable energy generation, and efforts to reduce methane emissions from oil and gas. The plan also outlines adaptation needs in water resources, agriculture, and public health, building on a National Adaptation Plan (NAP) process initiated in 2020 with the UN Environment Programme (UNEP).

Available information indicates the existence of co-financing or additional contributions, but the origin and composition of those contributions are not detailed in the public record. This limited transparency impedes the current monitoring and eventual evaluation of project implementation.

These observations and recommendations are meant to help build a more-participatory green-transition process in Iraq as the multilateral support for the program grows in future.

Reporting by Shorouk Diaa Eid.

Image: Aerial map of Iraq’s water resources. Source: ORB International.