The United Arab Emirates (UAE) has launched the world’s largest private climate investment vehicle ($30 billion USD) with the aim of drawing in a further $250 billion to slow climate change.
The fund, named Alterra, was launched at COP28 – the United Nations Climate Change Conference 2023 – in Dubai at the start of this month.
In a statement, the founders of Alterra – several of whom have senior roles in the UAE government and at COP28 – said they hope to grow the fund by another $250 billion by 2030. They say Alterra will focus on the four key points of COP28’s Action Agenda: energy transition, industrial decarbonisation, sustainable living, and climate technologies.
Sustainable investment in the Global South
Majid Al Suwaidi, the CEO of Alterra, who is also COP28 Director-General and a UAE ambassador, said: ‘Alterra is a critical element in the UAE’s efforts to create a global green finance ecosystem that stimulates and empowers the growth of a new climate economy. It will build a vibrant climate investment landscape which further catalyses investment into the Global South.’
The fund will be split into two unequal portions. The largest being Alterra Acceleration – a $25 billion pot aimed at directing institutional capital towards green investment. Some of this capital – $6.5 billion – is to be put into climate-dedicated funds offered by BlackRock, Brookfield and TPG.
The remaining $5 billion will be used specifically to provide risk mitigation capital for those investing in environmental sustainability in the Global South.
Alterra will be managed by Lunate, an investment management company headquartered in Abu Dhabi. It is part-owned by Tahnoun bin Zayed, the UAE’s national security chief and brother of its ruler.
Finance for climate action not currently accessible
A statement by COP28 organisers and founders of Alterra said: ‘Finance for climate action is not currently available, accessible or affordable enough where it is needed. By 2030, emerging markets and developing economies will require US$2.4 trillion every year to address climate change.’
Oliver Bolton, CEO of carbon credits company Earthly, was part of a COP28 panel on nature-based community-led solutions for environmental regeneration. On LinkedIn he said the feeling from some COP28 participants was ‘Alterra’s partnership with major firms like BlackRock signals serious commitment, but its impact on needy nations remains unclear’.
He added that ‘Despite Alterra’s scale, concerns linger about the adequacy of its $5 billion for risk mitigation in developing countries./ However Bolton said that personally he believes the fund ‘signifies a positive shift in climate finance to the Global South.’
Concerns about Alterra chair’s oil growth connections
The BBC has reported that Dr Sultan Al Jaber (COP28 president) who is to chair the Alterra board, is also also head of UAE state oil company Adnoc. The BBC reports that Adnoc told the broadcaster that it has “clearly stated plans to increase its oil production capacity by seven per cent over the next four years”.
How will the climate investment money be spent?
From the $30 billion initial commitment, some capital investment has been earmarked for the development of more than 6.0 GW of new clean energy capacity in India. This includes the construction of 1,200 MW of wind and solar projects that will begin producing clean power by 2025. More information about how some of the money will be spent is posted on the COP28 website here.
COP28 took place at Expo City Dubai from November 30-December 12, 2023. The Conference was attended by more than 70,000 participants.
Claudia Cahalane in Investments Editor for Alliance.