COP28: UAE commits $30bn to launch climate-focused investment vehicle

UAE commits US$30bn to launch landmark climate-focused investment vehicle at COP28
World Heads of State pose for a group photo at Al Wasl during the UN Climate Change Conference COP28 at Expo City Dubai on December 1, 2023, in Dubai, United Arab Emirates.

The UAE News Report: Today, as world leaders gathered for COP28, the UAE announced a US$30 billion commitment to the newly launched catalytic climate vehicle, ALTÉRRA, that will drive forward international efforts to create a fairer climate finance system, with an emphasis on improving access to funding for the Global South.

With this US$30 billion commitment, ALTÉRRA becomes the world’s largest private investment vehicle for climate change action and will aim to mobilize US$250 billion globally by 2030. It aims to steer private markets towards climate investments and focus on transforming emerging markets and developing economies, where traditional investment has been lacking due to the higher perceived risks across those geographies.

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. That is why COP28 made fixing climate finance a key pillar of its Action Agenda and has worked to deliver ambitious solutions, including mobilising private markets at scale.

The launch of the vehicle was described by COP28 President Dr. Sultan Al Jaber as a “defining moment” in the creation of a new era of international climate finance.

Dr. Al Jaber, who will chair ALTÉRRA’s Board, added: “ALTÉRRA provides a transformational solution for attracting private capital. Its scale and structure will create a multiplier effect in climate focused investment, making it a vehicle like no other. Its launch reflects the COP Presidency’s Action Agenda and the UAE’s efforts to make climate finance available, accessible and affordable.”

Ambassador Majid Al Suwaidi, COP28 Director-General, will serve as ALTÉRRA’s Chief Executive Officer. ALTÉRRA will have a team of specialist climate investment professionals who bring a strong track record of investing in emerging and developing markets.

ALTÉRRA has been established by Lunate, an independent global investment manager, and is domiciled in the Abu Dhabi Global Market. ALTÉRRA is one of a range of finance-led initiatives launched during COP28 to accelerate the global transition to a low-carbon economy and build climate resilience. Ambassador Al Suwaidi, said: “ALTÉRRA 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 catalyzes investment into the Global South.” ALTÉRRA will have an innovative two-part structure to spur new ideas, incentivize policy and regulatory frameworks, and identify solutions to rapidly deploy capital across the entire value chain of the new climate economy.

It has a dedicated investment focus on supporting four key priorities that underpin COP28’s Action Agenda, namely: Energy Transition, Industrial Decarbonization, Sustainable Living and Climate Technologies.

ALTÉRRA ACCELERATION, a US$25 billion component of ALTÉRRA, will steer institutional capital towards climate investments at scale that have the greatest potential to accelerate the transition to a net-zero and climate resilient economy.

ALTÉRRA ACCELERATION will serve as an anchor investor and co-investor in climate strategies, allocating capital both directly and through fund partnerships to maximize its global impact.

ALTÉRRA TRANSFORMATION, a US$5 billion component of ALTÉRRA, will provide risk mitigation capital to incentivize investment flows into the Global South, directly addressing the challenges that currently limit climate investment and access to affordable capital.

Inline with COP28’s message of full inclusivity, ALTÉRRA TRANSFORMATION will also create opportunities to leverage concessional finance to further attract climate investment to Least Developed Countries (LDCs) and Small Island Developing States (SIDS). The vehicle will add to the UAE’s accomplished track record of managing large investment platforms and successfully developing and operating renewable energy projects around the world, leading change as a trusted facilitator at the global crossroads between North, South, East and West.

ALTÉRRA, in collaboration with BlackRock, Brookfield and TPG as inaugural launch partners, has committed US$6.5 billion to climate-dedicated funds for global investments, including the Global South. The partners are expected to mobilize capital from other institutional investors, and global entities.

ALTÉRRA will continue to expand its partnerships as it creates investment opportunities, develops innovative solutions, and deploys capital at scale. ALTÉRRA and its partners are committed to the rapid deployment of capital in high-impact projects, particularly in emerging markets.

The vehicle and its launch partners are actively exploring a range of additional investment opportunities, including an African development platform with a pipeline of 5GW+ of onshore wind and solar PV energy projects and a rural electrification platform in Latin America that will provide electricity to over 1 million people in remote rural areas and with growth potential.

ALTÉRRA will put in place a Climate Impact Framework to ensure it is driving positive climate transformation towards collective climate objectives, aligning with international best practices to safeguard the vehicle’s climate mandate, and ensuring accountability and transparency. –