UAE Announces $30BN Climate Fund at COP28
The UAE has announced a $30bn fund to support global climate solutions.
President Sheikh Mohamed bin Zayed Al Nahyan announced the establishment of the $30bn fund during the opening of the World Climate Action Summit, held during the UN Climate Change Conference (COP28) at Expo City Dubai.
Designed to bridge the climate financing gap and facilitate affordable access, the fund aims to stimulate the raising and investment of $250bn by 2030.
UAE announces $30bn climate fund
Sheikh Mohamed welcomed world leaders, heads of governments, their delegations, and representatives of international organisations to the UAE during their participation in the World Climate Action Summit.
He stated that the meeting comes at a time when the world faces many challenges, with climate change affecting all aspects of life.
He underscored that the UAE has invested $100bn in climate action and renewable and clean energy and is committed to investing an additional US$130 billion over the next seven years.
In the speech, Sheikh Mohamed said: “The UAE has an established record in climate action. Over the past decades, we have built our capabilities in the renewable and clean energy sector.
“We have set a national pathway to net zero by 2050. The UAE is committed to a 40 per cent reduction in emissions by 2030.
محمد بن زايد: باستضافتنا COP 28 نلتزم بجمع العالم لتقديم حلول عملية لتحدّي التغير المناخي #COP28 #ClimateAction pic.twitter.com/f1RKLwbqLC
— UAEGOV (@UAEmediaoffice) December 1, 2023
“To date, we have invested $100bn in financing climate action, focusing on renewable and clean energy. We are also committed to investing approximately $130bn over the next seven years”.
He added: “When we committed to hosting COP28, we pledged to bring the world together to unite, work, and deliver. We are finding practical pathways to accelerate the world’s transition to sustainable economic growth.
“The lack of financing has long been one of the biggest obstacles to advancing climate action globally.
“Therefore, I am pleased to announce the establishment of a $30bn fund for global climate solutions.
“This fund is specifically designed to bridge the climate finance gap, ensuring availability, accessibility and affordability at scale. Its objective is to stimulate the raising and investment of $250bn by 2030.
عندما التزمنا باستضافة (COP28)، التزمنا بجمع العالم لتقديم حلول عملية لتحدي التغير المناخي. وبالنظر إلى أن من أكبر العوائق أمام العمل المناخي العالمي نقص التمويل بصورة ميسرة وتكلفة مناسبة، أعلنا اليوم خلال القمة العالمية للعمل المناخي عن إنشاء صندوق بقيمة 30 مليار دولار للحلول…
— محمد بن زايد (@MohamedBinZayed) December 1, 2023
The newly launched catalytic climate vehicle, ALTÉRRA, 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 $30bn commitment, ALTÉRRA becomes the world’s largest private investment vehicle for climate change action and will aim to mobilise $250bn 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 $2.4tn 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 catalyses investment into the Global South.”
ALTÉRRA will have an innovative two-part structure to spur new ideas, incentivise 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 Decarbonisation
- Sustainable Living
- Climate Technologies
ALTÉRRA ACCELERATION, a $25bn 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 maximise its global impact.
ALTÉRRA TRANSFORMATION, a $5bn 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.
In-line 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 $6.5bn 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.
From the vehicle’s initial commitment, immediate capital investment has been earmarked for the development of over 6GW 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.
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 1m 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.
