The UAE has announced a $30 billion climate fund – ALTÉRRA.
The fund is the world’s largest private investment vehicle for climate change action and aims to mobilise $250 billion of investment by 2030.
The commitment was announced by President His Highness Sheikh Mohamed during his opening address at the COP28 summit in Dubai.
The statement said that the fund 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.
COP28 President Dr. Sultan Al Jaber will chair ALTÉRRA’s Board while Ambassador Majid Al Suwaidi, COP28 Director-General, will serve as ALTÉRRA’s CEO. The fund has been established by Lunate, an independent global investment manager, and is domiciled in the Abu Dhabi Global Market.
Investment opportunities
From the vehicle’s initial commitment, immediate capital investment has been earmarked for developing over 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.
The vehicle is 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.
BlackRock, Brookfield and TPG, the inaugural launch partners of the fund, have committed $6.5 billion to climate-dedicated funds for global investments, including the Global South. The partners are expected to mobilise capital from other institutional investors and international entities.
What is ALTÉRRA?
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.
According to the statement by the COP28 Presidency, ALTÉRRA will have a 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: Energy Transition, Industrial Decarbonisation, Sustainable Living and Climate Technologies.
The fund will allocate $25 billion capital (ALTÉRRA ACCELERATION) towards climate investments and $5 billion (ALTÉRRA TRANSFORMATION) to incentivise investment flows into the Global South.
ALTÉRRA ACCELERATION will be an anchor investor and co-investor in climate strategies, allocating capital directly and through fund partnerships to maximise its global impact. ALTÉRRA TRANSFORMATION, on the other hand, will also create opportunities to leverage concessional finance to attract climate investment to least developed countries and small island developing states further.