UAE creates $30bn investment fund to support action against climate change

The UAE has initiated a $30bn project called Alterra which will act as an investment support for climate change partnerships across the globe

In brief:

UAE pledged $30bn to Alterra, with a goal of investing $250bn by 2030 for climate change action

Alterra will focus on emerging markets and developing economies to address the lack of traditional investment in these regions

The initiative aligns with COP28's goal to improve climate finance accessibility and affordability, especially in the Global South.

In detail:

A $30bn financial assistance fund was launched by the United Arab Emirates (UAE) last week, as part of a wider effort to combat climate change. 

Called Alterra, the catalytic climate vehicle is designed to revolutionise international climate partnerships and to enhance funding access for the global south.

This most recent investment has made Alterra the world's largest private investment vehicle dedicated to climate change action. 

Its goal is from now up to 2030 it will contribute $250bn to directing private market investments towards climate initiatives, particularly emerging markets and developing economies where investments have been hampered by perceived higher risks.

COP28 president, Dr Sultan Al Jaber, who will chair Alterra’s board, described the launch of Alterra as a "defining moment" in the evolution of international climate finance, and noted the vehicle's transformative potential for attracting private capital and its unique ability to create a multiplier effect in climate-focused investment.

The current state of climate finance has been considered inadequate, lacking availability, accessibility, and affordability where it is most needed. 

Emerging markets and developing economies are estimated to require $2.4tn annually by 2030 to effectively reduce the impacts of climate change. Therefore, a prime mission of COP28 was to tackle climate finance as a focus of its Action Agenda, aiming to mobilise private markets at a significant scale.

COP28 director-general and Alterra chief executive officer, ambassador Majid Al Suwaidi, highlighted the fund's critical role in the UAE's efforts to foster a global green finance ecosystem. 

The fund is intended to build a vibrant climate investment landscape, generate new ideas, incentivise policy and regulatory frameworks, and rapidly deploy capital across the entire value chain of the new climate economy.

It will focus on supporting four key priorities of energy transition, industrial decarbonisation, sustainable living, and climate technologies.

Under a two-part structure, $25bn will sit in Alterra Acceleration to guide institutional capital towards impactful climate investments, serving as an anchor investor and co-investor in climate strategies. 

 The remaining $5bn will fall to Alterra Transformation, to provide risk mitigation capital to encourage investment flows into the global south, directly addressing current limitations in climate investment and access to affordable capital.

 Established in collaboration with partners including BlackRock, Brookfield and TPG, it has already amassed $6.5bn to climate-dedicated funds for global investments. These partnerships are expected to generate additional capital from institutional investors and global entities.

The entity’s immediate investment plans include the development of more than 6GW of new clean energy capacity in India, with construction of wind and solar projects set to produce clean power by 2025. 

Additional investment opportunities are being explored, including a development platform in Africa with a pipeline of over 5GW of wind and solar photovoltaic energy projects and a rural electrification platform in Latin America.

To ensure its effectiveness and alignment with collective climate objectives, Alterra will implement a Climate Impact Framework to align with international best practice and safeguard the fund’s climate mandate, ensuring accountability and transparency in its operations.

COP 28 is currently taking place in Dubai, and will continue until 12 December.