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COP28: the “Alterra” fund will mobilise $250 billion for climate action by 2030

CategoryPublications
TagsFinance and Investment, Regulatory and Governance, Renewable Energy
Climate finance

At the 28th United Nations Conference of the Parties on Climate Change (COP28), the United Arab Emirates (UAE) announced the creation of Alterra, an investment vehicle that aims to mobilise $250 billion by 2030 to support climate action in the countries of the South. Sheikh Mohamed ben Zayed al-Nahyane's country is the first to commit $30 billion in catalytic capital.

The United Arab Emirates (UAE) will support climate action in southern countries around the world. This country on the Arabian Peninsula, located mainly along the Arabian Gulf, made a commitment on December 1 at the Expo City in Dubai to invest 30 billion dollars in catalytic capital to launch the new climate-focused investment vehicle, “Alterra”. According to the Emirati authorities, this investment vehicle, announced at the 28th United Nations Conference of the Parties on Climate Change (COP28), will advance international efforts to create a fairer climate financing system, with a focus on improving access to financing for countries in the South.

The aim is to capitalise the $250 billion investment fund by 2030. Ambassador Majid Al Suwaidi, CEO of COP28, will be the CEO of Alterra, created by Lunate, a new alternative investment manager, and domiciled with $50 billion in assets on the Abu Dhabi global market. Majid Al Suwaidi will work with a team of climate investment specialists with a strong track record of investing in emerging and developing markets.

Alterra, structured to target high-impact projects

In order to quickly identify projects requiring capital across the entire value chain of the new climate economy, Altérra will have an innovative two-part structure. This structure will also stimulate new ideas, and encourage policy and regulatory frameworks in line with the four key priorities underpinning the COP28 action programme, namely energy transition, industrial decarbonisation, sustainable lifestyles and climate technologies.

The first part, “Alterra Acceleration”, with an endowment of 25 billion dollars, will direct institutional capital towards large-scale climate investments that have the greatest potential to accelerate the transition to a net zero emissions economy that is resilient to climate change.  This component of Alterra will also serve as an anchor investor and co-investor in climate strategies, allocating capital both directly and through partnership funds to maximise its global impact.

“The $5 billion Alterra Transformation will provide risk mitigation capital to encourage investment flows to the South, directly addressing the challenges that currently limit climate investment and access to affordable capital. This second component of Alterra will also create opportunities to leverage concessional finance to attract more climate investment to Least Developed Countries (LDCs) and Small Island Developing States (SIDS).

Financing over 5 GW of wind and solar projects in Africa

“From the initial commitment of the Alterra vehicle, immediate investments have been earmarked for the development of more than 6 GW of new clean energy capacity in India, of which 1,200 MW will be produced by 2025,” say the UAE authorities.

The investment vehicle announced at COP28 is also expected to finance an African development platform with a pipeline of over 5 GW of onshore wind and solar photovoltaic projects, as well as a rural electrification platform in Latin America that will provide electricity to over a million people living in remote rural areas with growth potential.