COP28: UAE Pledges $30 Billion for Groundbreaking Climate Investment Initiative
COP28: UAE Pledges $30 Billion for Groundbreaking Climate Investment Initiative: In a momentous announcement during the COP28 summit, the United Arab Emirates (UAE) has committed an impressive $30 billion to ALTÉRRA, a newly established catalytic climate vehicle. This initiative, aimed at advancing global endeavors to establish a more equitable climate finance system, places a significant emphasis on enhancing funding accessibility for the Global South.
With this substantial financial commitment, ALTÉRRA now stands as the world's largest private investment vehicle dedicated to climate change action. Its overarching goal is to mobilize $250 billion globally by 2030, directing attention to private markets and prioritizing the transformation of emerging markets and developing economies. These regions have historically faced challenges in attracting traditional investments due to perceived higher risks.
Presently, climate action funding is insufficient, inaccessible, and unaffordable where it is most needed. COP28 has identified this gap, recognizing that emerging markets and developing economies will require $2.4 trillion annually by 2030 to address climate change. In response, the COP28 Action Agenda has prioritized addressing climate finance issues and proposed ambitious solutions, including the substantial mobilization of private markets.
COP28 President Dr. Sultan Al Jaber hailed the launch of ALTÉRRA as a "defining moment" in the establishment of a new era of international climate finance. Dr. Al Jaber, who will chair ALTÉRRA's Board, expressed optimism about the transformational impact of ALTÉRRA in attracting private capital. He highlighted ALTÉRRA's unprecedented scale and structure, projecting a multiplier effect in climate-focused investment.
Ambassador Majid Al Suwaidi, COP28 Director-General, will assume the role of ALTÉRRA's Chief Executive Officer. ALTÉRRA boasts a team of specialized climate investment professionals with a proven track record in emerging and developing markets.
Lunate, an independent global investment manager, has established ALTÉRRA, which is domiciled in the Abu Dhabi Global Market. This initiative is one of several finance-led projects launched during COP28 to expedite the global transition to a low-carbon economy and bolster climate resilience.
ALTÉRRA's innovative two-part structure aims to stimulate new ideas, incentivize policy frameworks, and rapidly deploy capital across the entire value chain of the new climate economy. It prioritizes four key areas: Energy Transition, Industrial Decarbonization, Sustainable Living, and Climate Technologies.
ALTÉRRA ACCELERATION, a $25 billion component, will channel institutional capital toward large-scale climate investments with the potential to expedite the transition to a net-zero and climate-resilient economy. ALTÉRRA TRANSFORMATION, a $5 billion component, will provide risk mitigation capital to encourage investment flows into the Global South, addressing current challenges in climate investment and access to affordable capital.
In alignment with COP28's inclusivity agenda, ALTÉRRA TRANSFORMATION will leverage concessional finance to attract climate investment to Least Developed Countries (LDCs) and Small Island Developing States (SIDS). The UAE's extensive experience in managing large investment platforms and successfully developing renewable energy projects positions ALTÉRRA as a trusted facilitator on the global stage.
ALTÉRRA, in collaboration with BlackRock, Brookfield, and TPG as inaugural launch partners, has committed $6.5 billion to climate-dedicated funds for global investments, including the Global South. This partnership is expected to mobilize additional capital from institutional investors and global entities.
As ALTÉRRA continues to forge partnerships, it remains committed to rapidly deploying capital in high-impact projects, particularly in emerging markets. The initiative and its partners are actively exploring various investment opportunities, including an African development platform and a rural electrification platform in Latin America.
To ensure a positive climate transformation aligned with collective objectives, ALTÉRRA will establish a Climate Impact Framework, adhering to international best practices for accountability and transparency. This ambitious initiative signifies the UAE's dedication to spearheading global efforts toward a sustainable and climate-resilient future.