ImpactAlpha, Dec. 4 – The United Arab Emirates is funneling $30 billion in oil wealth to a new fund that aims to mobilize up to $250 billion for climate investments in the Global South, representing a step-change in size over the growing number of multi-billion dollar private climate funds.
The megafund, dubbed Altérra, was created in partnership with BlackRock, Brookfield Asset Management and TPG and managed by Abu Dhabi-based Lunate.
The UAE is facing skepticism that its leadership of COP28 is greenwashing its expanded oil and gas production; leaked memos suggested it intended to use its positions to strike oil and gas deals.
Over the weekend, vide surfaced of the UAE’s Sultan al-Jaber arguing, in a testy exchange with Mary Robinson, former president of Ireland and chair of The Elders, that “There is no science out there, or no scenario out there, that says that the phase-out of fossil fuel is what’s going to achieve 1.5C.”
The International Energy Agency’s net-zero scenario rules out any new fossil fuels.
Crowding in
The UAE fund’s two-tiered structure is designed to de-risk investments and crowd in private capital. Some $5 billion is earmarked for Altérra Transformation fund, which will leverage concessional capital to address risk factors that hinder private investment in low-income countries.
The bulk of the capital is for Altérra Acceleration, which targets “climate investments at scale” and will invest directly as well as into funds. Its first investments: $2 billion for Brookfield’s second Global Transition Fund, and another $1 billion for a Catalytic Transition Fund newly launched by Altérra and Brookfield. It also committed funds to TPG Rise Climate and several BlackRock vehicles.
Separately, Bahrain-based alternative asset manager Investcorp announced the launch of an investment platform as part of the Innovate for Climate Tech coalition, focused on scaling climate tech innovation in emerging markets. Bahrain’s sovereign wealth fund Mumtalakat kicked in initial funding towards what Investcorp hopes will be $750 million in investment capital.
Blended finance
Also at COP, the IFC, Soros Economic Development Fund, Three Cairns Group and Bezos Earth Fund committed an initial $825 million for Allied Climate Partners, a new climate fund that is looking to draw in an additional $11 billion in private capital.
The blended-finance organization will finance development and de-risk climate projects in the Global South. It assumes a more than 40% portfolio failure rate. “In the absence of sufficient flows from north to south, getting leverage out of the pockets of blended finance is really vital,” IFC’s Jamie Fergusson told Reuters.
