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ALTERRA: UAE Commits $30bn to Climate-Focused Investment Vehicle

  • Published
    2nd Dec, 2023
Context:

The UAE announced a US$30 billion commitment to the newly launched catalytic climate vehicle, ALTÉRRA.

About ALTÉRRA:
  • With this US$30 billion commitment, ALTÉRRA becomes the world’s largest private investment vehicle for climate change action and will aim to mobilize US$250 billion globally by 2030.
  • It 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.
  • ALTÉRRA has been established by Lunate, an independent global investment manager, and is domiciled in the Abu Dhabi Global Market.

Need of ALTERRA:

  • By 2030, emerging markets and developing economies will require US$2.4 trillion every year to address climate change.
  • That is why COP28 made fixing climate finance a key pillar of its Action Agenda and has worked to deliver ambitious solutions, including mobilising private markets at scale.

Benefits of ALTERRA:

  • ALTÉRRA provides a transformational solution for attracting private capital.
  • Its scale and structure will create a multiplier effect in climate focused investment, making it a vehicle like no other.
  • Its launch reflects the COP Presidency’s Action Agenda and the UAE’s efforts to make climate finance available, accessible and affordable.
  • 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.

Structure of ALTERRA:

  • ALTÉRRA will have an innovative two-part structure to spur
    • new ideas, incentivize policy and regulatory frameworks
    • 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 that underpin COP28’s Action Agenda, namely:
    • Energy Transition
    • Industrial Decarbonization
    • Sustainable Living
    • Climate Technologies.

ALTERRA and Climate Change:

  • In-line with COP28’s message of full inclusivity, ALTÉRRA TRANSFORMATION will also create opportunities to leverage concessional finance to further attract climate investment to Least Developed Countries (LDCs) and Small Island Developing States (SIDS).
  • The ALTERRA vehicle will add to the UAE’s leading change as a trusted facilitator at the global crossroads between North, South, East and West.
  • ALTÉRRA, in collaboration with BlackRock, Brookfield and TPG as inaugural launch partners, has committed US$6.5 billion to climate-dedicated funds for global investments, including the Global South.

ALTERRA and India:

  • From the vehicle’s initial commitment, immediate capital investment has been earmarked for the development of 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.
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