His Highness Sheikh Mohamed bin Zayed Al Nahyan, President of the United Arab Emirates speaks during the World Climate Action Summit Opening Session at Al Waha Theatre during the UN Climate Change Conference COP28 at Expo City Dubai on December 1, 2023 Image Credit: AP

Dubai: President His Highness Sheikh Mohamed Bin Zayed Al Nahyan, welcomed world leaders to the World Climate Action Summit (WCAS) at COP 28 by establishing a $30 billion fund to bridge the climate finance gap.

The fund — named Altérra — is designed to bridge the climate finance gap. The UAE President said it aims to stimulate $250 billion of investment by 2030 on Friday at COP28.

Speaking at the COP28 at Expo City Dubai on Friday, Sheikh Mohamed said: “We (the UAE) are finding practical ways to accelerate the world’s transition to a low-emission growth economy. The lack of readily available and affordable climate finance has long been one of the biggest obstacles in advancing climate action globally.”

“Therefore, I am pleased to announce the establishment of a $30 billion fund for global climate solutions. This fund is specifically designed to bridge the climate finance gap, ensuring availability, accessibility, and affordability at scale. Its objective is to stimulate investment to $250 billion by 2030,” said the President.

Sheikh Mohamed’s announcement comes a day after the UAE pledged $100 million towards the loss and damage fund established during COP27 in Sharm El Sheikh, Egypt.

What is Altérra?

According to the COP Presidency, Altérra will drive international efforts to create a fairer climate finance system, emphasising improving access to funding for the Global South.

COP28 President and Adnoc Chief Dr Sultan Al Jaber will chair Altérra’s Board, and Majid Al Suwaidi, COP28 Director-General, will serve as Altérra’s Chief Executive Officer. Altérra will have a team of specialist climate investment professionals with a track record of investing in emerging and developing markets. Altérra has been established by Lunate, an independent global investment manager, and is domiciled in the Abu Dhabi Global Market.

Al Jaber said: “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.”

With this $30 billion commitment, the fund becomes one of the world’s most oversised private investment vehicles for climate change action. “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,” said the Presidency.

Finance for climate action is not currently available, accessible or affordable enough where it is needed. By 2030, emerging markets and developing economies will require $2.4 trillion yearly to address climate change.

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How will it work?

The fund will have a two-part structure to spur new ideas, incentivise policy and regulatory frameworks, and identify solutions to deploy capital across the value chain of the new climate economy.

It has a dedicated investment focus on supporting four key priorities underpinning COP28’s Action Agenda: energy transition, industrial decarbonisation, sustainable living, and climate technologies.

Altérra Acceleration — the $25 billion component of Altérra, will steer institutional capital towards scale climate investments with the potential to accelerate the transition to a net-zero and climate-resilient economy. The fund will serve as an anchor investor and co-investor in climate strategies, allocating capital directly and through fund partnerships to maximise its global impact.

Altérra Transformation — a US$5 billion component will provide risk mitigation capital to incentivise investment flows into the Global South. It will also create opportunities to leverage concessional finance to attract further climate investment to least developed countries (LDCs) and small island developing states (SIDS).

Moreover, 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.