Live updates: Follow the latest news on Cop28
The UAE has pledged to give $30 billion to combat climate change.
The money will go towards a new private investment vehicle, Alterra, which aims to raise $250 billion globally in the next six years to create a fairer climate finance system.
The commitment was announced by President Sheikh Mohamed during his opening address at the Cop28 summit in Dubai on Friday.
Alterra will become the "world's largest private investment vehicle for climate action", according to Cop officials, and will focus on climate investments in emerging markets and developing economies, where traditional funding has been lacking because of the higher perceived risks.
Alterra, in collaboration with BlackRock, Brookfield and TPG as inaugural launch partners, has already committed $6.5 billion to climate-dedicated funds for global investments, including in the Global South, a statement said.
The partners are expected to mobilise capital from other institutional investors and global entities.
The launch of the vehicle is a “defining moment” in the creation of a new era of international climate finance, said Cop28 President Dr Sultan Al Jaber, who will also chair Alterra's board.
"Alterra 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," he said.
"Its launch reflects the Cop presidency’s action agenda and the UAE’s efforts to make climate finance available, accessible and affordable.”
Emerging markets and developing economies will require up to $2.4 trillion every year to address climate change by 2030, a report by Cop27 found.
-
World leaders on day two of Cop28 in Dubai. Reuters -
President Sheikh Mohamed bin Zayed of the UAE at the opening ceremony of the World Climate Action Summit at Cop28. PA -
King Charles III with King Abdullah II of Jordan during the opening ceremony of the World Climate Action Summit at Cop28. PA -
From left, Italy's Prime Minister Giorgia Meloni, Prime Minister Narendra Modi of India, Cop28 President Dr Sultan Al Jaber and Japan's Prime Minister Fumio Kishida arrive for a group photo. AFP -
World leaders walk down Al Wasl Avenue after a group photo on day one of Cop28 at Expo City Dubai. Getty Images -
President Sheikh Mohamed and King Charles at the opening ceremony. PA -
Egypt's President Abdel Fattah El Sisi, left, and French President Emmanuel Macron. AFP -
United Nations Secretary General Antonio Guterres at the opening ceremony. AP -
Spanish Prime Minister Pedro Sanchez, left, and Portuguese Prime Minister Antonio Costa. Getty Images -
Italian Prime Minister Giorgia Meloni chatting to Netherlands Prime Minister Mark Rutte before the leaders' group photo. AP -
Michael Bloomberg, American businessman, politician, philanthropist, and author at Cop28. Chris Whiteoak / The National -
Former UK prime minister and now Foreign Secretary David Cameron. Chris Whiteoak / The National -
US Secretary of State Antony Blinken on the second day of Cop28 in Dubai. Chris Whiteoak / The National -
Nigerian President Bola Ahmed Tinubu. Chris Whiteoak / The National -
Cop28, Expo City Dubai, day two. Chris Whiteoak / The National -
A visitor from Ecuador at Expo City Dubai. Chris Whiteoak / The National -
Reporters from all over the world broadcast from the second day of Cop28. Chris Whiteoak / The National -
Expo City Dubai on day two of Cop28. Chris Whiteoak / The National -
A visitor with the Bangladesh flag. Chris Whiteoak / The National -
A visitor recording the moment at Cop28. Chris Whiteoak / The National
Meanwhile, without concessional finance in developing economies, a net-zero scenario would cost more than $7 trillion per year through to 2050, or $200 trillion in total by mid-century, consultancy Deloitte said in a report this week.
About 70 per cent of those investments would take place in low and middle-income economies.
However, making green projects more bankable can “unleash private finance” and bring investment spending down by $2 trillion every year. This amounts to $50 trillion in total by mid-century, which is about half of the global annual gross domestic product today, the report said.
Concessional funding using better financing structures can reduce the cost of the energy transition by nearly 40 per cent for developing countries, lowering global investment needs to $5.5 trillion per year.
Alterra is among the finance-led initiatives being launched at Cop28 to accelerate the global transition to a low-carbon economy and build climate resilience.
It will focus on supporting Cop28's four key priorities, including energy transition, industrial decarbonisation, sustainable living and climate technologies.
Alterra will have a two-part structure to support "new ideas, incentivise policy and regulatory frameworks, and identify solutions to deploy capital across the entire value chain of the new climate economy", the statement said.
Alterra Acceleration, a $25 billion fund, will provide institutional capital to climate investments at scale. It will serve as an anchor investor and co-investor in climate strategies, allocating capital both directly and through fund partnerships.
Meanwhile, the $5 billion Alterra Transformation fund will provide risk mitigation capital to incentivise investment flows into the Global South. It will also aim to create opportunities to "leverage concessional finance to further attract climate investment" to least developed countries and small island developing states.
From the initial commitment, immediate capital investment has already been set aside for the development of more than six gigawatts of new clean energy capacity in India.
This includes the construction of 1,200 megawatts of wind and solar projects that will begin producing clean power by 2025.
Alterra is also exploring other investment opportunities, including an African development platform with a pipeline of more than five gigawatts of onshore wind and solar PV energy projects as well as a rural electrification platform in Latin America that will provide electricity to more than a million people in remote rural areas, the statement said.
Alterra has been established by global investment manager Lunate and is located in the Abu Dhabi Global Market.
It will have a team of specialist climate investment professionals, with Cop28 director general Majid Al Suwaidi as chief executive.
"Alterra is a critical element in the UAE’s efforts to create a global green finance ecosystem that stimulates and empowers the growth of a new climate economy," Mr Al Suwaidi said.
"It will build a vibrant climate investment landscape which further catalyses investment into the Global South."
