What is Alterra, the UAE’s $30 billion green investment fund?

Much of the $83 billion “mobilized” at Cop28, Alterra is primarily a for-profit fund with some development goals

Perhaps the most attention-grabbing announcement from the first day of Cop28 was the United Arab Emirates’ pledge to create a $30 billion climate investment fund called Alterra.

This makes up a large part of the UAE Presidency’s estimate that Cop28 has “mobilised” over $83 billion, which it promoted in the press and on social media.

The other big chunk of the total is $31.6 billion earmarked for climate projects by multilateral development banks. Governments have pledged smaller amounts to funds including the Green Climate Fund ($3.5 billion), the Adaptation Fund ($134 million) and the Least Developed Countries Fund ($129.3 million).

Unlike these development-focused initiatives, Alterra is primarily a profit-seeking fund. It plans to buy shares in green companies and make money when their share prices go up and they pay dividends. Of this $30 billion, $5 billion is earmarked for investment in developing countries.

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The Cop28 presidency said when other investors see UAE money flowing into these investments, it will build their confidence to invest as well. By doing so, they hope to attract $250 billion by 2030.

How will it be invested?

The fund will be managed by Lunate, a company based in the city of Abu Dhabi in the UAE. Lunate is part of the property of Tahnoon bin Zayed, the UAE’s national security chief and brother of their ruler.

The Cop28 presidency said $2 billion would go into a “Global Transition Fund II” managed by Canadian giant Brookfield and its head of transition investing Mark Carney.

Much of the money will go to polluting businesses that Brookfield believes are trying to clean up. Commenting on the Global Transition Fund I in Brookfield’s 2021 Sustainability Report, Carney said “transition is not about pressing a green switch or investing only in companies that are already green.”

He added: “Financial institutions must go where the emissions are and support companies – including heavy-emitting sectors such as steel, cement and transport – that have credible plans to transform their businesses for a net-zero world.”

Part of the $30 billion will be invested in Brookfield’s new Catalytic Transition Fund. The Cop28 presidency said it would be “multi-billion dollar” and would only invest in “emerging and developing” countries.

Another $2 billion will be managed by the American company Blackrock. Of this, $1 billion will go to Blackrock’s climate-focused Transition Private Debt (CPD) strategy, $650 million will be invested in the Global Infrastructure Fund IV and $350 million will go to infrastructure in the Global South.

CPD’s $650 million will be invested in mid-sized companies that Blackrock says are “predominantly in Europe and the US” and are “committed to reducing their carbon emissions.” It uses a proprietary framework to assess whether companies meet these criteria.

The devil is in the detail

E3G’s head of sustainable finance Kate Levick said this fund was “probably a good thing”. It’s not a purely profit-seeking fund, she noted, because it does things like try to lower the cost of borrowing in developing countries.

Levick praised the strategy of investing in high-emissions businesses, but only if they have a “solid transition plan.” While embracing high-emissions investment can be controversial, she said “this may be a time to get your hands dirty.”

Action Aid activist Teresa Anderson contrasted the $30 billion investment with the UAE’s $0.1 billion pledge to the loss and damage fund.

While the $0.1 billion pledge “looked generous” compared to other countries’ “paltry” offers, she told Climate Home, it was “chump change compared to the $30 billion directed at the private sector and funds for assets’.

“This is part of a global trend where huge sums of money that could be used as grants to benefit climate-vulnerable communities are going into the pockets of banks and big business,” she added.

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