An Emirati financial firm plans to invest at least $30 billion in a new climate fund in partnership with some of the biggest names in North American finance, according to three people familiar with the plans.
The move comes as the United Arab Emirates, this year’s hosts of the annual United Nations climate talks that began in Dubai on Thursday, are under pressure to show they are committed to tackling global warming despite their economy is based on oil production.
Lunate Capital, a new financial firm overseen by Abu Dhabi’s royal family, was launched just a few months ago with at least $50 billion in assets.
Lunate is expected to announce on Friday that it will create the new climate fund with a handful of prominent asset managers, including TPG, BlackRock and Brookfield Asset Management, the three people said.
Lunate and BlackRock did not immediately respond to requests for comment. TPG and Brookfield declined to comment.
It was not yet clear what type of projects or companies the funds would be invested in. But at least 20 percent of the funds would go to projects in the developing world, where it is especially difficult to finance clean energy projects because interest rates are high. high and lenders avoid what they perceive as risky investments.
While the United Arab Emirates is one of the world’s largest oil producers, it is also investing heavily in renewable energy. The head of the United Arab Emirates’ state oil company, Sultan al Jaber, is also the president of the United Nations climate conference, known as COP28.
Lunate is affiliated with Chimera Investment, a part of the growing business empire affiliated with Abu Dhabi’s ruling family. It is overseen by Sheikh Tahnoon bin Zayed Al Nahyan, brother of UAE leader Mohammed bin Zayed Al Nahyan.
While the $30 billion is a significant sum, it represents only a fraction of the capital experts say is needed to help nations curb climate change and adapt to a rapidly warming world.
In fact, the amount of money needed to wean the world off fossil fuels and build a clean economy is staggeringly enormous: some $3.8 trillion a year in the next few years alone. according to BCG, and many billions more after that. Only a fraction of that need is currently being met.
However, with each passing month, more asset managers around the world are pouring money into investments aimed at reducing planet-warming emissions from burning oil, gas and coal.
Last year, TPG raised $7.3 billion for a climate fundBlackRock raised more than $4 billion for a climate-focused infrastructure fund, and Brookfield raised a $15 billion climate fund.
