Emirati Fund to Invest Billions in U.S. Firms for Climate Projects
Emirati Fund to Invest Billions in U.S. Firms for Climate Projects - The New York Times
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Emirati Fund to Invest Billions in U.S. Firms for Climate Projects
An Abu Dhabi fund is expected to invest at least $30 billion in climate projects with some of the biggest names in North American finance.
David Gelles is covering the United Nations climate conference in Dubai.
An Emirati financial firm is planning 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 host of the annual United Nations climate talks that opened in Dubai on Thursday, is under pressure to prove it is committed to tackling global warming despite the fact that its economy is based on oil production.
Lunate Capital, a new financial firm overseen by the Abu Dhabi royal family, launched just months ago with at least $50 billion in assets.
On Friday, Lunate is expected to announce it will set up 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 reply to requests for comment. TPG and Brookfield declined to comment.
It was not yet clear what kinds of projects or companies the funds would invest in. But at least 20 percent of the funds, would be earmarked for projects in the developing world, where it is especially difficult to finance clean energy projects because interest rates are high and lenders shy away from what they perceive as risky investments.
While the U.A.E. is one of the biggest oil producers in the world, it is also investing heavily in renewable energy. The head of the U.A.E.’s 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, one piece of the sprawling business empire affiliated with Abu Dhabi’s ruling family. It is overseen by Sheikh Tahnoon bin Zayed Al Nahyan, a brother of the United Arab Emirates’ leader, Mohammed bin Zayed Al Nahyan.
The Financial Times first reported on the new fund.
While the $30billion is a significant sum, it represents just a fraction of the capital experts say is needed to help nations slow down climate change and adapt to a rapidly warming world.
Indeed, the amount of money needed to shift the world away from fossil fuels and build out a clean economy is staggeringly huge — some $3.8 trillion per year just in the next few years, according to BCG, and many trillions more after that. Just a fraction of that need is currently being met.
Yet with each passing month, more asset managers around the globe are pouring money into investments aimed at reducing planet-warming emissions from the burning of oil, gas and coal.
Just last year, TPG raised $7.3 billion for a climate fund, BlackRock raised more than $4 billion for a climate-focused infrastructure fund, and Brookfield raised a $15 billion climate fund.
David Gelles is a correspondent on the Climate desk, covering the intersection of public policy and the private sector. Follow him on More about David Gelles
Related Knowledge Center: Climate economics
Climate change is now a driver of the world’s economy. The impact is profound:
- Catastrophic weather events — hurricanes, floods, droughts, high temperatures — are more frequent and more extreme. The cost can be measured in both the initial damage caused and the longer-term impact on the economy.
- Vulnerable communities are increasing climate-related investments, hardening infrastructure and taking other protective measures.
- Investment in carbon capture and storage technologies is increasingly rapidly.
- Governments are making investments and crafting regulations to reduce emissions of carbon dioxide and other greenhouse gases.
On top of all of this is the cost of uncertainty. As the Fourth National Climate Assessment, released in 2018 by the U.S. Global Change Research Program, says, “The assumption that current and future climate conditions will resemble the recent past is no longer valid.”