Emirati Fund to Invest Billions in U.S. Firms for Climate Projects

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.

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.