UAE’s Whopping $30B Climate Fund: Game-Changer or Cause for Concern at COP28?

"The UAE Launches $30 Billion Climate Investment Fund in Partnership with Global Investment Giants, Bolstering COP28 Hosting Bid"

The United Arab Emirates (UAE) is set to launch a significant climate-related investment fund worth $30 billion in collaboration with BlackRock, TPG, and Brookfield. This move comes as the UAE aims to strengthen its position as the host of the United Nations Climate Summit COP28. The fund will be overseen by Lunate Capital, a new Abu Dhabi-based asset manager backed by $50 billion in assets. Lunate Capital, owned by Chimera Investment and its senior management, will have the managing partners of Abu Dhabi Growth Fund and Abu Dhabi wealth fund ADQ. A portion of the fund, at least $5 billion, will be allocated to Global South countries, reflecting the UAE’s commitment to supporting climate-related initiatives in these regions. With its substantial oil and gas reserves estimated at $2.5 trillion, the UAE has the potential to direct significant funds towards climate action.

Sultan al-Jaber, the president of COP28, has consistently emphasized the importance of climate finance during the summit in Dubai. The summit is being attended by up to 180 heads of state or government and tens of thousands of delegates over the next two weeks. Financial Times’ analysis has shown that the UAE has been associated with approximately $100 billion in green energy investments this year. However, concerns have been raised about the UAE’s role in overseeing global climate negotiations due to its status as the world’s largest oil and gas producer.

Each year, member countries meet at the Conference of the Parties (COP) to discuss matters related to climate change. The 21st session of the COP resulted in the creation of the Paris Agreement, a global consensus to collectively achieve critical climate goals. One of these goals is to limit global temperature rise by reducing greenhouse gas emissions and achieving net-zero emissions by 2050. According to UN research in 2021, approximately $125 trillion in climate investments will be needed by 2050 to meet these goals. The International Energy Agency has also stated that around $4.5 trillion per year will need to be invested in clean energy by the early 2030s. In 2022, investment in clean energy transition increased by 31% to $1.1 trillion, according to BloombergNEF. There is also a growing movement to reform the financing focus of multilateral development banks such as the World Bank and IMF to prioritize climate-related investments. Recently, the World Bank decided to certify forest carbon credits and climate finance to boost carbon markets. There is a call for private investors to collaborate with public finance to support green projects, particularly in developing countries that lack sufficient funds to transition to greener energy sources. The world also faces a shortfall in funding to adapt economies to rising global temperatures.

The establishment of a ‘loss and damage’ fund during the early days of COP28 is a significant milestone. This fund aims to assist vulnerable nations in handling climate-related disasters. The UAE has taken the lead by committing $100 million to the fund, with subsequent pledges from Britain, the United States, Japan, Germany, and the European Union. The creation of this fund, which has long been requested by developing countries, sets a positive tone for further negotiations during the summit. A representative from a think tank highlighted the importance of this breakthrough, suggesting that isolating the ‘loss and damage’ fund in negotiations could pave the way for more genuine agreements.

As COP28 unfolds in Dubai, the UAE’s $30 billion climate investment initiative and the establishment of the ‘loss and damage’ fund represent both progress and scrutiny. While investments in climate action are commendable, the UAE’s role as a major oil and gas producer raises concerns. These early initiatives at the climate summit provide a platform for crucial negotiations and set the stage for meaningful compromises in the weeks ahead.

Matt Lyons

Matt Lyons

Matt Lyons is the founder of Forestry & Carbon. Matt has over 25 years as a forestry consultant and is invoilved in numerous carbon credit offset projects.

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