UAE's ALTÉRRA Fund Invests in Fossil Gas Despite "Climate Solutions" Pledge
Months after launching a significant climate fund at COP28, the UAE's ALTÉRRA is now backing a fossil gas pipeline investment, raising questions about its commitment to climate solutions.
In December, during COP28 in Dubai, the UAE unveiled a $30 billion climate fund aimed at accelerating the transition to renewable energy and enhancing climate resilience, particularly in developing regions. ALTÉRRA, described as the largest private investment vehicle dedicated to climate solutions, was presented as a milestone in international climate finance by COP28 President Sultan Al-Jaber.
However, just four months later, ALTÉRRA's initial investment of $300 million into BlackRock's Global Infrastructure Fund IV led to the acquisition of a major fossil gas pipeline in North America. The fund purchased half of the Portland Natural Gas Transmission System, a 475 km pipeline stretching from Canada to the US, in a deal valued at $1.14 billion.
This investment aligns with earlier indications from BlackRock, which had outlined potential investments in high-emission sectors, including gas power and transportation infrastructure. While it is unclear if ALTÉRRA was aware of these sectors before the COP28 announcement, the UAE firm has defended its actions, stating that its investments aim to support the transition of existing energy systems towards a cleaner future.
The BlackRock fund's portfolio also includes investments in carbon capture, waste management, and telecommunications, but it remains focused on sectors that contribute to fossil fuel dependency. Critics, such as Andreas Sieber from 350.org, argue that ALTÉRRA's investments in fossil fuels contradict its climate commitment, accusing the fund of using greenwashing tactics.
At COP28, ALTÉRRA was heralded as a driver of fairer climate finance, with a focus on improving access to funding for developing nations. However, only a fraction of its resources—$5 billion—was allocated to incentivize investment in the Global South, raising concerns about the fund's impact.
ALTÉRRA operates as a ‘fund of funds', investing in various funds managed by other firms. Since its $6.5 billion commitment to funds managed by BlackRock, Brookfield, and TPG, ALTÉRRA has not announced further investments. CEO Majid Al Suwaidi mentioned that the fund is preparing for its next phase but provided no specifics.
The fund's involvement in fossil fuel infrastructure contradicts its purported goals of promoting climate finance and energy transition. Mohamed Adow from Power Shift Africa criticized the investment as indicative of broader issues with funds launched by climate summit hosts, suggesting they may be more about public relations than actual climate impact.
BlackRock's infrastructure fund has also invested in carbon capture technology, including Stratos, a major direct air capture project. Despite being hailed as a climate solution, direct air capture remains costly and largely unproven.
As the UN prepares for COP29 in Azerbaijan, where a new fund for emissions reduction in developing countries will be announced, questions about the efficacy and sincerity of climate finance initiatives persist. Critics argue that developed nations should provide state-backed climate finance through official channels, rather than relying on voluntary, often profit-driven schemes.