Brookfield teams up with UAE's Alterra for $5bn fund to boost climate finance

New York-listed Brookfield Asset Management has teamed up with UAE-backed Alterra to raise up to $5 billion for a climate finance-focused fund that will invest in clean energy projects in emerging markets.

Alterra, a $30 billion climate fund, will support the Catalytic Transition Fund, with a $1 billion commit, Brookfield said in a statement on Thursday.

The first close for the CTF, which will be managed by Brookfield, is expected by the end of 2024.

“CTF represents a unique private capital approach to crowd in capital for clean energy and transition assets in emerging markets,” Brookfield said. “It will accelerate decarbonisation investments while generating attractive risk-adjusted returns in traditionally underserved emerging markets.”

Alterra, a private investment vehicle launched during Cop28, aims to raise $250 billion globally in the next six years to create a fairer climate finance system.

Earlier this year, it announced a partnership with the Global Climate Finance Centre, a private-sector-focused think tank and research hub to scale up climate investment in emerging and developing economies.

“Alterra is offering a capped return on its CTF commitment, improving the risk-adjusted returns for investors in the fund”, while unlocking compelling investment opportunities for private investors, according to Brookfield.

The total money raised through the fund will be invested in clean energy projects in South and Central America, South and Southeast Asia, the Middle East, and Eastern Europe. At least 10 per cent of the fund’s total capital will be contributed by Brookfield.

Emerging and developing economies outside of China receive less than 15 per cent of global clean energy investment, despite accounting for nearly one third of global emissions and often yielding greater emissions reductions per dollar invested than in developed countries, Brookfield said.

“The Catalytic Transition Fund is a private market solution to the global challenge of delivering transition investment to emerging markets,” Mark Carney, chair and head of transition investing at Brookfield Asset Management, said.

“Having this dedicated capital for emerging markets will complement our existing Brookfield Global Transition Fund strategy and further accelerate the growth of clean energy and transition investments in the future.”

The first fund in the Brookfield Global Transition Fund series raised a record $15 billion in 2022. In February 2024, the company's second fund in the series – expected to be larger than the first – announced initial close of $10 billion.

“Our catalytic capital will be deployed to supercharge investment in emerging markets – wherever we see great potential for delivering meaningful climate impact and positive economic return,” Majid Al Suwaidi, chief executive of Alterra, said.

The latest announcement comes as renewable energy players and governments continue to underscore the importance of private capital in climate finance.

By 2030, emerging markets and developing economies will require $2.4 trillion every year to address climate change, according to the Climate Policy Initiative.

Deloitte estimates that an investment of $5 trillion to $7 trillion a year is needed until 2050 in the energy sector to drive the transition, however, less than $2 trillion is currently being spent each year.

At Cop28, countries pledged to triple renewable energy capacity and double energy efficiency by 2030.

Fifty oil and gas companies, representing more than 40 per cent of global oil production, signed the Oil and Gas Decarbonisation Charter, which calls for net-zero emissions by 2050 or before.