Who’s Funding the New Energy Order

Majid. Um, can I take a step back before we go forward?

Yes.

Uh, because you were and I and and I mentioned this as well, one of the absolutely and if I can say this, brilliant team that had such a great success at COP 28. Um, I think Dr. Tolan I've known for many years. he's a to force and and all the brilliant work that you and the team did as well. Are you concerned before we move on to the financing that actually we've taken a step back from the successes we saw at COP 28 and that COP 29 and now COP 30 have been underwhelming.

I hope you don't mind me asking this as well because I think it lays the foundation for our finance conversation.

Steve, thank you for so much for having me. It's always a pleasure to be with you. I I always love to be here at Abu Dhabi finance week. Um I think that every presidency faces its own challenges and I think that what was wonderful about COP 28 was that we were really opened the door to the private sector. I think we had a particular moment in time where we needed to show how we could get back on track to achieving the goals of Paris and we did that so successfully.

I think it was a testament to do Sultan who you mentioned but and the team we had some of whom are here with me today and um we we did a I think a a stellar job of trying to manage what is a complex political process but we coupled that by bringing the private sector in like basically open kicking the doors open and saying welcome anybody who can come with a solution is welcome to the UAE and I think that that was what was the game changer about the about the UAE Um, we've seen progress in the in the recent cops. I think that that's the other thing to to recognize about cops is that we often want a cop to come with a game-changing solution every year. But that's not the point. The whole point of these conferences is that every year we make step changes towards achieving our goals. And I think that Azabaijan and and Brazil did uh great jobs in what is a very complicated uh process, but that's the key part.

It's a process, right? And so that process is happening and we're moving forward every single year. And I feel personally optimistic.

If I may say the big difference for me from COP 26 to 28 of both of which I attended was actually the realization you bring big oil into the tent, you get something from them. And for me to sit there with the CEO of the biggest oil company on the planet apart from Ramco um Exxon and him talking about his commitment to methane reduction, that was really heartening as well. Let me move on to talk about the money because I think that lays the foundation for the exciting opportunities. Um let me just remind everybody that Altera is a catalytic climate fund launched by the UAE at COP28. Your aim is to mobilize $250 billion globally by 2030.

Let me start off by the with the really obvious point. That is a hard amount of money to find a home for. How you getting on?

Well, we're doing a fantastic job. Um, as you know, we were launched at COP 28 because the UAE wanted to show its leadership. And I think it's really important to note the leadership in the UAE and their commitment to the process, which was really what helped us to deliver such a successful COP. And for them to say, you know, we are going to launch this fund. It's going to be 30 billion.

It's going to have the scope and the scale because it's going to be a global fund. It's going to be focused on the global south because remember, it's not just about mobilizing that money. It's about where we mobilize it to. So we want to make sure that it's delivering in the global south. And to start by saying that this is not, you know, you've been to many cops, I'm sure there are so many times you go to a cop and there'll be a pledge or a commitment and then five years later, not a penny has been spent.

What was different about our leadership was that they said, "No, we're going to commit." Right off the bat, 6.5 billion. We picked three partners, three of the largest global players in the world, Brookfield, TPG, and Black Rockck, and said, "Hey, help us to deploy this capital." We invested across seven of their strategies.

And what I get excited about, which is where I think we've already been successful, is we've created two blended finance vehicles with Brookfield and TPG. Um Brookfield's sort of a infrastructure fund with TPG private equity. When we started, Steve, the consultants told us that we could get one or 1.5 times our capital. With Brookfield, we've managed to raise nine times our capital.

With TPG, we're at four almost five times our capital. We've seen IFC from the uh from the World Bank putting uh putting money IFC and we've seen other act actors playing. That means that there's an appetite for these types of investments. There's an interest for these types of investment. We've blown out the water the predictions that we had and I think that we're well on track to achieving our goals and targets.

Um that said, your excellency, I did see a report earlier this year that said that you are struggling to find suitable projects to invest in as well. You would totally refute that.

Yes, that report was completely wrong and I was completely miserable.

By the way, it wasn't one of ours if whoever wrote about news earlier

and I know that CNBC would never do something like that. Of course, um what I was talking about when we when I did that interview was that globally um that there because of our scale because of the scale of what we're trying to achieve that it that it's inevitable that there will be challenges, right? We know that this isn't this isn't an easy thing to do. What we alter we don't take it lightly that it isn't an easy thing to do. But actually what I have found in the two years that we've been doing this, and remember we've only been doing this for two years, is that we have an incredible pipeline of deals, so good that we're able to pick and choose, cherrypick the ones that we want.

We're getting incredible returns from those deals. And that was the point in the first place. We want to show that investing in climate makes great returns for the investors because that's what will crowd in the private sector and that's what will bring the money to the global south and globally. And by the way, that's what I see. I see an incredible pipeline of deals.

Um, in fact, my team can barely keep up with the deals that we have. So,

I don't know where that journalist got their ideas from, but that was not what I said. Um, what is, and I think we'd all benefit from knowing a little bit about the process, vast amounts of money, amazing partners to work with as well. What is the biggest barrier to signing uh, a memorandum of understanding to getting things to the level where we're breaking ground as well? What are you finding is the biggest barrier at the moment? Look, I think it's for so what's unique about Alterara is that we have this very specific mandate, but what's also unique and I think that the hard work that we've done over the last two years is our proprietary climate framework that we work with.

So how we assess and evaluate the investments that we're making. So a lot of people will think of Altera as as simply a a renewable energy fund. In fact, we're a full suite investor. You can think of us as as an asset manager, a green label asset manager. So, we invest across the spectrum.

We invest in clean energy, including nuclear, which I know you discussed in the in the last panel. We invest in um industrial decarbonization. That's things like green steel, new types of manufacturing. We invest in um what we call sustainable living, which is a a catchall that allows us to do adaptation type investing. And then the last one is climate tech.

We've done a lot of really interesting investments in technology and we can maybe talk about AI. I know you discussed that a lot on the last panel. And so we're investing across the board, but I think that what's really important to think about is that we're investing in the future.

We're investing in a clean future. How many of us would like to invest in a rotary phone today? Probably none of us, right? Would you if you had to choose between an iPhone and a rotary phone, how many of us are going to invest in your

excellency the the dialing ever? No, there's some maybe some of you a certain age. I mean dialing the number it was right when it was seven digits. Now it's like 10 15.

There are some who would I not judging.

How many of us want to invest in steam power? How many invest want to invest in coal?

Yeah. How many of us would rather invest in SMRs, in fusion, in in renewable energy, clean renewable energy, wind and solar? What we do is we invest in the future. We invest in energy efficiency. We invest in new technologies that make us more productive and more efficient.

So, we're trying to get across that yes, we are a climate fund that's focused on impact, focus on emissions, focused on sustainability, but at the end of the day, we're investors in the future, in a clean future, in the new economy. Tell me about your returns a little bit as well, though, because there's a lot of money men and women in this room as well who want to be confident on their medium-term returns of these technologies. And one thing I do know about technology, being an economic history student as much as you and as much as I'm sure we all are, when technology becomes diffuse, when it becomes widespread, ubiquitous as well, of course it becomes commoditized and the costs go down. The speed of which and we mentioned this on the first panel that the cost of solar is going down for you users. The cost of wind produced electricity is coming down for you as well.

Can you be confident though as an investor that you're going to get the kind of is that a is that a rotary dar whoever's got an phone there anyway but but the the if it's becoming commoditized can your fellow investors and alter be confident of the kind of returns you would expect from these investments

I see today in our pipeline of investments returns that you would expect from the sectors that we invested in so you we they're competitive yes they're competitive Yes, if you you had Muhammad on the panel just now and and by the way, none of us should underestimate what Muhammad Mustar and Sultan under the guidance of his highness bin Zad our president have achieved with that company. They didn't start yesterday. They started 20 years ago by the way when everybody was criticizing criticizing them. Why is an oil and gas country hosting a renewable energy company and look at what they've achieved and they have been a big part in driving down the costs. you noted their 24h hour solar project which will drive the cost of batteries down further.

The innovation and and investment that they're making is phenomenal and you are 100% right. What we see is that those investments are there and that they're generating the returns that investors should expect. Now I don't approach it the same way other investors do. We're a long-term investor. We have the ability to think over the long term.

That gives us an advantage. Um, we work with partners who are looking to scale. How can we scale these platforms? We're not doing show pieces anymore. We're doing investable bankable projects that will generate returns for the long term and I feel very positive.

Okay, a quick anecdote before I move on as well. When we talk about AI as well, you talk about the longevity of the relationship of the UAE and Mazdar and others. I first met Dr. Sultan not in Abu Dhabi, not in Dubai, not in London. Met him in Margate.

Has anyone been to Margate? No, I didn't think any of you had. It's a seaside town in Kent and we were looking out at a great new array of wind farms. So, just to add credence to what you're saying of how long you have all been involved in this project and have invested in it as well, right, you you teased up a bit about AI there as well. How has it moved the needle for you?

And and again, I'll make the point. I apologize. Dan and I will apologize. We didn't spend much time talking about AI at COP 28. No, we didn't.

And I think that it's something that none of us could foresee um because the the innovation that's happened within that space has happened so quickly. And I think that we at Alter have spent a lot of time thinking about this because who hasn't, right? Like everybody has to think about it. I mean, the way that we look at it is from that how is this there's two ways. one, how can we apply the technology within our business?

And we're working on some innovative solutions that will help us to do our job better, that being investing in climate solutions and and and measuring how we how our investments are impacting. Um, which I think is going to be very exciting to see. Um, but the second part is how is the industry evolving? And I think for us it it can be in two parts because remember we invest in the energy side. So like Muhammad, we're interested that that is going to be the bottleneck for AI.

AI is energy. The two things are interlin and that is is the the the main issue that we need to address for it. And we have to think about what are the cleanest, most efficient and cheapest solutions. And by the way, today that's renewables. You could look at building a new gas plant, but that's going to take you five years.

You can uh deploy a solar array in 18 months. So it's simply speed. If you took away the cost simply on speed, you can do it with solar. Um, and then if you look at costs today, the cheapest electrons, as he said, are from solar. But it also is an opportunity as we're deploying these technologies in the global south in places we can replace dirty grids.

We can replace new things through these through these partnerships. And we've had a lot of really interesting uh conversations with the hyperscalers about how we can work with them. The other part which I think doesn't get talked about enough is that hopefully the technology helps us to be better at using energy. Hopefully AI can help us to improve how we use grids, help us design batteries better, help us to make the new generation of PV, help us

hopefully the technology will help itself become more efficient. Yeah. Right. I think that we underestimate we've seen how fast chips have have improved. Can they also work on how improving the energy efficiency of those data centers themselves?

And already you see that development happening and remember the other aspect of data centers that we never talk about is the water demand. Yeah.

Right. And that's at Altera we not only think about energy but we think about water we think about other aspects of how cooling. Um there are many aspects to a data center that aren't just the chips, right? Yeah. And so as Altera, we look at the full suite of, you know, in this sector, how do we want to to play within the sector?

What are the areas where we can act that can reduce emissions that can have an impact that can help that local community? Because we think about several things when we invest. First and foremost, we think about commercial return. Secondly, we think about how are we helping to mobilize capital? How are we getting to our 250 target?

Then we look at emissions. What are the emissions reductions that we're achieving? And then we look at the additionality. How is this helping the community? How is this helping?

How is it that without Alterara money this can be more impactful than what we have? if you start to stack up those things and that's what allows us to give uh to make a choice about the the types of deals that we want to do.

Um let me ask you a question. You've just got me thinking about three three or four things I want to follow up on, but I'll do one of there. You talk about returns and I know the returns are very important as well, but and I've also seen that that Alterero would be willing to forsake some returns in order to bring partners in in order to dare I say it do the right thing in many parts of the world. Uh that is amazing. Is is that the case?

Yeah. So we've created these two blended finance vehicles with Brookfield and TPG where we innovated and and created what we call FICO, our first incapal model. Um it's different with each partner, but it's it's catalytic capital. It's not concessional capital because and I think that's important distinction to make and it's like you said, we forsake a little bit of profit to encourage others to come and invest. We're looking at how we can create other innovative products and so please stay tuned because we'll be hopefully uh developing new new versions of that and that's specific to our remember we have 30 billion 25 billion is in our acceleration fund they can invest anywhere in the world but then that five billion is for the global south and so we use it in that from that five billion to create these because those two funds are glo global south focused funds because we don't need to use catalytic capital where in in the in the global north where there's plenty of capital already and in other markets what we want is that that capital where we use catalytic capital it has the most impact is is mobilizing the most capital and how can we use it effectively what was really like I said when we started we were told maybe we could get one time 1.

5 times our capital I don't think it can be really underestimated how groundbreaking our two funds have been nine times our capital on the Brookfield field CTF fund and four to five on gsi the TPG fund they have already started deploying that capital into the global south in place like Colombia Sri Lanka India and others um Malaysia um and we're seeing great projects and that the fact that we're able to mobilize that kind of capital and to do that to take that that sort of catalytic role is really testament to our President Shah Handen Zid who wanted to put the UAE's money behind uh our commitment um and we've delivered on that and I I think from my point of view we've already been successful and now we're just uh

your excellency this is like a therapy session for me I found myself guilty of two things one not mentioning enough AI at COP 28 but two looking at this from a western European developed world bias I do it too many times times and and actually various comps I've been to should have taught me better than that as well because it is always the developing and emerging world that needs that leg up. It needs the support as well if we are going to successfully decarbonize and reach net zero as well. and I counted you've mentioned uh the global south four times in a couple of your answers and I think it's so exciting that what Alterara and others are doing for the global south could really level the playing field because you mentioned something else that was fascinating as well a new gas plant facility can take years but you can have up and running a solar array in up to 18 months

right

this is really exciting of potentially the energy which will be available for the global south as well

yeah no I think you're 100% correct and where is the future and and we think about this because people don't think of it but the UAE is the global south we have been investing and have been part of the global south for our 54 years you know you know it's our 54th anniversary uh national day on the 2nd of December and we know how to invest in the global south we've been doing it through companies like Mustad for years and years ADIA u many other investment institutions ADQ others here in UAE do Sultan himself has in investing in the global south. So we at Altera know how to invest in the global south. What we want to do is couple that with our catalytic uh uh capital along with really strong partners and it's not by coincidence that we chose partners that were the largest asset managers in the world to to say hey work with us to create a fund that's focused on the global south. What we've done that is also I think a success is that we've gotten those big asset managers to look at the global south and to look at these markets. We know that there are challenges there.

We know that it's not easy and that it's difficult and there are a we could sit and talk all day about the various risks that I think are often perceived risks um in the global south. We did a white paper earlier this year. If you haven't had a chance to to look at it, please do. That showed that about 700 billion worth of deals is available today for investment that's investable that you can do today in the global south.

100 billion

and that you could do today in the global south and we need what we need to do is match the private capital to those opportunities. Altera plays an important role in that and we can we can do that. Um, we can do that at scale, we can do that at speed. We want to we we are lucky because we're a first actor. We get to pick the best of the deals.

Um, but what we hope is that we can help mobilize others to invest in those places.

Okay. So, here's a question. Uh, and I know you've been doing some amazing work in places such as India with I think it's hundred million dollar investment in Everan as well. Is the needle or the the the equilibrium changing that actually there are too many barriers to investing in renewables in developed markets and actually that 700 billion represents how emerging and the global south is becoming more attractive than in developed markets. I think that we always are going to be wanting to invest in the developed world in Europe and North America.

Those are the you know stable economies where we can generate great stable returns. I think that what's great about Altera is that we can act globally and we can act at scale. So we can develop a portfolio that allows us to manage our risk to be smart because what I would like to do come 2030 is to come back and say, "Hey, I've made a great return. I've achieved my my impact um goals. I've achieved my mobilization goals.

How give me some more money to continue to do my job." But and I think that that's about creating a a a blend of of investments across the developing world and the developed world that allow us to generate the returns that we expect to receive. Um, and so then a word on developed world and you did mention the United States and look I I am 100% not going to be political here as well and I know you're not as well but do you feel the environment is more problematic in the United States now with an administration that is is quite frankly saying that coal uh and other hydrocarbons would be more competitive have been more competitive if it hadn't been for the Biden era IRA incentives and what have you. Do you honestly feel that actually even in the US at the moment as well there are still some extraordinary opportunities?

Look, I think that the US administration is you know every administration that is in government in any country whether it's the US orever is thinking really hard about how to meet this AI energy demand. You mentioned at COP 28 we weren't talking about AI, right?

And so we but we already knew that the energy demand that was coming from the global south and from the growth of energy demand electrification in the north was going to far outstrip our conventional capacity to provide energy and that we needed to create new solutions that being nuclear that being renewables that needed we needed to we need an and right approach. We need to improve all of what we do in terms of energy. And I think that that now we've added that layer of AI, which we know has sucked the oxygen out of the room in terms of all of our conversations and is really the energy demand that it's creating is dramatic. And so we know that we need to find solutions. And every administration is thinking, okay, how am I going to meet the the nearterm demand, which is like tomorrow's demand for energy?

But that doesn't affect the transition. The transition is between now and 2050. We know that we're dependent on conventional forms of energy today. And look, I'm not going to uh think say that restarting coal plants is is the best option. But I also would argue that the fossil fuel industry has benefited from subsidies and continues to benefit from subsidies today.

And we don't criticize the fossil fuel industry for benefiting from subsidies. Yet we do criticize the renewable energy industry. The

subsidies for hydrocarbons globally are far greater than so embedded into their process. They take it as as

as as a great point normal. But we for some reason think that when those same uh support systems are created for new forms of energy that that's a problem. But what I will tell you is the fact that we are investing today in projects in the US, in Europe, in the global south. And when we look at investment, we make sure that they are those projects are not dependent on subsidies for their long-term survival. Every investment we have made is a is an is a project that is sustainable financially without subsidies.

And we have got by the way plenty of those projects without without IRA or or subsidies are a a bonus

and the point is there is a lot of capital available but it's not unlimited amount of capital and as you just pointed out that capital can find a home in the global south if it needs to. So you've got me think

can I give you one other reason for us

as long as you like sir because our time's up but I would like to carry on as long as you can.

Our capital lots of capital is running towards AI which creates lots of opportunity for me. right there is creating lots lots of space where I can invest in those things.

Um, you've got me thinking about COP 28 and now and you know we didn't talk about AI per se and I know you've got to move on but but but we did talk about it. We just didn't brand it as such when I had Darren Woods at your conference talking to me about um methane monitoring and that's why they could sign the OGDC which was one of the great achievements of COP 28. I think we'll all agree he was talking about AI. He was

he was talking about new technology because without those new technologies we couldn't um monitor this and get them to sign up to what is one of the great achievements of so we kind of were but whoever was in charge of branding out there. You didn't brand it as such.

Yeah. But you you're making a 100% correct point. Let's talk about methane. Methane is one of the most powerful greenhouse gases. Why are we allowing it a valuable resource to leak into the atmosphere?

And that was what was brilliant about our leadership in the UAE in the 70s. His highness Zed, our founding father, went to the oil and gas companies and said, "I want a zero flaring policy. I want you, I don't want you to be burning this natural gas. I want you to use it and not be polluting the environment." He did that in the 70s.

That's why today our energy system is based on natural gas. And that's because he said, "This is a natural resource. We need to use it." And so we we're using it today. Why are we still today in this day and age allowing methane gas to leak into the atmosphere when you can use it as a power source?

It's better for the environment. It's green. Why are we not investing in the solutions that exist today? These are not new technologies that exist today to capture the methane and use it for productive purposes. Your excellency, you have been incredibly generous for your time and I have thoroughly enjoyed chatting to you.

In fact, I was I I'll be honest with you, I was worried about my two panels and how they were going to flow, but I've had two fantastic panels now. But I really want you all to thank along with me his excellency Majid Al- Suede, who is the CEO of Alterara. Thank you, sir, very much indeed.