According to a major Newswire, BlackRock has raised a target-beating $673 million for a climate-focused infrastructure fund with backing from the French, German, and Japanese governments to invest in renewable energy projects in emerging nations.
The world's largest money manager hopes that the Climate Finance Partnership, which was unveiled on Tuesday, would demonstrate how to mobilize private cash in developing nations to combat climate change, which is a sticking point at the United Nations climate negotiations in Glasgow. Investors have been hesitant to put money into riskier projects where there is no guarantee of a return.
State-owned development banks from France, Germany, and Japan, as well as philanthropic organizations like the Grantham Environmental Trust and the Quadrivium Foundation, are contributing 20% of the fund's capital and have pledged to bear losses before other investors.
While a number of multibillion-dollar renewable energy funds have been formed in the previous year to assist build out solar, wind, and other projects, the vast majority of the money has gone to countries with lesser risk for investors.
Emerging economies, such as those in Africa, Asia, and Latin America, will require about $1 trillion per year to help them transition to a low-carbon economy by 2050, according to BlackRock. Except for China, just $150 billion will be invested in 2020.
At the COP26 United Nations, Climate Change Conference in Glasgow, BlackRock and the fund's other supporters are attempting to rally greater support for such emerging markets-focused initiatives. The new fund might aid industrialized countries in meeting a goal of raising $100 billion each year to aid poorer countries in combating climate change.
TotalEnergies, a French energy firm, and institutional investors like AXA and Dai-ichi Life Insurance were among the fund's 22 backers. BlackRock CEO Larry Fink stated on Tuesday at the Green Horizon Summit, held in conjunction with the COP26 climate talks in Scotland, that the fund easily exceeded its $500 million fundraising goal.
"We could have raised a lot more," Fink said, "and this is a terrific example of what public capital can do." He also supported the idea of energy firms spinning off a portion of their assets, and he suggested that international leaders reconsider how organizations like the World Bank may be changed to encourage more private-sector lending.
He stated, "We're going to have to overhaul financing."
According to David Giordano, global head of renewable power at BlackRock Alternative Investors, the fund has a standard 10-year lock-up with a five-year investment term, with the average equity investment likely to be in the $25 million-$75 million range.
"Back in 2018, when we first started down this path, one of the major things we talked about with our partners was actually coming up with something that was simple but did provide that sense of de-risking emerging markets," Giordano said.
Kenya, Morocco, and Egypt, as well as Peru and Vietnam, where the government was "truly committed" to the energy transformation, were all interesting to investors, according to Giordano.
According to Edwin Conway, global head of BlackRock Alternative Investors, renewable energy in non-OECD nations is predicted to account for 49% of global energy capacity by 2050.
"Now, that's huge ... I think we're talking about decades, with regard to the opportunities that are ahead," Conway said.