(Ecofin Agency) - At COP29, developing countries are pushing to negotiate a deal that would secure $1 trillion in annual funding to fight climate change. However, many investors appear hesitant to commit to these nations.

 Alterra, the world’s biggest private fund dedicated to fighting climate change, is struggling to find the right projects to invest in, especially in Africa. Majid Al Suwaidi, the fund’s manager, shared this concern during a panel at COP29 focused on financing the energy transition.

Launched by the United Arab Emirates during COP28, Alterra has a bold vision to raise $250 billion for climate investments by 2030. But Al Suwaidi admitted that the fund has hit a roadblock. “We simply don’t have enough projects. The enabling environment isn’t ready,” he said, pointing specifically to challenges in developing countries and emerging markets.

This situation shines a light on why energy transition projects in Africa often fail to attract major investments. Several factors are to blame: political instability, shifting regulations, a lack of infrastructure, and the high risks of combining public and private funding.

Al Suwaidi provided a clear example of how difficult this has been for Alterra. The fund currently manages $30 billion, but only $6.5 billion has been allocated to strategies led by major players like BlackRock, Brookfield Asset Management Ltd., and TPG. Even more concerning, not all of that $6.5 billion has actually been invested yet.

The hesitation isn’t just on Alterra’s part. Private investors and banks are also reluctant to get involved because many African governments don’t offer strong financial guarantees. This lack of investment is deepening the continent’s energy crisis, where over 600 million people still do not have access to electricity. It also keeps countries dependent on fossil fuels, making the transition to clean energy even harder.

Africa has enormous potential for renewable energy, especially solar, wind, and geothermal power. But despite this, the continent receives less than 2% of global renewable energy investments. The problem isn’t the lack of resources; it’s the lack of funding to develop them.

Al Suwaidi’s comments highlight a bigger issue, which is how global climate financing works needs to change. For funds like Alterra to succeed, stronger cooperation between governments and private investors must be strengthened. Clearer regulations, better infrastructure, and financial safeguards could make energy transition projects in Africa much more attractive.

Without these changes, the energy transition could leave the most vulnerable nations behind. This would only widen global inequalities and make it even harder to meet the goal of limiting global warming to 1.5°C.