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New Zealand works with BlackRock for NZ$2bn climate fund

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The new climate infrastructure fund has been described as the first of its kind.

The New Zealand government has worked with BlackRock to support its goal of becoming one of the first countries to achieve 100 per cent renewable electricity through the launch of a NZ$2 billion ($1.86 billion) climate infrastructure fund.

The fund is set to provide NZ businesses with access to greater pools of capital and accelerate green energy such as solar, wind, green hydrogen, and battery storage.

“This is a first of its kind fund in the country that demonstrates the huge economic potential of New Zealand being a climate leader and our goal of generating 100 per cent renewable electricity,” NZ Prime Minister Chris Hipkins said in a statement on Tuesday.

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“It proves again that we can grow our economy while we lower emissions. This fund is a massive opportunity for New Zealand innovators to develop and grow companies.”

According to BlackRock, the launch of a NZ-focused strategy will provide a platform through which institutional investors can invest in the country’s transition to a low-carbon economy.

The global asset manager indicated the new initiative intends to create investment opportunities in target sectors including wind, solar, batteries, electricity storage, electric vehicle charging, natural capital projects, green hydrogen, and associated enabling infrastructure.

NZ, which aims to transition to a 100 per cent renewable energy-powered electricity grid by 2030 and achieve net zero carbon emissions by 2050, currently has an 83 per cent renewable energy penetration rate.

However, BlackRock noted that the transition to 100 per cent renewable will require investment running to NZ$42 billion ($39 billion) in renewable power generation and distribution as well as battery storage to ensure network reliability and provide greater energy security.

“This pioneering initiative between BlackRock and New Zealand is a powerful example of the public and private sectors joining forces to mobilise capital and help a country achieve its energy transition goals,” said Rachel Lord, chair and head of Asia-Pacific, BlackRock.

“We believe New Zealand is at the forefront of low-carbon transition, and investors will benefit from the opportunities it creates.”

BlackRock chief executive officer Larry Fink said the climate fund represented the “largest single-country low-carbon transition investment initiative” that the asset manager has been involved in to date.

“New Zealand doesn’t just have the ambition to build a more resilient energy system and be a leader in decarbonisation globally. It is already doing that today,” he wrote on LinkedIn.

“As we approach COP28 at the end of this year, the world is looking for models of cooperation between the private and public sectors to ensure an orderly, just, and fair energy transition. Building on BlackRock’s Climate Finance Partnership fund announced at COP26 in Glasgow, the New Zealand climate infrastructure strategy can be a model for how to scale and implement this vision.”

NZ Minister of Energy and Resources Megan Woods said that the country was now an “investment magnet” for capital towards unlocking clean technology solutions.

“The New Zealand net zero fund will look to crowd in investment from crown companies and entities, including superannuation funds and private sector funds to accelerate New Zealand’s transition to 100 per cent renewable electricity,” she said.

“This arrangement means we will get there faster, with opportunities for local investment in a low emissions economy. That will be a significant selling point for New Zealand businesses as consumers demand more sustainable products and services.”

In September last year, BlackRock Real Assets agreed to acquire solarZero, marking its first investment in New Zealand and its first residential solar investment in the Asia-Pacific region.

New Zealand works with BlackRock for NZ$2bn climate fund

The new climate infrastructure fund has been described as the first of its kind.

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Jon Bragg

Jon Bragg

Jon Bragg is a journalist for Momentum Media's Investor Daily, nestegg and ifa. He enjoys writing about a wide variety of financial topics and issues and exploring the many implications they have on all aspects of life.

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