Temasek and BlackRock have jointly established Decarbonization Partners, a partnership that will invest in companies focused on carbon-cutting solutions, according to state news agency Bernama.

Decarbonization Partners will launch a series of venture capital and private equity funds that will focus on early-stage companies advancing decarbonisation solutions to accelerate global efforts to achieve a net zero economy by 2050.

Temasek and BlackRock are committing a combined US$600 million ($804.8 million) in initial capital towards the partnership.

For its first fund, Decarbonization Partners is targeting to raise US$1 billion, with US$300 million to come from Temasek and BlackRock’s initial commitment, according to Bloomberg. The remainder will be raised from third-party investors, who will be asked to lock up money for about a decade, with targeted annualised returns of about 20%. 

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The funds deployed will be invested into start-ups covering decarbonisation solutions including emerging fuel sources, grid solutions, battery storage, electric and autonomous vehicle technologies as well as building and manufacturing-related innovations.

The funds will be staffed by employees from both Temasek and BlackRock as well as a dedicated team to manage the portfolio.

Larry Fink, chairman and CEO of BlackRock, says that patient, well-managed capital is needed to enable decarbonisation solutions to be scaled in order to transform the economy.

“This partnership will help define climate solutions as a standalone asset class that is both essential to our collective mission and a historic investment opportunity created by the net zero transition,” he says.

Dilhan Pillay, CEO of Temasek International, says “Decarbonization Partners represents one of several steps we are taking to follow through on our commitment to halve the emissions from our portfolio by 2030, and ultimately move to net zero emissions by 2050.”