Green hydrogen gets a push in KSA + Oman

Good morning, nice people. We have a brisk issue to kick off this week, with lots happening in the green hydrogen and climate diplomacy spaces.

THE BIG CLIMATE STORY- What will be the world’s largest green hydrogen facility is now one step closer to becoming reality, after Saudi authorities issued operating licenses for the joint venture that will develop a 1.2 mn-ton green hydrogen facility in the kingdom’s Neom. Oman is also stepping up its green hydrogen game, with the country signing a handful of agreements with Saudi to partner on green hydrogen and renewables projects.

^^We have these stories and more in the news well below.

THE BIG CLIMATE STORY OUTSIDE THE REGION- Mexico is capitalizing on its advantages over the US to become an EV manufacturing hub, with some of the world’s biggest carmakers reportedly eyeing EV production in the country. BMW announced it’s investing EUR 800 mn to ready an existing car plant in Mexico for EV production and construct a battery assembly center there, while Tesla is reportedly looking at setting up a Mexican plant as well. Audi, General Motors, and Fiat Chrysler are also said to have expressed interest. Amid heated debates between the US and EU over the impact of President Joe Biden’s Inflation Reduction Act’s subsidies to support EV manufacture in the US, Mexico has notable advantages — including existing infrastructure and expertise, several stakeholders have noted recently. Crucially, there’s a much lower fiscal burden for the export sector compared to the US, Foreign Minister Marcelo Ebrard said.

The story is attracting coverage in the international press: Reuters | Financial Times | Reuters | CNBC | Bloomberg | Economist (listen, runtime: 24:00)

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WATCH THIS SPACE #1- Renewables’ share of most Middle Eastern countries’ energy mix will double or triple by the end of the decade, Saudi Association of Energy Economics (SAEE) Chairman Majeed Al Moneef told Arab News. The catch? Investing in renewable energy will happen alongside investments in oil and gas, Al Moneef said, noting that the Middle East will be at “the forefront of both” sectors.

REMEMBER- MENA oil and gas giants — including the UAE, Saudi Arabia, Kuwait, Bahrain, and Qatar — have been under fire as of late for their continued investments in the heavy-emissions industries. The UAE was most recently put under the microscope for its high per capita emissions as it gears up to host the COP28 summit this year.

WATCH THIS SPACE #2- South Korea’s Kepco wants to construct four nuclear reactors with a combined capacity of 1.4 GW worth USD 32.5 bn for Turkey, South Korean news agency Yonhap reported last week. Kepco submitted a proposal for the reactors following talks with Turkey in December, as Ankara plans to expand its national nuclear capacity to 7.2 GW by 2035. The location and timeline of the project have yet to be revealed.

KEPCO also has a presence in the GCC: The company is among five South Korean firms that signed a USD 6.5 bn agreement with Saudi Arabia’s Public Investment Fund (PIF) in November to build a hydrogen and ammonia plant. The firm was also awarded the contract to build the UAE’s Barakah nuclear power plant — which recently approved its operational blueprint for 2023-2026 — back in 2009.

WATCH THIS SPACE #3- Masdar is looking to ramp up investments in Africa with new renewables projects in Nigeria, as part of its plans to develop a combined 20 GW of renewables capacity in Africa by 2035, The Guardian Nigeria reported last week. The UAE renewables giant previously signed three contracts as part of Etihad 7 — an initiative aiming to attract public and private funding to invest in Africa’s renewable energy sector over the next 12 years. Last month, Masdar signed agreements with Ethiopia and Zambia with a total capacity of 2 GW per country.

SIGN OF THE TIMES- Hasta la vista, Boeing 747: Boeing delivered its final 747 jumbo jet last week and has committed to leading with sustainability, according to a statement. Increasing awareness about the industry’s polluting effects over the last few years has prompted airlines and airplane manufacturers to look for more fuel-efficient aircrafts and the covid pandemic further put pressure on the company to decommission the four-engine aircraft and seek more lucrative models.

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PSA #1- Egypt-based startups working on clean energy, agritech, or resource efficiency can now apply to startup accelerator ChangeLabs’ Scale up to Green acceleration program. ChangeLabs is partnering on the program with the Dutch Entrepreneurial Development Bank (FMO), Netherlands-based NPO Hivos, and Amazon’s AWS Activate, it said in a post on LinkedIn. Startups at a post-revenue stage can apply for the three-month mentorship program here.

PSA #2- Morocco launches call for projects to enhance the sustainability of industrial zones: Morocco’s Industry and Trade Ministry and the Millennium Challenge Account-Morocco Agency (MCA-Morocco) launched a call for projects designed to boost the sustainability of industrial zones, according to a government statement. MCA-Morocco is an institution implementing a US-Morocco cooperation program aiming to improve land productivity by rehabilitating industrial zones to improve their “environmental and social performance.” Selected projects will receive funding from the MAD 150 mn (USD 14.6 mn) Fonzid II fund, set up as part of the MCA-Morocco program. Morocco-based public and private firms working in the field of industrial zones can apply through Fonzid’s website.

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COME TO OUR NEXT ENTERPRISE FORUM-

We’re excited to unveil our next C-level event: The Enterprise FDI + Exports Forum, where we will take a deep dive into two of the most critical topics affecting our community.

Exports and foreign direct investment (FDI) have never been more important to our economy — or our businesses — than in the wake of the float of the EGP. We think we have a once-in-a-lifetime chance to build an export-led economy that makes us a magnet for FDI and all the benefits that will come with it for our nation.

Want to partner with us on the conference? Ping a note to Moustafa Taalab, our head of commercial, here.

HAPPENING TODAY- The first International Conference on Earth Sciences and Energy Transition is kicking off this morning in Muscat, and is running until Friday, 10 February. The conference is set to bring together 162 participants from 26 countries to exchange research about low-to-zero carbon energy and discuss trends and challenges in the field of earth sciences, according to the Oman News Agency.

CIRCLE YOUR CALENDAR-

Egypt will host the CSR Forum from 2-5 March at Somabay, Hurghada. The event aims to further discussions put forth during COP27 and boost private and public sector cooperation on climate action. You can register for the event here.

The Arabia CSR Awards is accepting applications until Friday, 30 June. The awardwinners will be announced during a ceremony on Wednesday, 4 October.

The first MENA Solar Conference is accepting applications from published researchers specialized in PV technology until Sunday, 30 April. The Dubai Electricity and Water Authority will be hosting the conference from 15 to 18 November, in conjunction with the Water, Energy, Technology, and Environment Exhibition and the Dubai Solar Show 2023. Researchers can submit their papers here.

Check out our full calendar on the web for a comprehensive listing of upcoming news events, national holidays and news triggers.

KSA issues operating license for Neom green hydrogen project: Saudi’s Industry and Mineral Resources Ministry has issued an industrial operating license for the Neom Green Hydrogen Company (NGHC) — a JV between Neom, US-based gas supplier Air Products and Saudi Arabia’s Acwa Power, according to a statement last week. The NGHC plant is set to produce 1.2 mn tons of green ammonia annually, promising to be the world’s largest utility-scale green hydrogen facility.

Next stop: Financial close? The USD 5 bn green hydrogen project was expected to reach financial close in early 2023, but we have yet to see confirmation that it has reached this milestone. NGHC signed facility agreements with Saudi and international banks in December to secure operating capital, and we’re also expecting to see “significant participation” from the government.

A recap on the Neom green hydrogen plant: The plant will be powered by renewable energy projects totaling nearly 4 GW and is expected to begin hydrogen production in 2026. All of the green ammonia produced will be exported to global markets through a long-term offtake agreement with Air Products, the statement notes.

The technical partners: Air Products will construct the plant and supply its own air separation technology used in green ammonia production, while the 2.2 GW electrolysis technology used to produce the green hydrogen will be supplied by Thyssenkrupp Nucera, according to the statement. Denmark’s Topsoe will provide the technology to produce green ammonia, while Houston-headquartered Baker Hughes will be responsible for hydrogen compression.

Tadawul-listed Acwa Power intends to “replicate” the project elsewhere, to supply the “huge capacities” of green ammonia likely to be in demand, the company’s global head of hydrogen Andrea Lovato recently told the National. The “replicated” project will also produce 1.2 mn tons of green ammonia annually, Lovato said. No information on the potential investors, site location, or project cost has been announced yet.

Acwa Power inks cooperation agreement with Azerbaijan for 1.5 GW wind project: Acwa Power signed a cooperation agreement with Azerbaijan that will see the Tadawul-listed company extend its partnership with the country by setting up a 1.5 GW offshore wind energy project, according to local media outlet Azernews. The two sides signed the agreement during meetings of the Southern Gas Corridor Advisory Council and the Green Energy Advisory Council held in Baku on Friday. The planned location, investment size, and time frame were not disclosed.

The planned scope of the partnership: Acwa Power and Azerbaijan are planning to build wind farms with a combined capacity of 2.5 GW and develop the country’s first battery storage systems, Azerbaijan’s Energy Minister Parviz Shahbazov is quoted as saying. Again, no investment size or time frame are disclosed.

This partnership appears to be separate from the 240 MW wind farm we already knew about: In mid-January, Acwa Power broke ground on its USD 300 mn, 240 MW Absheron-Khizi wind farm, according to Zawya. Up to USD 105 mn of the price tag is being provided by the EBRD as debt financing, with “a number of other financial institutions” also expected to contribute. The company signed the investment, power purchase, and transmission connection agreements in December 2020, Acwa Power notes. The extra 1.5 GW being added through the newly-announced offshore project seems to be in addition to this 240 MW — though no stakeholder has confirmed this.

KSA had been eyeing closer collaboration with Azerbaijan: Saudi Investment Minister Khalid Al Falih noted in December that the kingdom was interested in implementing “larger energy projects” than the 240 MW project.

And hoping to hop on board the green electricity export train: Saudi also hoped to participate in the export of green electricity from Azerbaijan to Europe, Al Falih also said. This followed the leaders of Azerbaijan, Georgia, Hungary, and Romania signing an agreement on Saturday in Romania’s Bucharest to build an underwater electric cable that would go under the Black Sea to Europe, marking “a step towards creating a corridor for green energy,” according to Azerbaijan’s President Ilham Aliyev.

Oman, KSA sign 13 investment MoUs worth USD 270 mn in multiple sectors — green and otherwise: Public and private sector entities in Saudi Arabia and Oman signed 13 MoUs in multiple sectors — including some that are green business-focused — at the Saudi-Omani Investment Forum, held in Riyadh from Wednesday-Saturday, Muscat Daily notes. The total value of the MoUs exceeds SAR 1 bn (some USD 270 mn). The agreements include some in the clean energy space — specifically, renewable energy and green hydrogen — but also span oil and petrochemicals storage, mining, tourism, logistics and transportation, and others, Saudi Gazette notes.

One of the big agreements has a green component: Oman’s Finance Ministry signed an MoU with the Saudi Fund for Development — a government institution that provides loans for development projects — to build an integrated economic zone in Oman’s Dhahirah. The first phase of construction will cost some OMR 122 mn (USD 317 mn). The project will include provisions for industrial waste treatment.

Details on the other green or possibly-green agreements: An OMR 4 mn (USD 10.4 mn) agreement was signed to invest in green hydrogen production, with initial plans to prepare investment, financing and economic studies to spur investment partnerships. Oman’s Colossal Engineering and Construction signed an agreement with Saudi solar PV company Desert Technologies to launch solar projects in Oman. Saudi’s GCC Electrical Testing Lab signed an agreement with Oman’s Voltamp worth OMR 5 mn (USD 13 mn) in the field of electrical transformer services — which improve system reliability and energy efficiency. Saudi’s International Marine Industries signed an agreement with an Omani firm to support the kingdom’s marine industry. Oman’s Construction and Engineering Company signed an agreement with Saudi’s Tharawat Mining to operate and manage mining sites, with no further information given.

Oman’s been upping its climate game recently: Oman unveiled a strategy in October to boost investment in green hydrogen to USD 140 bn by 2050. It recently allocated land within its special economic zones for green hydrogen and green ammonia production and has been inviting project bids. Energy investment company OQ has been exploring low-carbon ammonia generation with a number of other players. Like many countries in the region, Oman is eyeing export to Europe. The country has also been working to “greenify” some industries, including with Jindal Shadeed Iron Steel setting up a USD 3 bn green steel plant in Duqm, while Oman Aluminium Rolling Company inked an agreement in November to purchase biofuel for use in production. In the solar space, Oman Power and Water Procurement Company kicked off an open tender for a 500 MW IPP solar PV project, set to come online by 4Q 2026, we noted in November.

Spain and Morocco signed 19 MoUs, including renewable energy and water management agreements, at the end of Spanish Prime Minister Pedro Sanchez’s two-day visit to Rabat last week, according to Morocco World News. Spain also extended a credit line worth up to EUR 800 mn “to promote investments in sectors such as railways, water, agri-food, and tourism,” according to a statement. No further details on the agreements were provided.

Closer energy cooperation in the offing: Moroccan Energy Minister Leila Benali met with her Spanish counterpart Teresa Rodriguez on the sidelines of the high-level meeting to discuss energy cooperation between the two countries, with a specific focus on green hydrogen, electricity, and mining, according to a statement. The pair’s conversation took place with COP28 in mind as Spain will preside over the European Council during the climate conference.

We knew clean energy would be on the agenda during the Spaniards’ visit: Press reports ahead of the high-level meeting suggested Spain and Morocco were set to discuss the joint development of solar energy and green hydrogen. The two countries already have infrastructure in place for Morocco to export energy — including renewables and green hydrogen — across the Mediterranean to Spain.

ALSO IN CLIMATE DIPLOMACY-

KSA and France are setting up a framework for collaboration in the energy sector — including clean energy initiatives after the two countries signed an MoU during a meeting in Riyadh on Thursday between KSA’s Energy Minister Prince Abdulaziz bin Salman and France’s Foreign Affairs Minister Catherine Colonna, Saudi Press Agency (SPA) reports. The MoU is aimed at boosting cooperation in areas including renewable energy, energy efficiency and storage, and smart grids. It’s also designed to enhance collaboration in fields like climate change-mitigation tech — including carbon capture and hydrogen production — energy supply chain localization, and research. During the Riyadh meeting, the two ministers also discussed possible cooperation on nuclear energy use, clean hydrogen, and electricity interconnection.

India, France, and the UAE established a “trilateral initiative” to support sustainability and advance solar and nuclear energy, according to a statement released on Saturday. The initiative will coordinate efforts from the three nations’ development agencies to implement sustainable projects, including addressing single-use plastic pollution, desertification, and food security with a particular emphasis on the Indian Ocean region.

Egypt, Romania talk energy: Egyptian Prime Minister Moustafa Madbouly discussed exchanging energy and expanding green hydrogen capacity during a meeting with his Romanian counterpart Nicolae Ciuca on Saturday, according to an Egyptian Cabinet statement.

QatarEnergy could get a 20-25% stake in the USD 27 bn cluster of energy projects in Iraq it has been eyeing, Bassem Abdul Karim, head of Iraq’s state-owned oil and gas producer Basra Oil Company (BOC), told Reuters last week. The projects, which are jointly owned by France’s TotalEnergies and the Iraqi government, include a planned 1 GW solar plant.

Iraq wants to own the lion’s share of the energy projects: Iraq is planning to hold a 40% stake in the project, while QatarEnergy is eyeing a 30% stake, Abdul Karim said, without disclosing the size of the stake TotalEnergies is planning to retain. “We determine our percentage as an Iraqi country, and the rest is for Total and QatarEnergy… I don't expect more than 20-25%, they are talking about 30%,” he said, referring to Qatar’s potential stake.

The country wants to ramp up its solar energy generation: Iraq wants to produce 5 GW of solar power in 2023, Electricity Minister Adel Karim said recently. The country signed solar power agreements over the past two years with several companies, lining up a total generation capacity of 7.5 GW.

KSA, Aerofarms form JV for indoor vertical farming: KSA’s sovereign wealth fund the Public Investment Fund and US-based AeroFarms have signed a joint venture agreement to build and operate indoor vertical farms in Saudi Arabia and MENA, according to a statement released last week. The first farm will be the largest of its kind in the region and will produce some 1.1 mn kg of crops. The JV will rely on smart agriculture technology to streamline the supply chain and support year-round, sustainable local sourcing of high-quality crops. AeroFarms also partnered with the Qatar Freezones Authority and Doha Venture Capital to build a vertical indoor farm in Qatar last November.

Masdar City broke ground on its 30k sqm sustainable and renewable-powered community “The Link” last week, according to a press release from WAM. The Link is expected to house the first net-zero shared living and working facility in the region, and will also be home to four low-carbon buildings. Once complete, the community will meet LEED Platinum, WELL Gold, 4 Pearl PBRS Estidama and LEED SmartPark Silver standards.

OTHER STORIES WORTH KNOWING ABOUT THIS MORNING-

• Saudi’s Public Transport Company began operating its first electric bus in Jeddah on Thursday. The bus can run for 300 kilometers on a single charge and consumes 10% less electricity compared to the average electric bus. (Zawya)
• Egypt-based NGO Bioenergy Association for Sustainable Development signed an MoU with the National Bank of Kuwait-Egypt to develop a biogas production facility in the country’s southern governorate of Assiut. (Statement)

A former desalination plant is being transformed into The Jeddah Central Museum, Arab News reports. Set to open its doors in 2028, the desalination plant-turned-museum will bring together the city’s industrial and cultural heritage, along with a science education element as it plans to incorporate a display of the desalination process, its website notes.

From pollution to culture: A decision from Saudi Arabia’s Environment Ministry brought the plant’s operations to a halt in 2020 due to high operating costs and the spread of air pollution, Arab News notes. The plant was owned by the Saline Water Conversion Corporation, which now utilizes more sustainable and innovative desalination technologies.