Masdar-led consortium inks land allocation agreement for 10 GW wind farm in Egypt

Good morning, friends. We have big news from Egypt today and a couple of stories to note from other parts of the region. Let’s jump in.

THE BIG CLIMATE STORIES- UAE’s Masdar, Infinity Power, and Hassan Allam Utilities signed a land allocation agreement with the Egyptian government for the 10 GW wind farm and KSA’s SABIC Agri-Nutrients has sent its first shipment of low-carbon ammonia to Taiwan.

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

THE BIG CLIMATE STORY OUTSIDE THE REGION- Canadian wildfire smoke triggered health alerts from Environment Canada yesterday as the country remains on track for its worst-year ever of destruction amid an early start to its intense wildfire season. The smoke has polluted air over Toronto and Ottawa on the back of blazes in nearly all of Canada’s provinces and territories. “Smoke plumes from local forest fires as well as forest fires in Quebec have resulted in deteriorated air quality,” Environment Canada said, putting air quality in category 10+, the worst level on Environment Canada's Air Quality Health Index. The smoke from the Canadian wildfires has moved south, covering much of the eastern US and Great Lakes to impact New York City.

The story grabbed headlines in the international press: Reuters | Bloomberg | CNN | NBC News

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WATCH THIS SPACE #1- A new green hydrogen project in Egypt? A consortium comprising real estate developer GV Developments and unnamed companies from Egypt, the US, and France will sign the framework agreement for a utility-scale green hydrogen and ammonia production project in Egypt’s Tarboul Industrial City by the end of the month, GV executives confirmed to Enterprise Climate yesterday. “Final contracts will be signed at a later stage,” GV Group Chairman Sherif Hamouda said. “This shows how far Tarboul City is faring in terms of sustainability and taking the lead in the green industry,” said GV Developments Group Chief Business Development Officer Ahmed Abdel Ghany. They did not name the companies involved in the consortium nor the plant’s projected production capacity or cost.

WATCH THIS SPACE #2- Muscat wants to overhaul public transport in a bid to reach net zero: The Greater Muscat Structure Plan has been submitted to Oman’s Housing and Urban Planning Ministry in a bid to help the country realize its carbon-neutrality targets by 2050, The National reports. The new sustainable mobility plan — due to be officially published in 3Q — involves the establishment of a light railway spanning some 54 km, water taxis to cover the full length of Muscat’s 175 km coastline, and the launch of a new bus system in a bid to put approximately a third of Muscat’s population within a 20-minute walk from public transport. Some 1.5 mn cars were registered in the country last year alone partly on the back of inadequate public transport networks.

WATCH THIS SPACE #3- Egypt ramps up public sector spending on renewables: Egypt plans to increase public green investments to 50% of total investments by FY 2024-25, up from the current 30-40%, according to a Planning and Economic Development statement. A draft economic and social development plan, presented by Planning Minister Hala El Said before the Senate, sets out targets for the government to complete the second phase of the climate risk mapping project, expand the industrial emission monitoring network by adding 13 new monitoring points, and carry out 12 field research trips to monitor water quality in the Mediterranean Sea, Red Sea, and local lakes. The plan has been passed to the House of Representatives for discussion and final approval.

WATCH THIS SPACE #4– Bonn Climate Change Conference kicks off without final agenda: The Bonn Climate Change Conference — set to conclude on 15 June — has kicked off without agreeing on a final agenda for technical discussions, casting doubts on whether the conference will yield a concrete program for COP28, Reuters reports. The Bonn conference aims to prepare decisions for adoption at COP28 and is considered a pulse check for how ambitious talks will be at the global climate conference.

Essential preparations for COP28: Although months of discussions have been taking place since COP27 in Egypt, no agreement has been reached on adopting the agendas proposed by the COP permanent subsidiary bodies for the Bonn conference, UN Subsidiary Body for Implementation Chair Nabeel Munir said at Bonn. While the non-adoption of an agenda is “not uncommon in a party driven process,” making as much progress as possible during Bonn is crucial, since the conference will set the technical groundwork for the political decisions required at COP28, said executive secretary of the UN Framework Convention on Climate Change Simon Stiell.

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WATCH THIS SPACE #5- Carbon removal industry’s fate in the balance? A leaked UN document says that nature-based carbon dioxide removal (CDR) methods — such as tree-planting — are preferable to those that use machines or other technology, Bloomberg reports. If published, the note could have negative repercussions for the carbon offset market, which is estimated at USD 2 bn today. The note refers to direct air capture — grabbing carbon directly from the atmosphere — rather than carbon capture and storage technologies that capture carbon from the emission source.

What’s the UN’s reasoning? According to the UN note, the effectiveness of direct-air capture of CO2 in mitigating climate change is “technologically and economically unproven,” given that it is only able to remove a few thousand tons of carbon a year and remains expensive and energy intensive. Technology-based removals are also “not suitable for implementation in developing countries and do not contribute to reducing the global mitigation costs,” the note added.

Nature-based solutions aren’t all positive either: While nature-based solutions are cheaper and more established, they “have a shaky history when it comes to reliability and durability,” not to mention that they require wide tracts of land to be effective, Bloomberg said.

ALSO- Governments are realizing there is much to gain from the carbon market: A growing number of governments want to capitalize on the USD 2 bn market by taxing, regulating, or restricting trade in credits generated within their borders, Bloomberg reported, citing the governments of Indonesia, Kenya, and Honduras. By regulating the carbon market, governments can raise revenues or collect credits that could be put toward their own national climate goals, as well as gain “a slice of the revenues made by foreign project developers.”

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WATCH THIS SPACE #6- A new EV chapter for Ferrari: Italian luxury automaker Ferrari’s factory for electric supercars will launch operations in June 2024, CEO Benedetto Vigna told Bloomberg on Monday. The automaker plans to unveil its first fully electric vehicle in the fourth quarter of 2025, Vigna said. He added that battery-only and plug-in hybrid models will dominate the automaker’s portfolio during the second half of the decade.

WORTH READING- Rich countries could pay reparations for excessive emissions: Over-emitting rich countries could be liable to pay up to USD 192 tn in climate reparations to the rest of the world by 2050, analysis published in the journal Nature Sustainability on Monday showed. Most of the reparations would be owed by the US, the UK, and the EU, which are the world’s top emitters, according to tweets by Jason Hickel, co-author and professor at the Institute of Environmental Science and Technology at the Autonomous University of Barcelona. The study’s scope only covers reparations owed for atmospheric appropriation, Hickel said, stressing that this should be considered in addition to other costs related to transition, adaptation, and damages. Read the full thread here.

Atmospheric appropriation? “Not all countries are equally responsible for the depletion of carbon budgets, however; some nations have contributed more to causing this crisis than others. This disproportionate historical responsibility is problematic from a climate justice perspective that recognizes the atmosphere as a shared commons, to which all people are entitled to a fair and equitable use,” the research says.

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THE DANGER ZONE- New record: CO2 emissions are now 50% higher than pre-industrial volumes, Reuters reports, citing research by the US National Oceanic and Atmospheric Administration (NOAA) and the Scripps Institute of Oceanography, both of which measured greenhouse gas emissions above a volcano in the US. Atmospheric carbon dioxide levels observed above the Mauna Loa Atmospheric Baseline Observatory in Hawaii reached 424 parts per mn (ppm) last month, up 3 ppm from the previous record in 2022. CO2 emissions are typically recorded in May because that is the month carbon levels peak in the Northern Hemisphere, Reuters notes, adding that Mauna Loa Atmospheric Baseline Observatory began recording GHG emissions back in 1958 when average emissions totaled 320 ppm. The steady ascent in carbon levels since records began is “a direct result of human activity,” the newswire quotes NOAA Administrator Rick Spinrad as saying.

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CIRCLE YOUR CALENDAR-

Saudi Arabia will host the Arab-Chinese Business Conference next Sunday, 11 June and Monday, 12 June in Riyadh. The conference will bring together CEOs, business leaders, investors, and entrepreneurs from the Middle East and China to collaborate on new trade and investment initiatives in different sectors, including renewables and minerals. A panel discussion titled Clean Energy and Renewables – Pathways to Emissions Reduction is scheduled on the first day, according to the program (pdf). The second day will focus on the localization of renewable energy and on value chain opportunities in mining.

The UAE will host The Arab Green Summit on Tuesday, 13 June to Wednesday, 14 June in Dubai. The two-day summit will bring together industry players and experts for conversations on climate change and sustainability and solutions for concurrent climate-related issues in the region. Key themes to be addressed during the summit include industry decarbonization, renewable and clean energy potential and implementation, sustainable building and construction and others.

Morocco will host the Bloomberg New Economy Gateway Africa on Tuesday, 13 June to Wednesday, 14 June in Marrakech. The event will bring together stakeholders from the private and public sector to discuss the world’s most pressing topics and assess potential solutions. Those include the impact of a decelerating global economy, spiking food and energy prices, supply-chain shocks and risks of distress among sovereign borrowers.

France will host The Summit for a New Global Financial Pact on Thursday, 22 June to Friday, 23 June in Paris. The two-day summit will bring together heads of states and heads of multilateral development banks, international organizations, the private sector and international NGOs to shape a new finance “toolbox” and “pave the way towards a more balanced financial partnership between the north and south.” It will also see new agreements in a bid to relieve debt distress and allow countries to access additional financing to invest in sustainable development and slash emissions.

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

Masdar-led consortium secures land for mega wind farm in Egypt: UAE’s Masdar, Infinity Power, and Hassan Allam Utilities signed a land allocation agreement with the Egyptian government for the consortium’s planned 10 GW wind farm, according to a press conference aired on Egyptian state television yesterday (watch, runtime 37:05). The agreement comes eight months after the companies signed an MoU on the sidelines of COP27. Details on when the project is expected to come online were not provided, but the wind farm is expected to cost c. USD 10 bn.

What we know: The project will produce 47.7k GWh of clean energy annually, which will save the country some USD 5 bn per year by minimizing the need for natgas consumption, Masdar CEO Mohamed Jameel Al Ramahi told the press (watch from 7:59). The onshore wind project is set to be one of the largest wind farms globally and the largest in Africa and offset nearly 24 mn tons of CO2 equivalent annually, according to a press release (pdf).

More details: The project, which will be located in Egypt’s Sohag governorate, will offset as much as 10% of Egypt’s total carbon footprint, according to Al Ramahi. The developers will in the “coming period” carry out feasibility, investor onboarding and environmental studies to bring the project online, Al Ramahi said. The developers expect the project will reach financial close in no less than a year, he added (watch, runtime, 17:29). It is expected to help Egypt meet its targets of sourcing 42% of its energy from renewables by 2030, according to the statement.

Export potential? The Egyptian government did not clearly state if the energy generated from the consortium’s wind plant would be exported to foreign markets, but noted it is is looking to export energy in general to Libya, Sudan, and to the GCC through its planned interconnector with Saudi Arabia, and to Europe via its 3 GW Greece-Egypt Interconnector (GREGY) during the presser (watch, runtime, 20:08). Infinity Power — part of the developers on the 10 GW wind farm — signed an MoU last month with Greece-based Copelouzos Group to explore the feasibility of jointly developing renewable energy projects to supply the 3 GW interconnector.

Big FDI potential for Egypt: The consortium is expected to bring in an estimated USD 20 bn in direct investments into the country — USD 10 bn through the 10 GW wind plant, and USD 4 bn for their green hydrogen plant, which is planned to have a 480k ton yearly generational capacity, and a final USD 6 bn to bring online the 7 GW of clean energy that will power their green hydrogen facility, Al Ramahi said (watch, runtime, 30:37).

Saudi chemical manufacturer SABIC Agri-Nutrients shipped its first 5k metric ton load of low-carbon ammonia to Taiwan, according to a statement. The shipment originated from Jubail and was shipped to the Taiwan Fertiliser Company (TFC). An expected date of arrival and details on whether the shipment is blue or green ammonia have not been disclosed.

SABIC is on a roll: SABIC shipped a 5k ton load of low-carbon ammonia to India in May, an unknown quantity to Japan in April, and 25k tons of low-carbon blue ammonia to South Korea last November.

Ma’aden is not far behind: Saudi mining company Ma’aden signed an agreement with TFC in March to export an unknown volume of blue ammonia, one week after inking an agreement with Japanese industrial conglomerate Mitsui & Co, marking the mining companies first planned shipments to both Taiwan and Japan.

REMEMBER- Blue ammonia — the same as conventional ammonia but with the CO2 byproduct captured and stored during production — is a carrier for hydrogen, which many in industry are tipping as one of the fuels of the future for hard-to-decarbonize industries. Blue ammonia can be used to produce clean urea fertilizers, to fuel ships, to power cement production more sustainably, and to fire factories.

A new climate-focused investment platform before COP28? Bahrain-based alternative asset manager Investcorp plans to have a new climate-focused investment platform up and running before COP28 kicks off in November, Co-CEO Rishi Kapoor told The National. The company is in the process of establishing the new climate-focused growth capital platform, which is “already beyond the initial creation and conceptualisation stage,” Kapoor said. The final size of the funding Investcorp plans to raise for the new investment vehicle is yet to be decided, he said.

What we know: The new investment vehicle will grab stakes in companies operating in various sectors including mobility, climate technology, carbon management, and energy transition and storage industries, Kapoor said. Investcorp will make necessary growth capital accessible to energy transition technology companies that require funding to grow. It is set to invest between USD 25 mn and USD 75 mn either directly or through partners to increase green assets under its private equity portfolio.

What they said: “By the time COP28 comes around, we're going to have all the building blocks and the foundation well in place to be able to deliver on the commitment to be a steward of investor capital, towards the commercial scale-up of these technologies,” Kapoor said, adding that North America will be a leading target market for the new investment fund, with possible investment targets in Europe, parts of Asia, and the Middle East.

Investcorp is on a roll: Tuesday’s announcement comes weeks after the company acquired a controlling stake in China’s renewable energy critical components manufacturer Shandong Jianuo Electronics, marking the asset manager’s “first control buyout in China.” Its first controlling buyout in the world’s largest economy came months after it partnered with Hong Kong-based private equity investment arm Fung Capital to set up a USD 500 mn fund to invest in mid-cap companies across China’s Greater Bay Area (GBA).

Ignis to sell EUR 300 mn of its solar portfolio: Spanish renewables developer Ignis Energia is selling five solar power projects worth some EUR 300 mn, reports Spanish newspaper Expansion in a story picked up by Reuters, with the renewable energy firm hiring investment bank Lazard to work on the sale. The portfolio of projects up for sale has a combined electricity capacity of 380 MW that is expected to come online late 2024.

The Egypt connection: Egyptian financial institution EFG Holding’s clean energy investment platform Vortex Energy signed an agreement in 2021 to invest EUR 625 mn in the company for what media reported was a 49% stake. Vortex is making incremental equity investments in the firm, announcing separate EUR 222 mn and EUR 46 mn commitments during 2022. The investment was made through the renewables-focused Vortex Energy IV Fund, which reached its first close of USD 200 mn in July 2021.

The next round of investment is expected soon: Vortex said last year that it would invest another EUR 176 mn in the company in 1Q 2023, with the remaining EUR 181 mn coming after.

Ignis is one of the largest solar energy companies in Spain: The company has 20 GW of projects under development and 4.5 GW of assets under management.

Automakers using new tech to extract lithium from brine for use in EV batteries: As automakers set ambitious EV production targets that may require a 20-fold increase in lithium supply, companies are looking to shift from mining lithium from hard rock to mining it from brine, where the mineral is more abundant but less efficient to extract. However, newly developed tech is making mining lithium from brine more feasible, CNBC reports.

Why had they previously shied away from brine? Traditional methods of mining from brine involve evaporating it in massive pools over 18 months until high concentrations of lithium are left behind. While the process is simple, it requires a lot of land and is disruptive to the environment, CNBC said. Lilac is one of several companies piloting “direct lithium extraction,” which puts the brine through a series of chemical processes to extract the lithium before injecting the brine back underground. Through this method, battery-grade lithium carbonate is produced within a matter of hours without the need to transport concentrated brine to a separate processing facility. The company expects to have its first commercial-scale module operating before the end of 2024, while lithium extractor EnergyX aims to have the first two demonstration processing plants running by the end of this year.

Tunisia’s waste management facility coming online this week: Elec’Recyclage Tunisie will launch its waste recycling facility in Tunisia by Friday in a ceremony that will be attended by European Bank for Reconstruction and Development (EBRD) First Vice President Jürgen Rigterink, according to a statement by the bank. The size of the new facility has not been revealed.

What we know about the company: Elec’Recyclage — established in 2008 — collects industrial and non-hazardous waste from over 100 firms operating in the country, and along with waste management and sorting, exports the unneeded refuse to foreign markets where it is repurposed for commercial purposes, according to the EBRD. The company has received a EUR 1.1 mn loan and technical assistance from the EBRD as well as an EU grant of EUR 118k under the bank’s Value Chain Competitiveness Programme for Egypt, Jordan, Morocco, and Tunisia.

OTHER STORIES WORTH KNOWING ABOUT THIS MORNING-

• The Central Bank of the UAE held a meeting with the chiefs of banks operating in the country to outline future banking strategies that prioritize green and climate finance ahead of COP28 and orient the banking industry with the country’s Year of Sustainability agenda. (Wam)

Italy could be axing the use of coal in 2024 — a year earlier than planned — if gas prices remain low, Reuters reported on Monday, citing statements by Environment Minister Pichetto Fratin. Fratin said natural gas — seen as the least polluting fossil fuel — would remain part of the country’s energy transition until 2050 as it boosts its renewable energy capacity. The plan would be a part of the country’s Environment Ministry’s updated strategy for energy and climate, set to be announced later this month. The updated strategy would see Italy targeting an increase of power generation from renewables to two-thirds of the overall generation by 2030 from the current one-third, according to the minister.

Germany plans to provide EUR 2 bn to help fund a planned green steel plant by leading German conglomerate Thyssenkrupp, Reuters reported on Monday. The aid package announced by Germany’s Economy Ministry includes EUR 700 mn to be provided by the German state of North Rhine-Westphalia, where Thyssenkrupp’s headquarters are located. The plant, which comes under Thyssenkrupp’s hydrogen-based climate strategy for steel production, plans to produce 2.5 mn tons of climate-friendly steel annually, with production slated for 2026. It estimates the costs for the site of the plant and related infrastructure at over EUR 2 bn.

OTHER STORIES WORTH KNOWING ABOUT THIS MORNING-

• Brazil’s President Luiz Inacio Lula da Silva has laid out a plan to eliminate deforestation in the Amazon by 2030. (Reuters)
• Japan plans to pour USD 107 bn over the next 15 years into boosting the country’s hydrogen supply. (Reuters)
• India intends to offer USD 455 mn in incentives for battery storage projects. (Reuters)