World Bank extends EUR 113.6 mn loan for Tunisian wastewater PPP contracts

Good morning, wonderful people. We have a few climate stories making ripples in the region as we slide into the weekend.

THE BIG CLIMATE STORIES- The Tunisian government and the World Bank have signed a EUR 113.6 mn loan agreement to back the country’s wastewater projects and Saudi Aramco’s venture subsidiary Aramco Ventures has invested an undisclosed sum in the latest financing round by British sustainable fuels startup OXCCU.

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

THE BIG CLIMATE STORY OUTSIDE THE REGION- Arctic summers could have no ice as early as the 2030s under high emission scenarios, decades sooner than scientists predicted, according to research published in Nature Communications. Under previously held best case warming scenarios by the UN-backed Intergovernmental Panel on Climate Change, the Arctic was projected to see Septembers without sea ice as soon as 2050. The new research, however, indicates that even under lower-emissions predictions, the same outcome is inevitable between 2030-2040. “It has become too late to save the Arctic summer sea ice,” study author from the University of Hamburg Dirk Notz said, adding that “there’s nothing really we can do about this complete loss anymore, because we’ve been waiting for too long.”

The story grabbed headlines in the international press: Bloomberg | The Guardian | AFP | CNN | New York Times | Washington Post

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WATCH THIS SPACE #1- Egypt-KSA interconnection project testing will commence: Japan’s Hitachi ABB Power Grids and the Saudi Electricity Company will begin testing the transformer stations for its 3 GW electricity linkup between Saudi Arabia and Egypt in July, Asharq Business reports, citing sources it says have knowledge of the matter. The trial operations for the USD 1.8 bn Egypt-Saudi electricity interconnection are set to begin in May 2025, with an official operational launch set for later in the same year.

WATCH THIS SPACE #2- A possible CBD green bond issuance this week? The Commercial Bank of Dubai (CBD) said a decision might be made this week on its debut green bond issuance, it said in a disclosure (pdf) to the DFM yesterday. The bank says it has not decided on whether it will or will not proceed with any public market debt issuance at this stage, but confirmed it has hired banks to “evaluate the potential issuance of a senior unsecured green bond.” The clarification was released the same day Reuters reported the bank plans to raise USD 500 mn through its inaugural sale of five-year green bonds at an initial price guidance of around 175 basis points over US Treasuries, citing a document it has seen.

WATCH THIS SPACE #3- EU renewables talks set to resume soon: The European Commission is still in negotiations with member states to reach an agreement on scaling up renewable energy by 2030, EU Energy Commissioner Kadri Simon told Bloomberg yesterday. EU policymakers decided to postpone a vote on raising the share of renewables after France opposed the law on grounds that it wanted more clarity on how nuclear power would be treated. The French plan to reopen the draft legislation has received criticism from several member countries, including Spain, which described the move as a “very dangerous exercise.” The bloc’s energy ministers are set to meet in Luxembourg on 19 June to discuss the deadlock if not solved before then, Bloomberg writes.

One reason France is balking? France says it needs to maintain its current nuclear capacity amid a forecasted surge in power demand by 2035, Reuters reports, citing a report by grid operator RTE. Electricity use is expected to rise by 10 TWh per year on average over the next decade to between 580 and 640 TWh in 2035 on the back of a growing demand for electric vehicle and battery plants. The report estimates an average of 350 TWh of nuclear power availability per year by 2035, yet stresses the need to extend the lifespan of the country's other reactors to 60 years to accommodate the surge in energy demand over the decade.

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WATCH THIS SPACE #4- We’ll have to pay more to fly green: A transition to net zero would mean higher air fares for passengers for decades, The Telegraph reports, citing comments by IATA Director General Willie Walsh. “People have asked me, what’s this going to mean for fares? It will mean higher fares. Because sustainable aviation fuel (SAF) is more expensive than traditional jet kerosene,” Walsh says. Passengers have already been grappling with double-digit percentage rises in fares since last year due to inflationary pressures, but Walsh warns that increases even if inflation falls due to the added cost of airlines switching to SAF.

REMEMBER- The EU agreed in April to set binding targets for European aviation to boost its use of SAF in a bid to decarbonize the industry. The proposal aims to increase the use of SAF by ensuring fuel suppliers have 2% of the fuel accessible at EU airports as SAF in 2025, rising to 6% in 2030, 20% in 2035 and 70% in 2050. The EU carbon market is set to provide about EUR 2 bn to help airlines switch to SAF. Some 1.2% of fuels must also be synthetic fuels from 2030, rising to 35% in 2050. Aviation is a difficult sector to decarbonize and net zero aircrafts are not expected for another 10 years.

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DATA POINT #1- Most money invested in passively managed mutual funds that track ESG indices fail to have an impact in the fight against climate change, Bloomberg reported this week, citing a study. Researchers divided environmental, social, and governance indicators into three categories: Broad, light green, and dark green. The dark green indices refer to “genuinely sustainable assets,” while the other, passively run indices have little impact on sustainability. According to the findings, only 5% of an estimated USD 190 bn of assets under management followed the dark green indices.

DATA POINT #2- Over half of Africa’s 375 GW renewables portfolio is in North Africa, with Egypt and Morocco leading the pack, an outlook report (pdf) by Africa Energy Chamber finds. Wind energy has the highest announced renewable capacity on the continent, currently standing at 134 GW, while solar came in close second with 120 GW and green hydrogen third at 112 GW. Egypt and Morocco represent almost half of the announced wind capacity, around 42% of solar capacity and 40% of green hydrogen.

And it will be a bit of a rollercoaster when green hydrogen picks up: Africa’s share of solar and wind in renewable capacity is expected to increase until 2025 before hydrogen begins to gain traction, the report finds. Solar and wind contribute 80% of green energy capacity in the continent today, and the share is expected to increase to 85% by 2025, before falling five percentage points in the later half of the decade and then down to 75% between 2031-2035 as green hydrogen capacities begin to pick up. Over 75% of Africa’s announced renewable capacity is still in the concept stage with only 7% currently in operation, the report adds.

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THE DANGER ZONE- CCS is no easy way out: Excessive reliance on carbon capture and storage technology (CCS) could lead to the world missing the 1.5global warming target, the head of the Intergovernmental Panel on Climate Change Hoesung Lee told The Guardian this week. Lee warned countries against overuse, adding it was likely that global temperatures would surpass 1.5°C above pre-industrial levels, but could then be pushed to return to below 1.5°C by the end of the century. “The jargon for that is the overshoot,” he said. “Carbon dioxide removal methods will be much in demand if that overshoot indeed occurs,” Lee added.

Overshoot = increasing warming: “But there will be a cost to doing that. There’s no free lunch. And that cost includes that the longer the period of overshoot, there will be additional global warming, and there will be consequences of increased warming. There is also the possibility of positive feedback from that additional warming, creating more losses and damages during the overshoot period,” he said. “So one wishes to avoid such an overshoot scenario.”

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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.

A helping hand for Tunisia: The Tunisian government and the World Bank have signed a EUR 113.6 mn loan agreement to back the country’s Sanitation Public-Private Partnership (PPP) Support project, according to a statement released this week. The project aims to enhance the quality of wastewater management services in select areas in the country and support the country’s National Office of Sanitation of Tunisia (ONAS) management of PPP contracts for sanitation services provision.

What we know about the project: The project comes under the government’s steps through ONAS to develop PPPs through regional public service delegation contracts, the statement said. It will be structured under three main components: wastewater management infrastructure rehabilitation and retrofitting, wastewater management infrastructure operation and maintenance, and institutional backing and project management for ONAS.

What they said: “This project will support improved water supply and sanitation services for an estimated two mn direct beneficiaries — more than 500k households — in six governorates during the ten years of implementation," said World Bank Country Manager for Tunisia Alexandre Arrobbio.

REMEMBER- ONAS awarded the Tunisian water industry's first public-private partnership to a consortium led by French water utility company Suez in April. ONAS chose Suez, Segor, SCET Group, and BIAT1 to operate the public wastewater treatment service for Sfax, Gabès, Medenine, and Tataouine governorates. The 10-year, EUR 200 mn contract will be financed by the World Bank and by the Tunisian state, Suez said at the time.

Aramco Ventures supports British SAF production startup: Oil giant Saudi Aramco’s venture subsidiary Aramco Ventures is participating in the latest financing round by British sustainable fuels startup OXCCU led by Clean Energy Ventures, according to a company statement (pdf) published yesterday. OXCCU raised USD 22 mn to accelerate its efforts to commercialize its method of converting hydrogen and CO2 into sustainable aviation fuel (SAF) and other green fuels, the statement said. Aramco’s share of the total investment secured by OXCCU was not disclosed.

Who were the other investors? The financing round saw participation from first-time investors including Italian oil company Eni’s venture arm Eni Next, United Airlines Ventures Sustainable Flight Fund, and Braavos. Existing investors Kiko Ventures and the University of Oxford contributed to this round, as well as Trafigura, TechEnergy Ventures and Doral Energy-Tech Ventures.

A one-stop-shop for SAF production: The startup’s Oxefuel is made directly from electrified CO2 through a one-step process that creates a circular economy for aviation fuel, according to the company website. The startup does this through a “novel, robust iron-based catalyst and process” that can convert CO2 and green H2 from water into fuels. The new technology can reduce SAF costs by cutting capital costs by 50% while producing fewer byproducts, the statement said.

One merger to rule them all: Oman’s Nama Holding Group, the holding company of state-owned power sector entities in the country, has announced the merger of all power supply and distribution entities under two entities: Nama Electricity Distribution and Nama Supply, ONA reported earlier this week, citing statements by the group’s executives. The two entities are replacing Muscat Electricity Distribution Company, Mazoon Electricity Company, Majan Electricity Company and Tanweer Company.

Why now? The move comes under efforts to review costs, increase efficiency of the systems, and develop provided services, Ahmed Amer al Mahrezi, acting CEO of Nama Group said. ‘It is part of a comprehensive initiative to review the electricity sector’s costs and restructure the distribution and supply companies,’ the company was quoted as saying by Muscat Daily.

REMEMBER- The Oman Power and Water Procurement Company (OPWP) rebranded to Nama Power and Water Procurement under Nama Group last month.

Spain, Morocco seek to boost partnerships on renewables and more: Spain’s Secretary of State for Trade Xiana Mendez and a delegation of 58 Spanish companies are in Casablanca for a three-day visit intended to boost local partnerships between Moroccan and Spanish companies, Moroccan World News reports. The delegation will discuss partnerships in renewable energy, water management, environment, transport infrastructure and more. The visit will conclude today, following the end of a B2B dedicated day with 130 meetings scheduled.

What was on the agenda? The opening event — attended by Morocco’s Minister of Trade Ryad Mezzour, Spain’s Ambassador to Morocco Ricardo Diez-Hochleitner, and the President of the General Confederation of Moroccan Entreprises — was preceded by two panel discussions on existing investment opportunities in Morocco and the tools available for companies to finance those opportunities. Subsequent meetings also discussed avenues to promote relations between local stakeholders, and featured workshops on renewable energy and education.

REMEMBER- Earlier this year Spain and Morocco signed 19 MoUs, including renewable energy and water management agreements, and extended a credit line worth up to EUR 800 mn “to promote investments in sectors such as railways, water, agri-food, and tourism.”

ALSO WORTH NOTING-

• US Secretary of State Antony Blinken met with Saudi Crown Prince Mohammed bin Salman in Riyadh to discuss increasing cooperation in clean energy and tech. (CNN)
• Argentina has expressed interest in cooperating with Egypt on renewable energy. (Statement)

Paris to plant climate-resistant trees: The French capital intends to plant some 170k trees by 2026, including ones that are resistant to heat in anticipation of rising temperatures in the coming years, Bloomberg writes. The new plan could see Paris plant heat-resistant trees such as the Turkish hazel, the Montpellier maple, and the European nettle tree instead of the traditional chestnut, linden, and Japanese pagoda trees which have lined Parisian streets since the 19th century. “We’re going to diversify our trees ahead of climate change and an increasing number of heat waves,” said deputy mayor for green spaces Christophe Najdovski. “We need species that will be able to handle the stress of not having water.”

Egypt’s four telecoms companies are getting a taste of renewables: Egypt’s New and Renewable Energy Authority (NREA) has signed contracts with the country’s four mobile network operators for the conversion of their premises to operate on clean energy, according to a statement. The contracts were signed with We, Orange Egypt, Etisalat Misr, and Vodafone Egypt.

What we know: The details provided are scant, but according to the contract, NREA will sell energy generated from its affiliated stations to the telecom operators so they can operate their premises on clean energy, according to the statement. The cost, the power capacity to be provided, and the duration of the contract have not been disclosed.

All part of Egypt’s renewables drive: The move is in line with telecom operators’ aim to transition to renewable energy in providing ICT services, CIT Minister Amr Talaat said in the statement. The step is also in line with Egypt’s strategy to boost the use of renewable energy and reduce reliance on traditional energy sources, Electricity Minister Mohamed Shaker said, adding that Egypt aims to meet its targets of sourcing 42% of its energy from renewables by 2035 after reaching a 20% target last year.

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KSA’s Red Sea Global to use Partanna’s carbon-neutral concrete for landscape nursery project: Bahamas-based net zero concrete firm Partanna has signed an agreement to supply concrete pavers for Saudi real estate developer Red Sea Global’s (RSG) 1 mn sqm landscape nursery, according to a statement. The agreement — which follows an MoU inked eight months ago during COP27 — will provide Red Sea Global with 11k net zero concrete pavers. Partanna uses repurposed seawater brine generated from desalination projects to create non-toxic building materials that can absorb CO2 instead of using traditional cement materials, which account for 8% of the world’s total carbon emissions.

OTHER STORIES WORTH KNOWING ABOUT THIS MORNING-

• The UAE is nixing registration fees for firms issuing green debt instruments —- including sukuks and traditional climate-aligned bonds — this year in a bid to support funding for climate-friendly projects. (Statement)
• Iraq’s Electricity Ministry has approved TotalEnergies’ planned 1 GW solar plant in Iraq’s Basrah governorate following an agreement inked in April. (Iraq News Agency)
• China’s Envision Energy will supply wind turbines with a capacity of 1.67 GW to power Neom’s USD 8.4 bn green hydrogen project, which is slated to become fully operational in 2026. (Statement)
• Abu Dhabi has managed to reduce the use of single-use plastic bags by 95% since a ban was implemented in June 2022. (Wam)
• Qatar’s Alfardan Group signed an MoU with e-waste recycling company Electronics Recycling Factory to recycle its electronic waste. (The Peninsula)

Exxon wants the EU to let the market be: The EU should follow the example of US policy with regards to climate action and “let the market work” to avoid pushing companies away with limiting rules, Bloomberg reports, citing comments made by Exxon Mobil CEO Darren Woods. “I think it’s a huge mistake to be picking winners and losers and focusing on specific technologies,” Woods said. “Instead we should be looking more broadly at letting the markets figure out which solutions provide the most emissions reductions for the lowest cost.”

Pass the subsidies: Woods was referring to the Biden administration’s landmark Inflation Reduction Act passed last year, which offers USD 370 bn in tax subsidies to slash carbon emissions. The package is stirring interest in CCS technologies, which are otherwise seen as costly and likely to fail. Exxon has committed to spending USD 17 bn on low-carbon initiatives until 2027, including plans for carbon capture.

OTHER STORIES WORTH KNOWING ABOUT THIS MORNING-

• Italy-based Eni energy company’s renewables subsidiary Eni Plenitude has completed construction of a utility scale battery plant with an installed capacity of 15 MW in the Italian island of Sardinia. The plant will be complemented with an energy storage unit totaling 9 MW. (Reuters)
• A Shell advertising campaign promoting green initiatives has been banned in the UK for not making it clear to consumers that most of the company’s business is based on fossil fuels. (The Guardian)
• Japanese financial conglomerate SBI Holdings and climate tech startup Asuene established a Japan-based JV for regional carbon trading called CarbonEX. The exchange will host both private-sector voluntary credits and non-fossil certificates. (Bloomberg)

Air quality monitoring stations are unintentionally capturing large amounts of airborne DNA from animals and plants helping scientists track biodiversity, BBC Future Planet reports, citing a paper (pdf) published in Current Biology. Scientists have been able to extract airborne DNA from air quality monitoring stations’ filters in the form of skin cells, saliva, hair, and feces. The paper looked at data collected from air quality filters in Scotland and London in 2021 and 2022, and collected environmental DNA from more than 180 different plants, fungi, insects, mammals, and amphibians.

Why is this important? Air monitoring infrastructure “may represent a tremendous opportunity to collect high resolution biodiversity data on national scales,” the study concluded, adding that it can allow scientists to analyze changes in species “on geographical and temporal scales … unforeseen until recently.”

Some unique benefits: Air quality stations around the world collect data on a daily or weekly basis in a highly regulated and standardized way, which is “unheard of in biodiversity science,” lead author of the study Elizabeth Clare explained. Traditional biodiversity monitoring methods — which involve setting up camera traps or tracking footprints — are often more resource-intensive and expensive than air quality monitoring, Clare adds.

But it can’t capture everything: While the consistency in data collection helps scientists analyze changes given the access to a “complete picture of what is happening in the area,” these stations are often not operational in biodiverse places, associate professor at the University of Gothenburg in Sweden Matthias Obst points out. Additionally, there is likely to be a much higher rate of false positives than in the case of conventional methods.