KSA inks USD 5.6 bn EV partnership agreement with China’s Human Horizons

Good morning, ladies and gents. The regional climate updates have tapered off slightly as we hit a mid-week slump, but there are a couple of big ripples coming from KSA and the UAE.

THE BIG CLIMATE STORIES- Saudi Arabia has signed a USD 5.6 bn agreement with Chinese electric car manufacturer Human Horizons to develop, manufacture, and sell electric vehicles and UAE renewables giant Masdar has signed a roadmap agreement with Kazakhstan to develop a 1 GW wind farm with a battery energy storage systems facility.

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

HAPPENING TODAY- There’s a handful of events kicking off in the region today:

• Innovation Summit Saudi Arabia is opening its doors in Riyadh and running through to tomorrow hosting sessions on how digitization can support the decarbonization of oil and gas and scaling up hydrogen among other topics.
• The UAE is hosting The Arab Green Summit today and tomorrow in Dubai, bringing together industry players and experts for conversations on climate change and sustainability and solutions for concurrent climate-related issues in the region.
• The Bloomberg New Economy Gateway Africa is kicking off today in Marrakech, Morocco and running through to tomorrow, gathering stakeholders from the private and public sector to discuss the world’s most pressing topics and assess potential solutions.

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THE BIG CLIMATE STORY OUTSIDE THE REGION- Biparjoy alert for India, Pakistan: Authorities in India and Pakistan are on high alert as they brace for the “extremely severe” Biparjoy cyclone set to hit some of the two countries’ coastal regions this week. The wind speed of the cyclone could rise to as high as 150 kilometers per hour, crossing over India’s Saurashtra and Kutch and neighboring Pakistan coasts on Thursday, the India Meteorological Department said yesterday. Concerns over the cyclone have pushed authorities to begin evacuating thousands of people away from impacted regions, with Pakistan alone evacuating over 80k people from coastal cities in Sindh and moving others in dangerous buildings in Karachi to safer zones. This year’s first severe cyclone for the two countries comes as the region continues to see climate-driven extreme weather conditions.

The story grabbed headlines in the international press: Reuters | Bloomberg | The Associated Press | The Guardian | BBC

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We have tons more in the pipeline — come help us build new publications. We offer the chance to work in a fast-paced newsroom on a broad range of topics and in a variety of formats. Our goal is simple: To create value for our growing community of >250k daily readers by telling stories that matter.

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That said, we're looking for gifted story-tellers from all walks of life and across all professions, as long as they show a keen interest in learning to write about the stories, topics, businesses, and figures moving markets. Egyptian and foreign nationals alike are welcome to apply. So are job-switchers: If you’re an equities analyst tired of the rat race, we’re a great place to come work.

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WATCH THIS SPACE #1- The Qataris’ next big check is going elsewhere: Qatar is planning to pour in more capital in Asia and the US through investments in climate change, infrastructure, and digitization, the country’s sovereign wealth fund’s top dealmakers told Bloomberg this week. “We will continue to deploy in the continent, but a larger share of our investments will be going to the other two regions, given the opportunities we see in the US and in places like China and India,” Qatar Investment Authority (QIA) CEO Mansoor Ebrahim Al Mahmoud said.

Europe also could be getting a taste: QIA — among the top sovereign investors in Europe — also plans to continue backing its leading holdings to handle issues like climate change and energy transition through significant capital if necessary. “We can deploy capital quickly when the right investment is presented to us,” QIA’s Chief Investment Officer for Europe, Turkey, and Russia Ahmed Al-Hammadi said. Last year, QIA became a shareholder in Germany's largest power producer RWE with a 9.1% stake, giving the company sufficient capital to purchase USD 6.8 bn in renewable energy assets from US-based investor-owned energy company Consolidated Edison.

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WATCH THIS SPACE #2- Vodafone Egypt will invest EGP 330 mn this year into renewable energy sources to operate its network, as the Vodafone Group aims to use 100% renewable energy by 2025, Al Mal quotes Vodafone Egypt’s External Affairs Director Ayman Essam as saying. The company will rely on renewable energy supplied by the country’s New and Renewable Energy Authority (NREA), and has already purchased 260 GWh of renewable energy to power its network, Essam said.

WATCH THIS SPACE #3- Poland is suing the EU over fossil fuel car ban: Poland intends to file a lawsuit “in the coming days” with the European Court of Justice over EU regulations prohibiting the sale of combustion engine vehicles starting from 2035, Reuters quotes the country’s Climate Minister Anna Moskwa as saying. The EU rules lack a proper market analysis and do not take into account the full social consequences the prohibition will have, Poland argues. In 2021, Poland raked in c. EUR 3.2 bn from car exports, according to research by Statista.

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CIRCLE YOUR CALENDAR-

Ireland will host the European Climate Change Adaptation Conference on Monday, 19 June to Wednesday, 21 June in Dublin. During the two-day conference, Europe’s leading climate researchers will present the latest climate action tools, decision-support platforms, and prototype climate adaptation services to 500 attendees. The audience includes adaptation experts, policy-makers, local authorities, private sector companies, investors, NGOs, and citizen and youth organizations.

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.

Thailand will host the second workshop on addressing loss and damage from 15-16 July in Bangkok. The workshop will see discussions on pathways to increasing funding for climate-induced loss and damage. The workshop is being held in preparation for the third meeting of the COP27 Transitional Committee in August. The committee is tasked with operationalizing the Loss and Damage Fund, to be approved during the fourth transitional meeting in October.

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

KSA partners with Chinese EV manufacturer Human Horizons: Saudi Arabia’s Investment Ministry has signed a USD 5.6 bn agreement with Chinese electric car manufacturer Human Horizons to develop, manufacture, and sell electric vehicles (EVs), the Saudi Press Agency (SPA) reports. No details were disclosed regarding the location of the facility or a timeline for the launch of the electric vehicles. The agreement was signed on the sidelines of the Arab-China business conference held in Riyadh on Sunday, which saw over 30 agreements signed worth a total USD 10 bn.

Who are Human Horizons? Human Horizons is a Chinese developer of autonomous driving technologies and manufacturer of electric cars under the HiPhi brand, which was the first domestic product to make top sales for luxury electric cars in China. The company has centers in the US, Germany, and Japan. It is unclear whether the new Saudi partnership will include the manufacture of the HiPhi EV.

A Saudi-Chinese copper mining partnership was also inked: Saudi Arabia’s ASK Group and the China National Geological and Mining Corporation signed a USD 500 mn agreement for the development, financing, construction, and operation of an Arabian Shield copper mining project, according to SPA. Copper is one of the critical minerals for EV technologies.

There may be more in the pipeline from China — and KSA welcomes it: The country plans to introduce 1 TW of renewable energy to Africa and the Middle East by 2060, according to SPA. “We came to recognize the reality of today that China is taking, has taken a lead, will continue to take that lead. We don’t have to compete with China, we have to collaborate with China,” Saudi Energy Minister Abdulaziz bin Salman told CNBC on the sidelines of the conference.

Masdar looking to develop 1 GW wind farm in Kazakhstan: UAE renewables giant Masdar has inked a roadmap agreement with Kazakhstan to develop a wind farm in the southern part of the country with a potential production volume of 1 GW with a battery energy storage systems (BESS) facility, according to a statement. The financials of the agreement and a timeline for deployment have not been provided.

We knew this was happening, but it’s bigger than expected: The agreement builds on a previous MoU signed between the parties back in January. The company said at the time that the first phase of the project will generate some 500 MW of clean energy and that it may include a BESS facility.

Masdar aren’t the only ones jumping on the bandwagon: KSA’s Acwa Power signed back in March an agreement with Samruk-Kazyna and the Kazakh Energy Ministry to build and manage a 1 GW wind farm and an accompanying BESS facility.

The UAE is helping Kazakhstan achieve its net zero target: UAE state-owned Abu Dhabi Developmental Holding Company (ADQ) signed a USD 6 bn investment agreement in 2021 with Kazakh sovereign wealth fund Samruk-Kazyna to build two hydroelectric power plants, a wind farm, and solar plant in the country. Kazakhstan has a carbon-neutrality target set for 2060 and another target to source 50% of its electricity from renewables by 2050.

Biofuels plant in Oman set begin within two months: Oman’s first biofuels producer Wakud plans to establish a plant with a capacity of 250 tons per day at an investment cost between USD 120-150 mn in partnership with Omani-British green energy venture X2E, the two companies’ top executives told Zawya. The plant, which will be set up in the country’s Khazaen Economic City, comes as part of a plan by Wakud to boost its production capacity tenfold, they said.

What we know: Construction on the project is set to begin in two months, with a completion timeframe of 16 months, Wakud CEO Maher Al Habsi told Zaywa. Production is expected to begin by the end of 2024, he added. “With this huge factory, we will be ready to produce sustainable aviation fuel and marine fuels by 2025, depending on raw material availability,” he said.

About Wakud: The Omani-based company is a joint venture between Carbon Management Services, the UK’s leading manufacturer of sustainable biofuel process equipment Green Fuels, and Al Habsi to set up a biofuel ecosystem in the Middle East starting with Oman, according to the company’s website. It supplies biofuels to various industries, including construction and shipping, in a bid to help them slash their carbon footprint.

X2E is spending big: X2E plans to invest c. USD 120 mn in Wakud’s biodiesel capacity expansion project, co-founder John Jones told Zawya. It grabbed a 60% stake in Wakud for USD 1.4 mn with an additional USD 3.6 mn expected soon to raise the capacity of the existing facility, he added.

And that’s not all: Wakud also plans to set up a fish-waste recycling facility and a vegetable and fruit waste-to-biogas plant, Al Habsi revealed. “A 50 ton-per-day fish waste-to-biodiesel conversion plant is planned at a cost of USD 5 mn to USD 7 mn. Work is expected to begin by mid of next year,” he said. They plan to make use of abandoned fruits and vegetables at the market next to its factory by recycling them into biogas, he said, with “discussions [currently] underway to secure land for the project.”

A regional expansion? Wakud could also be looking at expanding to Saudi Arabia and the UAE, he said. “About 90k tons per month of used cooking oil (UCO) is available in Saudi. The country has big plans for the sector, and we would like to participate in that,” he said.

Mamdouh Saud Al Saud has been appointed as the CEO of Saudi Arabia’s King Abdullah City for Atomic and Renewable Energy (Kacare), the government research arm said. Prior to this appointment, he served as president of the Islamic University of Madinah from 2020 till 2023.

About Kacare: Established in 2010, Kacare is a government research entity tasked with managing renewables and nuclear energy projects in the country, according to its website. It provides financing for private-sector clean energy projects, works on upskilling the local workforce on green technologies through academic programs and training courses, provides energy data to power companies, and works to increase the country’s nuclear production capacity.

It’s time for the shipping industry to pay up: The shipping industry’s zero-tax status could be changing, with proposals that the industry pay a global levy for its carbon emissions to encourage it to transition away from hydrocarbons, Reuters reports. If applied by the International Maritime Organization (IMO), the levy would help raise an annual USD 100 bn to go towards developing nations hard hit by climate change. The levy is one of the ideas on the agenda of The Summit for a New Global Financial Pact taking place in Paris later this month. The IMO will then meet in early July to potentially set a timeframe for introduction of the levy if momentum is built.

About the proposal: A group of Pacific nations, led by the Marshall Islands, are suggesting a levy that starts at USD 100 per ton, moving upwards from there to make fossil fuels as expensive as cleaner fuels. This could raise up to USD 100 bn in the medium term from the shipping industry, which emits 2.9% of the world's greenhouse gasses. The group of nations want the majority of funds channeled to countries most susceptible to climate change, with the remaining funds directed to developing countries to help them build up green shipping industries. However, the International Chamber of Shipping wants the bulk of the funds raised from the tax to go back to the shipping industry to help it subsidize its green transition.

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Buses are ahead of the game in the EV transition: Nearly half of the world’s buses will be entirely electric by 2032, a decade before passenger vehicles are expected to reach the same mark, Bloomberg reports, citing BloombergNEF’s annual Electric Vehicle Outlook. By 2032, three out of four buses sold will be electric, the report said, whereas commercial trucking is also decades away and scooters are “moving slowly.”

Possible reasons for the faster switch: Government transport initiatives to turn buses electric often replace fossil fuel buses all together rather than keep both on the road, Bloomberg writes, citing examples from Berlin and New York, as well as US school districts. Additionally, the relatively slow speed of buses means that the driving range is extended compared to other vehicles, especially as the batteries can charge up slightly each time the bus stops. Given that most bus fleets park in a centralized area, the logistics of charging are streamlined. The price of EV buses have also become similar to diesel-powered alternatives given that fuel costs are minimal, and the electric buses do not require oil changes, air filters, or spark plugs.

OTHER STORIES WORTH KNOWING ABOUT THIS MORNING-

• Net zero targets set by the world's largest fossil fuel companies are “largely meaningless” given their exclusion of Scope 3 emission targets, short-term reduction plans, and commitments to phase out fossil fuel extraction and production, a new study finds. (Reuters)

KSA’s King Abdulaziz City for Science and Technology (KACST) is looking to manufacture microchips with help from China, the Saudi Press Agency reports. KACST inked an MoU with the China Electric Power and Equipment Company and the Beijing Smartchip Microelectronics Technology Company to jointly develop a microchip designing and manufacturing facility in the country in a bid to support the kingdom’s smart cities, smart grid, and energy digitization projects.

Why is this important? Microchips are the foundation of a range of electronic devices, including computers. They are also important parts of electric vehicles and are essential for the conversion of power generated from renewables projects and in the transmission of energy to power grids.

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Egypt’s SCZone gets E-Tadweer: Waste management platform E-Tadweer has been launched at the Suez Canal Economic Zone (SCZone) to help manage waste from industrial plants at the zone, according to a statement. The online platform will allow for registering types of waste and splitting them depending on their type, and enable the SCZone to monitor the amount of waste generated from each factory. It will also allow investors to benefit from industrial waste that can be utilized in other industries as raw materials, according to the statement.

About E-Tadweer: Launched in 2021 in collaboration with Egypt’s Environment Ministry, E-Tadweer aims to promote the recycling of old electrical and electronic devices in the country to achieve benefits for both consumers and the environment, according to its website.

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A recycled PET market in the UAE? Japan’s Jeplan and Abu-Dhabi based recycling plastic trading platform Rebound signed a letter of intent to set up a recycled PET market in the UAE, according to a statement. Under the agreement, both firms will conduct a joint study on the PET chemical recycling plant in the UAE in a bid to build a demonstration project ahead of COP28. The joint study will be conducted in several stages, with Jeplan focused on quality surveys of used PET bottles in the country, verification of recycling costs and the plant’s manufacturing operations.

OTHER STORIES WORTH KNOWING ABOUT THIS MORNING-

• GE Grid Solution — a renewables arm of General Electric — has been selected as the supplier of three 380 kV T155 gas-insulated substations needed for Neom’s USD 8.4 bn green hydrogen plant in KSA. (Statement)
• The Sharjah Electricity, Water, and Gas Authority met with a delegation from the US Consulate General in the UAE to explore potential partnerships with US companies in sustainable development. (Wam)
• Fitch Solutions predicts a passenger EV penetration rate of 20.4% by 2032 in Qatar as the government steps up efforts on EVs. (Report)

US electric car manufacturer Tesla is looking to rake in c. USD 3 bn by 2030 from its charging agreements from top US automakers Ford Motor and General Motors, Bloomberg reported this week. Per the partnership, Ford and GM customers can purchase a Tesla-made adapter that allows them to access over 12k of the company’s superchargers starting early 2024. Its unique charging port will also be built into Ford and GM’s EVs in 2025. The company’s Superchargers are emerging as the company’s most top deal-making production with a widespread presence in North America, Asia, Europe, and the Middle East. By the end of 1Q 2023, Tesla consolidated its position in EV charging with around 5k charger stations and over 45k charging stalls or connectors globally.