Maersk’s C2X signs USD 3 bn green methanol agreement with Egypt

Good morning, friends. We’re rounding out the week with what feels like a calm day for the climate world, just in relative terms to the past several days.

THE BIG CLIMATE STORY- Egypt signed a framework agreement with C2X — which is owned by AP Moller Holding and AP Moller-Maersk — worth some USD 3 bn for the production of green methanol and its derivatives in the Suez Canal Economic Zone

HAPPENING TODAY- The Global Resilience Forum kicks off today in Dubai and wraps tomorrow, where senior officials will gather to address the evolving security landscape affected by disaster risks in preparation for COP28, Wam reports. The main pillars of the forum include risk governance, private sector cooperation, investment in urban solutions, and data-driven approaches to enhance cities' resilience.

THE BIG CLIMATE STORY OUTSIDE THE REGION- One step closer to new EU climate chiefs: The European Parliament’s environment committee approved yesterday new chiefs of the EU’s climate policy after additional pledges were made to coax lawmakers, Reuters reports. They approved former Dutch FM Wopke Hoekstra to be the bloc’s upcoming chief of climate change policy and Maros Sefcovic to be the proposed EU green policies chief. Both officials secured the approval from at least two-thirds of the committee, with the approval coming a day after they failed to secure the greenlight in a parliamentary hearing. Hoekstra made extra pledges to win over lawmakers, including disclosing how much of the bloc’s funds are poured into fossil fuel subsidies and to take an unyielding stance at COP28 on a fossil fuel phaseout. Sefcovic also promised new EU curbs on microplastic pollution and animal welfare rules this year. However, he did not reveal when Brussels would deliver such pledges.

What’s next: The two officials still require a formal greenlight from the majority of the full EU Parliament in a vote today that is likely to pass.

The lawmakers’ approval also got ink from: Bloomberg | The Financial Times | The Guardian

OVER IN COPLAND- Big Banks are making a larger showing at COP28 compared to last year as their role in climate finance gains urgency: Top brass from Standard Chartered Bank, Citigroup, and Barclays are planning to attend COP28 in the UAE after having been absent in Sharm El Sheikh’s COP27 last year, Bloomberg reported. “Banks need to channel four times as much capital into renewable energy as they do into fossil fuels by the end of the decade for the world to have a chance of achieving net-zero emissions by midcentury,” BloombergNEF estimates found according to the news outlet.

The higher turnout by Big Banks is partially because their regional offices are based in the UAE where COP28 will be hosted in a couple of months. A COP28 spokesperson said in an email that organizers are collaborating with GFANZ, the International Monetary Fund and the World Bank to “unlock the power of the capital markets and incentivize capital and finance at multiple levels.”

Last time banks were at COP, notable steps to facilitate green financing were initiated, but not for long: COP26 hosted in Scotland’s Glasgow saw the unveiling of the Glasgow Financial Alliance for Net Zero (GFANZ) — a collection of many of the world’s biggest lenders and asset managers committed to achieving net zero financed emissions by 2050. GFANZ — which counts JPMorgan Chase & Co. and BlackRock Inc. among its 650 members — was meant to represent a “wall of capital” to finance green solutions, Bloomberg writes, but a recent backlash against ESG investing in the US led to numerous insurance companies from the Net Zero Ins. Alliance — a GFANZ subgroup focused on cutting emissions from insurance underwriting portfolios — to withdraw completely.

REMEMBER- Methods to reduce loan risk premiums is the main focus of financing discussions at COP: At last year’s climate summit, one persistent topic of discussion was how international lenders can reduce the risk for private companies in financing green investments in developing economies, Bloomberg said. Premium added on loans due to risks — including country risk, exchange rate risk, and off-take risks — is one of the highest barriers to climate finance access as it adds a premium to the cost of capital and makes borrowing for renewable related projects more expensive.

SOUNDBITE OF THE WEEK– Global heat records reached “gobsmackingly bananas” levels in September 2023, surpassing the previous 2020 record by 0.5°C, Zeke Hausfather, a Berkeley Earth researcher, said on X. The month’s temperatures were around 1.7°C above pre-industrial levels, above the Paris Agreement target of 1.5°C, due in large part to fossil fuel emissions and El Niño, Bloomberg reports, citing data by Japan Meteorological Agency and the EU’s Copernicus Climate Change Service. This also follows the hottest summer on record, according to a NASA report. “Climate scientists are running out of superlatives to describe 2023,” Bloomberg quotes Hausfather as saying.

Renewables stocks take a big hit due to higher interest rates: The S&P Global Clean Energy Index, which comprises the top 100 renewable energy companies, dropped 20.2% in two months off the back of higher interest rates hitting the sector, the Financial Times reports. Higher global inflation and interest rates raised costs for green energy companies, which usually set long-term contracts that fix the price at which they will sell energy before projects are developed.

Renewables businesses are feeling the pain: Swedish wind turbine developer Vattenfall says its costs rose 40%, Reuters reported in June. NextEra Energy, a US-based wind and solar generator, announced it was cutting its three-year growth plans. “Tighter monetary policy and higher interest rates obviously affect the financing needed to grow distributions to shareholders at 12%,” NextEra CEO John Ketchum told the FT.

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WATCH THIS SPACE- UAE to announce unified price for EV charging before year-end: “A unified price for charging electric cars will be announced at the state level before the end of this year,” Undersecretary for Energy and Petroleum Affairs under the UAE’s Energy and Infrastructure Ministry Sharif Al Olama told Emarat Al Youm. The ministry is currently collecting responses from the emirates of the country regarding the unified tariff, after which the price will be set, Al Olama added. The undersecretary made the statement on the sidelines of the Abu Dhabi International Petroleum Exhibition and Conference (Adipec) conference, which kicked off earlier this week and is scheduled to conclude today.

REMEMBER- Dubai aims to have 42k electric cars on its roads by 2030, and the UAE’s EV market is expected to grow at a CAGR of around 28.5% during the 2023-28 period, according to a recent market research report. Annual EV car sales in the Middle East, including the UAE, is currently at 3-4 mn units. In July, the Dubai Water and Electricity Authority (Dewa) joined the global EV-focused Charging Interface Initiative as a core member, enabling Dewa to establish EV industry standards for charging systems.

WATCH THIS SPACE #2- Jordan plans to update its 2030 renewable energy plans with more ambitious targets by the end of this year or early next year, Energy Minister Saleh Kharabesh said at the Adipec conference this week, according to Reuters. Renewables currently contribute around 27% of the country’s energy mix, while Jordan’s goal has been to reach a 30% contribution by 2030, although officials have previously signaled that it could hit a much higher target of up to 50%.

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CIRCLE YOUR CALENDAR-

The Saudi Green Building Forum kicks off next week from Monday-Thursday, 9-12 October. The forum, hosted by the Saudi Municipal, Rural Affairs, and Housing Ministry, will focus on speeding up the construction industry's transition to carbon neutrality by promoting sustainable practices in energy, water use, and green cities.

MENA Climate Week is kicking off soon in KSA’s Riyadh Boulevard City: The UN-backed climate conference, hosted by Saudi’s energy ministry, will gather policy makers, the private sector and civil society organizations from across the MENA region to discuss climate barriers and solutions between 8-12 October. This is one of four region-specific climate weeks to take place after the UN’s global stocktake report and ahead of COP28 this December.

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

C2X is investing up to USD 3 to produce green fuel in the SCZone: Egypt signed a framework agreement with C2X — which is owned by AP Moller Holding and AP Moller-Maersk — worth some USD 3 bn for the production of green methanol and its derivatives in the Suez Canal Economic Zone, according to a statement. The USD 3 bn price tag is for the initial phase of the agreement, the statement noted, adding that the SCZone, Sovereign Fund of Egypt, the New and Renewable Energy Authority, and Egyptian Electricity Transmission Company inked the agreement with the companies.

The details: The company plans to produce 300k tons of green methanol per year in the project’s first phase, with that figure set to increase to 1 mn by the end of the final phase, the statement said.

REMEMBER- Danish shipping giant AP Moller-Maersk and its parent company AP Moller Holding (APMH) established C2X in September to produce and sell green methanol to the global shipping industry. The firm aims to reach an annual production output of over 3 mn tons by 2030 by pursuing large-scale green methanol projects near the Suez Canal in Egypt and the port of Huelva in Spain, among several other planned locations. The company is 20% owned by AP Moller-Maersk, with the majority 80% stake held by AP Moller Holding.

Maersk has already been laying the groundwork: The company had signed a preliminary agreement with the government during the COP27 climate summit last year to invest as much as USD 15 bn to set up clean fuel projects in Egypt. It is reportedly on course to purchase half of the government’s 545-MW Zafarana wind farm to help power green fuels production. In May, the Egyptian cabinet also approved requests by Norwegian renewables producer Scatec and Maersk to allocate a piece of land in the Gulf of Suez for a 320-MW wind farm to power their green fuel projects.

PROJECT UPDATE- Dewa is buying water from Acwa Power’s Hassyan plant: The Dubai Electricity and Water Authority (Dewa) has signed a 30-year water purchase agreement with Saudi Arabia’s Acwa Power to buy water from phase 1 of its solar-powered Hassyan desalination plant, according to a company statement. Dewa will purchase the desalinated water at a price of around USD 0.365 per cbm — the lowest bid the UAE company received. The agreement was signed by Dewa CEO Saeed Al Tayer, and Acwa Power Chairman and Founder Mohammad Abunayyan.

Project details: The facility has a capacity of 681.4k cbm per day and is set to be one of the largest sea water reverse osmosis plants powered by solar energy. Phase 1 will begin commissioning in 2026. The project is Dewa’s first to be carried out under an Independent Water Producer (IWP) model, and is part of its efforts to increase its water desalination capacity to 730 mn imperial gallons per day by 2030, up from the current 490. Once completed, Dewa will have an output of 670 mn imperial gallons per day.

What they said: “This project supports UAE’s vision to produce 100% of desalinated water by a mix of clean energy and waste heat by 2030,” Al Tayer said, according to the statement.

REMEMBER: Acwa Power was selected to construct and operate the Hassyan plant last month: Dewa tapped Acwa Power in August to construct and operate the AED 3.4 bn (USD 914 mn) solar-powered desalination project in Hassyan. Acwa Power beat the Abu Dhabi National Energy Company (Taqa) bid at the time.

Not the first solar-powered desal plant for Acwa Power: The company inaugurated KSA’s first solar-powered desalination facility last June, the USD 650 mn Jubail 3A independent water desalination plant, which has a production capacity of 600k cbm per day.

Sharjah is getting its largest solar plant: The UAE's Sharjah National Oil Corporation (SNOC) has signed an agreement with Emerge — a joint venture between Abu Dhabi state-owned renewable energy developer and France’s EDF — to set up Sharjah’s largest solar power plant, Wam reports.

What we know: The new solar power station will have a capacity of 60 MW, and is expected to be operational by the end of 2024. The solar facility will be set up at SNOC’s Sajaa Gas complex to provide necessary energy for its operations. It will export the surplus solar energy produced during the day to the Sharjah Electricity, Water, and Gas Authority (SEWA). In return, SEWA will provide SNOC with electricity during the night when demand for electricity is lower.

And more: The surplus would allow for the conversion of more units at SNOC’s complex to operate on electricity rather than gas, leading to lower greenhouse gas emissions.

Italian water engineering firm Cannon Artes has been awarded a contract for a “massive” UAE wastewater treatment project, the firm said at the Abu Dhabi International Petroleum Exhibition and Conference (ADIPEC) this week, according to a statement. The plant will treat industrial wastewater coming from an unnamed UAE-based thermoplastics manufacturer. The value of the transaction was not disclosed.

The timeline: Cannon Artes will take on the turnkey project by 1Q2024 and will be responsible for designing, constructing, commissioning and delivering the plant. It expects to have the site fully operational by the year’s end.

The details: The plant “will cover an area equivalent to two football fields and has the capacity to treat up to 5k cubic meters per day (5 mn liters per day), similar to the needs of a city with 100k population,” Cannon Artes said. It’ll bring in polluted streams from the thermoplastics factory through four inflows, using techniques of equalization, coalescing plate interceptors (CPI), and dissolved gas flotation, to remove unwanted solids, oils, and grease from the water.

The Nasdaq Dubai exchange welcomed the debut green bond listing of Dubai party hotel operator Five Holdings, the exchange said in a statement yesterday. The inaugural listing by Five marks its first appearance on the exchange.

About the green bond issuance: The debut green bond amounts to USD 350 mn with a coupon rate of 9.375%. Its maturity is set for 2028, according to the statement, which added that the listing “underlines Five’s steadfast commitment to sustainable finance and its consistent leadership in Environmental, Social, and Governance (ESG) practices.”

A W for all: The listing of Five’s green bond boosted Nasdaq Dubai’s total value of ESG classified bonds and sukuk listings, bringing it up to USD 26.7 bn. It also contributed to bringing the total value of debt listed on the exchange to USD 118.34 bn, according to the statement.

After dumping Adani Green + Adani Energy, IHC ups stake in Adani Enterprises: Abu Dhabi's International Holding Company (IHC) raised its stake in Adani Enterprises (AEL) to more than 5% to explore further investment options in India, the company said in an ADX filing. This comes around a week after IHC offloaded its minority stake in Adani Green Energy and Adani Energy Solutions to an undisclosed buyer. No financial details were disclosed in the filing.

What they said: IHC said it believes in “the inherent strength of airports, data centres, green hydrogen and various other verticals being incubated under AEL and that AEL is poised to uniquely capitalise on India’s robust growth journey,” the filing read. “[This] further validates AEL's standing as a global leader in incubating new businesses, particularly in sustainable infrastructure, developing global aviation infrastructure and equitable energy transition,” said Adani Enterprises in its own Bombay Stock Exchange filing.

Refresher- IHC has been eyeing a stake in Adani Enterprises since January, when it announced its intention to invest USD 400 mn in the USD 2.45 bn (INR 200 bn) secondary offering of Adani Enterprises. Adani Group has seen major drops in its share prices after the publication of a report by investment research firm and short seller Hindenburg Research, which leveled allegations of fraud and unsustainable debt at Adani Group.

The African Development Bank (ADB) has appointed Malinne Blomberg (LinkedIn) as country director for Tunisia, it said in a statement on Wednesday. Blomberg currently serves as deputy director general for North Africa and country manager for Libya and Mauritania. Since joining the ADB in 2008, Blomberg has served as country head for Egypt, managing a USD 3 bn portfolio.

India’s EV maker Triton plans to set up shop in the UAE: Indian smart mobility startup Triton EV plans to set up an assembly facility in the UAE next year, its Chairman and Managing Director Himanshu Patel told Gulf Today on Tuesday. The move is in line with Triton’s interest to enter Middle Eastern markets, Patel said.

Showing off its state-of-art EV truck soon: Triton EV plans to introduce its 8.5 ton electric vehicle truck by mid-November, he said. “We are looking at mid-November 2023 to make the truck ready for showcase and this will be a great asset for the logistics sector as the 8.5 tonnes EV truck is getting developed based on acute market demand. This 8.5-tonne truck will run 300 km on a single full charge,” Patel said.

A game changer: “This product is expected to make an overwhelming impact on the commercial vehicle segment because of its robust performance capabilities. The mileage and maintenance of this 8.5 tonne electric truck will become a major game changer for the industry,” Patel said.

And that’s not all from Triton EV: The Indian smart mobility startup recently announced plans to unroll a 3.5 tonne capacity EV truck, according to Patel.

Adnoc Distribution to power UAE fleet with biofuel: Adnoc Distribution, the UAE's largest fuel retailer, will use B20 biofuel to power its heavy vehicle fleet, which supplies fuels and liquefied petroleum gas to its corporate customers, the company announced in a press release. The target is a 15% CO2 emission reduction from the fleet as part of the company’s push to reduce its carbon intensity by 25% by 2030, said Adnoc distribution CEO Bader Al Lamki in the release. Adnoc allocated USD 15 bn in January to fund its decarbonization goals.

Adnoc and German startup Power ID have kicked off a pilot project to test the use of recycled used EV batteries in bid to cut emissions and costs in its remote production operations, according to a statement. The EV batteries will be assembled into a comprehensive battery energy storage system (BESS). The BESS is estimated to hold up to 2 MW of power, and combines liquid cooling technology, silicon carbide convertors, and electric vehicle technology for the best possible energy management, allowing Adnoc to cut down on its diesel generators reliance used in power drilling, and reduce emissions by 25% and energy related expenses by 50%, to meet its net zero targets by 2045.

ALSO FROM ADNOC- The company has awarded a contract worth over USD 400 mn to US oilfield technology company Baker Hughes for the supply of all-electric compressions systems for its low-carbon LNG plant in Abu Dhabi’s Al Ruwais Industrial City, according to a statement.

A pioneer in low-carbon LNG: Al Ruwais’ LNG plant will be the first LNG project in MENA to be powered by clean energy, making it one of the lowest carbon intensity LNG projects globally, according to Adnoc.

Sadafco + NTSC will partner on fleet decarbonization: Sadafco, a food manufacturer, seller, and distributor in Saudi Arabia and the Middle East, is partnering with KSA’s National Transportation Solutions Company (NTSC) to reduce carbon emissions and establish a future driven by Zero Emission Vehicles (ZEVs), Zawya reports.

In detail: The five-stage partnership will see NTSC help SADAFCO quantify its carbon emissions, assess ZEV availability in KSA, chart the transition plan, and use digital platforms like PowerBI to analyze its results, the report reads.

OTHER STORIES WORTH KNOWING ABOUT THIS MORNING-

• Morocco + Tunisia among recipients of USD 11 mn Quebecois grant for climate vulnerable countries: Canada’s Quebec government will grant USD 11 mn to support 15 projects in nine countries vulnerable to climate change, including Morocco and Tunisia. The grant is expected to be officially announced at the Adaptation Futures international conference on climate change adaptation on Tuesday. (Montreal City News)
• Oman upping its carbon emissions tracking game: Oman’s Environment Authority plans to unroll a system allowing it to monitor greenhouse gas emissions across the country in a push by the sultanate to achieve carbon neutrality by 2050. (Muscat Daily)
• UAE halfway to sourcing 30% of energy from renewables by 2030: The UAE’s minister of energy and infrastructure says the country currently sources 15.6% of its total energy mix from clean energy sources, which puts it more than halfway to achieving its target of 30% by 2030. (Zawya)
• UAE’s Mubadala to plant 700k mangroves by 2030: Abu Dhabi sovereign investor Mubadala Energy is planting 100k mangroves a year until 2030 under the Abu Dhabi Mangrove Initiative. The investor is the first to sign onto the initiative, which aims to boost mangrove conservation and restoration through research, partnership, and action. (Statement)
• Egypt eyes continued World Bank support on its decarbonizing efforts: Egypt’s Oil Minister Tarek El Molla met with World Bank officials to discuss continued support on projects such as natural gas delivery to homes and carbon capture feasibility studies. (Al Mal)

Climate change among biggest concerns for business leaders in India: “Unpredictable weather patterns” are among the biggest concerns for Indian business executives and managers, a new survey found, according to Bloomberg. About 91% of the respondents in a survey said they found it easier to manage traditional risks compared to newer “non-linear risks” — which consisted of environment, data-led, reputational, and regulation risks. Almost 13% of CEOs and managing directors cited climate change as the top risk. The non-linear risks were characterized by their unpredictability, extent, and ability to disrupt businesses. The survey, commissioned by Bloomberg LP, polled 300 top executives from the technology, services, travel, manufacturing, and retail industries. “Risks have evolved, making them quicker to emerge, less predictable and far more variable in severity,” the report concluded.

Indian conglomerate Reliance Industries reveals new swappable + multipurpose battery technology: Indian oil refining giant Indian and b’naire Mukesh Ambani-led conglomerate Reliance Industries has developed removable and swappable batteries for EVs that can also be used to power household appliances, Reuters reported, citing company executives at a renewable energy exhibition. The batteries can be swapped at Reliance's battery swap stations or re-charged by households using rooftop solar panels, which the company also plans to sell, the executives added. Development of battery storage solutions is a part of Reliance's bigger USD 10 bn push towards clean energy projects, which include four giga-factories that will produce solar cells and modules, energy storage batteries, fuel cells, and green hydrogen infrastructure.

Reliance is making big strides in green tech: Last year, Reliance acquired a 79.4% stake worth USD 32 mn in solar energy software developer SenseHawk. Abu Dhabi’s renewable energy company Masdar and Reliance had also pledged to explore agreements for collaboration in green hydrogen. The company is also making strides in bio-energy, offshore wind, and other non-conventional forms of renewable energy.

Reliance has big green investment ambitions: The company aims to cut dependence on its oil-to-chemical business and become net zero carbon by 2035, according to Reuters, and generate 100 GW of solar energy by 2030.

The first green hydrogen unicorn: Hydrogen technology-focused startup Electric Hydrogen (EH2) closed a USD 380 mn series C round that values the company at USD 1 bn, Reuters reports. The round was led by Fortescue, Fifth Wall and Energy Impact Partners, and investors BP Ventures, Oman Investment Authority, Temasek, Microsoft’s Climate Innovation Fund, and the United Airlines' Sustainable Flight Fund, reported. EH2 has raised over USD 600 mn since 2020, counting Amazon and Honeywell among their key investors.

OTHER STORIES WORTH KNOWING ABOUT THIS MORNING-

• More funds to help fight deforestation in the Amazon: Switzerland and the US have allocated USD 8.4 bn in donations to help Brazil’s Amazon Fund stop deforestation under plans by the South American country to reach zero deforestation by 2030. (Reuters)
• US is spending USD 20 mn on geological hydrogen R&D: The US Department of Energy has allocated USD 20 mn to fund research in geological hydrogen technologies, which can stimulate the generation of hydrogen within the subsurface. A number of countries around the world have made geological hydrogen discoveries this year. (Statement)

EVs are heavier than their fossil fuelled counterparts…: Owing to the hefty weight of electric and hybrid car batteries, electric vehicles (EVs) are heavier than their traditional counterparts, according to a report by the Institution of Structural Engineers (ISE). As their popularity has grown — with over 10 mn EVs being sold in 2022 — so too has the weight of the average vehicle, rising from 1.5 to 2 tonnes over the last 50 years.

…which could be a burden on parking garages: This extra load — which is also due to increasing average car size — could potentially lead to the collapse of some multilevel car parks. ISE fellow Chris Wapples told CNBC on Tuesday that this risk is “something we have to consider,” although he added we shouldn’t be alarmist about it just yet.

So we need new guidelines: The ISE has recommended new guidelines to mitigate the risk. Thorough planning is key, specifically with regards to structural assessments. The ISE recommended adjusting parking bay sizes and deck loadings, screening vehicles, and keeping heavyweights on the ground floor.

Fire safety is another concern: While EV fires are relatively rare, extinguishing them can be extremely difficult, “particularly if the battery is on fire, because you’ve got so much energy that’s locked in,” Whapples told CNBC. To this end, sprinkler systems could be needed to limit the spread of fires, especially in underground facilities, the guidelines said.