The GCC wants to cloud seed its water. What could possibly go wrong?

Good morning, wonderful people. And to our readers in the UAE, happy hump day. We hope the work week has so far been kind to you all, whether you’re reading us in Dubai, Cairo, Riyadh or beyond.

THE BIG CLIMATE STORY here at home: A subsidiary of Abdul Latif Jameel Energy has completed a solar farm in Australia with a production capacity of 115 MW that will power c. 40k homes.

ALSO- Don’t miss our deep dive this morning on cloud seeding in the GCC. It’s increasingly being seen as a solution to the region’s water shortages. But what are the implications of messing with the weather and water table?

---

The state of Egypt’s agriculture in 2022: Egypt’s agricultural output has been suffering over the past few years, in no small measure thanks to climate change. 2021 saw crops including mangoes and olives take a beating. It’s a little different this year: A longer winter and milder spring caused difficulties for growers of olives and corn — but brought unexpected upsides for wheat, cotton, and, especially mangoes, which staged a recovery.

Want to read more? Check out Going Green, our weekly dive into Egypt’s green economy, in EnterpriseAM.

---

WATCH THIS SPACE- Saudi Arabia’s ACWA Power will test out new technology that could make desalination less energy-intensive, the company said. The renewable energy giant inked on Monday an agreement with research and tech development firm Water Global Access (WGA) to integrate hydraulic injection desalination technology (HDI). HDI utilizes one-third less energy than the most efficient reverse osmosis desalination tech currently available, according to ACWA. It currently takes at least 3 KWh to desalinate one cubic meter of water using reverse osmosis — ACWA hopes that WGA can get the figure down below 2 KWh.

SIGN OF THE TIMES-

Mns of people in MENA depend on privately owned diesel-powered generators for their electricity needs — forced to the highly polluting generators after conflict, economic challenges or mismanagement have decimated their infrastructure, the Associated Press reports. In Lebanon, Iraq, Yemen, and Libya, systemic central power network failures have left residents reliant on generators that pump over 40 toxic contaminants into the air, says a co-founder of the American University of Beirut (AUB) environment academy. Diesel-powered generators spew out especially large quantities of climate change-inducing emissions — and more than 40 toxic by products.

In Lebanon, levels of toxic emissions may have quadrupled since the start of the financial crisis — thanks to increased reliance on generators, AP quotes AUB researchers saying.

Could a market for energy service companies (ESCOs) help Lebanon? A white paper out last week argues that it could — and that investing in an ESCO market should be a priority. But what the heck is an ESCO? We have more in this morning’s news well, below.

---

THE BIG CLIMATE STORY outside our region- Another day, another report spelling out climate doom: A multi-agency report warning that there's a 48% chance that at least one year in the next five the annual mean temperature will temporarily be 1.5C higher than pre-industrial levels is dominating global climate headlines. The world is entering an “uncharted territory of destruction” through our collective failure to act on slashing greenhouse gas emissions, said UN Secretary General Antonio Guterres, commenting on the report, which was coordinated by the World Meteorological Organization. Guterres slammed wealthy countries for failing to help developing nations adapt to the climate crisis, saying they should immediately provide financial support of USD 40 bn a year, increasing to USD 300 bn a year by 2030. (Guardian | Washington Post | Reuters)

This is the second report in a week to warn that the world is teetering on the brink of disastrous tipping points. We picked up the first here.

COUNTDOWN TO COP-

South Africa will see if Western donors will put their money where their mouths are: South Africa’s cabinet is set to draft in the coming fortnight an investment plan for some USD 8.5 bn in pledges committed by Western nations to transition the country to renewables, South Africa’s Environment Minister Barbara Creecy told Reuters. The US, EU, Britain, France and Germany last year committed to providing USD 8.5 bn over three to five years to help the continent’s third-largest economy (after Nigeria and Egypt) start kicking coal and get more solar and wind into its energy mix. South Africa is looking for grants, but donors are largely offering loans — and the terms of the pledges are still uncertain. The ministers hope to finalize the plan before COP27.

MEANWHILE- More than 530 investors managing USD 39 tn urged governments to ramp up their climate ambition in advance of COP 27 in a collective statement (pdf) published yesterday by the Investor Agenda — a group focused on accelerating investor action for a net-zero emissions economy. The big asks from yesterday’s statement? Putting regs in place to phase-out fossil fuel use, forcing companies to produce science-based transition plans, scaling up low-carbon energy systems, implementing carbon pricing mechanisms, and increasing action on deforestation.

Guess who didn’t sign the pledge? BlackRock, Vanguard and State Street — who happen to be the three top three index fund managers in the US, Reuters reports.

Subscribe to Enterprise

***
YOU’RE READING ENTERPRISE CLIMATE, the essential regional publication for senior execs who care about the world’s most important industry. Enterprise Climate covers everything from finance and tech to regulation, products and policy across the Middle East and North Africa. In a nod to the growing geographical ambitions of companies in our corner of the world, we also include an overview of the big trends and data points in nearby countries, including Africa and southern Europe.

Enterprise Climate is published at 4am CLT / 5am Riyadh / 6am UAE Monday through Thursday by Enterprise, the folks who bring you Enterprise Egypt, your essential 6am and 3pm read on business, finance, policy and economy in Egypt and emerging markets.

Subscribe to Enterprise Climate here or reach out to us on climate@enterprisemea.com with comments, suggestions and story tips.

***

HAPPENING TODAY-

Abu Dhabi Commercial Bank’s (ADCB) will issue USD 500 mn worth of green bonds today. The sale underscored that investors not only have strong appetite for GCC debt despite current global economic headwinds — but that there is a plenty of interest in green paper. The issuance attracted more than USD 1.9 bn in orders and was 3.8x oversubscribed.

Could more GCC issuers follow suit? A day after the announcement of ADCB’s sale, Reuters reported that Saudi Arabia’s sovereign wealth fund might be going to market with a green bond sale this week. We’re keeping an eye out.

Construction Week magazine’s Leaders in Construction UAE Summit is taking place today in Dubai. Industry leaders including China State Construction Engineering Corporation CEO Yu Tao and URB CEO Baharash Bagherian will be panelists at the summit. You can register for the event here.

CIRCLE YOUR CALENDAR-

The UN Economic and Social Commission for Western Asia is hosting its Towards COP27: Arab regional forum on climate finance on 15 September in Beirut. The forum will explore the climate finance needs of Arab countries to ensure water, energy and food security, while showcasing projects that can accelerate climate action.

The European Union’s Delegation to Egypt will host Euro-Egyptian energy day on Friday, 16 September at the Fish Garden in Zamalek, Cairo, Egypt. Speakers will include EU delegation to Egypt chief Christian Berger, as well as a number of Egyptian ministers. Alongside workshops, there will be activities for kids, including how to build a solar-powered car, a windmill and a watermill using Lego bricks.

The Wetex and Dubai solar show will run 27-29 September at the Dubai World Trade Center.

Dubai will host the World Green Economy Summit on 28-29 September. The summit wants to provide a platform to build consensus around the potential of technologies, policies and youth that could drive the green economy transformation.

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

Abdul Latif Jameel Energy’s Aussie solar farm is up and running: The Metz solar farm in Australia’s New South Wales — which is owned by the Australian arm of Saudi-owned renewable energy project developer Fotowatio Renewable Ventures (FRV) — is now running at full capacity, according to an FRV statement published yesterday. The farm has an output of 115 MW, which is enough to meet the energy needs of up to 40k households, the company said. Phase one of the facility launched in March.

Background: In 2020 FRV completed the acquisition of the solar power project, under which a power purchase agreement was signed in 2018 with Australian electricity generation company Snowy Hydro. The project was funded through a green loan provided by Westpac and NORD/LB, though the statement didn’t disclose how much was invested.

About FRV: FRV is owned by Saudi Arabia’s Abdul Latif Jameel Energy and Environmental Services, a leading solar PV developer. In late-2021, FRV sold a 49% stake in its Australian arm to Canadian pension fund Omers Infrastructure.

Jordan could be building three sustainable cities: Jordanian officials are considering establishing three “sustainable cities,” the government said in a statement yesterday.

Don’t get excited just yet: The project is still in the earliest of early stages. The government is yet to start studying the idea and is still discussing setting up the committee that will handle the process.

What we do know: As such, the statement is very light on details, though it does mention that the government is considering establishing cities with as many as 25k houses in the north, south and center of the country. EVs, waste and water recycling facilities and renewable energy plants — the foundations of any aspiring green city — also get a mention.

Sustainable cities are becoming popular in MENA: Launched in 2013, Abu Dhabi’s Masdar City, promises to be the world’s first carbon-neutral city. The city’s 20k homes and attached business district would be entirely powered by renewable energy and be built with sustainable construction materials and architecture. Saudi Arabia’s Neom is also promoting itself as a sustainable city powered by renewable energy. More recently, Dubai-based architects URB have announced plans to build a zero-emission tech district on the Creekside of Al Jaddaf area in Dubai

The GCC is banking on cloud seeding one of the solutions to climate change. But questions remain about efficacy and ethics: The UAE has started developing artificial intelligence (AI) for use in its cloud seeding program, heralding a new level of precision in tech that’s being hailed as an answer to our global water scarcity woes. By using an algorithm to cross reference historical weather data with current satellite reports and generate predictions about precipitation, scientists hope to effectively assess whether there’s enough humidity for cloud seeding operations to be successful.

SOUND SMART- What, exactly, is cloud seeding? Cloud seeding literally trying to make it rain or snow. For it to work, you need to put substances that help water molecules stick together (like silver iodide) into clouds — either by spraying it from a plan or shooting it up from earth. Programs in China and the US show precipitation can increase as much as 10-30% when it works.

In MENA — where water scarcity is an existential threat — solutions on the water security front can’t come quickly enough. MENA is projected to be one of the first regions to “effectively run out of water.” The UAE sees “sparse and inconsistent” rainfall, averaging some 140–200 mm per year, the World Bank tells us.

This isn’t the UAE’s first cloud seeding rodeo: The UAE has run a cloud seeding program for the last two decades, but efforts accelerated in 2015, when it set up a research center to support new tech developments in the field. The center has funded 11 projects, including one focused on the use of nanotechnology to develop cloud seeding materials — also intended to improve cloud seeding efficiency. The AI project was financed through a USD 1.5 mn grant this year.

Other countries in the region are following suit: Saudi Arabia launched the first phase of its cloud seeding program in April this year and the second in early August. Kuwait said in 2016 it would launch a cloud seeding program “soon.” And both Egypt and Ethiopia are mulling whether cloud seeding could work for them. Still, the UAE is “the unquestioned regional leader” in cloud seeding, the New York Times reported recently.

But cloud seeding remains a controversial practice — not least because the jury’s still out on just how effective it actually is. “The results of about 70 years of research into the effectiveness of cloud seeding are mixed,” atmospheric scientist William Cotton noted recently.

No one knows how much snow we can really get from SNOWIE: A 2020 study based on an experiment called “US SNOWIE” offered “unambiguous” evidence that cloud seeding can work when conditions int he sky are just right. The catch is that we still don’t have a great understanding of how much water we can produce from it, the study’s lead author said recently. And there are practical limitations: It’s “widely acknowledged that cloud seeding is least likely to be effective during drought conditions, as clouds don’t have moisture to release,” notes a recent article in Bulletin of the Atomic Scientists.

Other unanswered questions: What’s the environmental impact of forcing clouds to rain? Cloud seeding could be linked to a number of extreme weather incidents, including severe flooding in the UK and UAE and a blizzard in China, the Bulletin article notes. Questions have also been raised about whether silver iodide — which appears to be toxic to aquatic life — may cause long-term damage to people or the environment.

In the end, silver iodide is no silver bullet: “The promise of creating rain is highly appealing in the face of increasing water shortages (pdf) and disruptions to water cycles exacerbated by climate change,” notes the Bulletin article. But experts stress it’s no catch-all, quick-fix solution — most importantly because it doesn’t solve the systemic causes of drought.

How developing energy efficiency regs and an ESCO market could help Lebanon’s economy and reduce its emissions: Lebanon’s widespread electricity shortages and surging energy prices are both the result of and factors in its economic woes, making more energy efficiency a really big issue for folks in Beirut and beyond. One way forward is for the country to invest in creating energy efficiency standards, practices and policies, according to a white paper (pdf) out last week by the Clean Energy Business Council MENA (CEBC MENA), the American University of Beirut (AUB) and the Issam Fares Institute for Public Policy and International Affairs (IFI).

The report’s key recommendation? Officials should help develop a market for energy service companies (ESCOs).

Uh, Enterprise … what’s an ESCO? ESCOs increase the energy efficiency of their clients’ facilities by developing, designing, building, and arranging financing for energy-saving projects that translate into cost savings on the energy, operations and maintenance fronts. Advocates think ESCOs will become more important as more and more companies adopt ESG targets and emissions standards.

How are they different from your run-of-the-mill energy service companies, like Halliburton? Their incentives structure: What differentiates ESCOs from standard energy companies is their use of performance contracting — meaning they are paid from the energy-related savings resulting from the solutions that they design and implement — the report notes. This could be through a guaranteed savings model — where the client pays retrofitting expenses, but the ESCO has a legal obligation to generate energy savings. It could also be done through a shared savings contract — where the ESCO covers all retrofitting expenses and is then paid by receiving a share of the client’s savings from reduced energy consumption rates.

And with one of the region’s worst economies and emissions profile, Lebanon can use all the help it can get: The World Bank expects that Lebanon’s ongoing economic and financial crisis — which in part is due to rising energy costs and energy inefficiencies — will see real GDP contract 6.5% in 2022, after falling 10.5% in 2021. Lebanon’s CO2 emissions, which stand at some 4.1 metric tonnes per capita, according to 2019 World Bank data, is higher than many regional peers, including Egypt (2.5), Jordan (2.4), Morocco (2.0) and Tunisia (2.6).

So, how can Lebanon get ESCOs up and running? A regulatory framework for energy efficiency would be a start: Ratifying its draft energy conservation act would promote energy efficiency, the report notes. It recommends setting “ambitious but achievable” energy efficiency targets. It also advocates setting up a regulatory body to introduce energy audit guidelines, certification, and ESCO accreditation, providing training and capacity building, and setting clear transparency measures in ESCO contracts.

Electricity subsidies also need an overhaul: Reforming electricity subsidies would, among other things, create demand for ESCO projects, the report argues.

On the financing side, Lebanon’s ESCO market needs more private-sector buy-in. The authors say the best way forward is to get private capital engaged, either on a stand-alone basis or through public-private partnerships.

And setting up Super ESCOs is also key. Super ESCOs usually function as intermediaries between ESCOs, the government, and facility owners. They grow the overall ESCO market, help existing ESCOs operate more efficiently and “can assist ESCOs in less economically developed countries to overcome financial and technical barriers,” the report says.

There’s precedent for a successful rollout in MENA: MENA’s ESCO market is still early-stage compared to the US, China and Europe, the paper says. The UAE has the most developed market in MENA, while Saudi Arabia, Oman, Morocco and Egypt have taken steps in the field. In 2014, Dubai’s Etihad ESCO generated AED 4.5 mn in cumulative investments and saved 4.4 mn kWh of energy and 2.2 mn imperial gallons (MIG) of water, the report notes. Tarshid, Saudi Arabia’s first Super ESCO, is expected to save an estimated 3.7k tonnes of CO2 emissions through a project it began in 2020 retrofitting ministry buildings in Riyadh, the report adds.

OUR TAKE- It’s a stretch to think that Lebanon, with all of its current challenges, has the capacity to create an ESCO market, but they’re clearly part of a long-term solution when it manages to get through the current bottleneck. And the concept absolutely has legs in other regional countries — smart entrepreneurs should take note.

More solar capacity on the horizon for Egyptian companies: Egypt’s Taqa PV — the renewable energy arm of Qalaa Holding subsidiary Taqa Arabia — will fit Sharm El Sheikh’s Royal Nabq Center to run on solar energy, with a total power generation capacity of 20 MW, Al Borsa reported on Monday, citing unnamed sources.

The Abu Dhabi Investment Authority (ADIA), has invested EUR 390 mn into Energy Impact Partners (EIP)’s climate-focused European fund, a source told Reuters.

OTHER STORIES WORTH KNOWING ABOUT THIS MORNING-

• Commercial Bank of Dubai inked an agreement with solar energy solutions company Sharaf DG Energy to allow customers install solar PV systems for their homes. CBD clients can apply online using only their Emirates ID, a company statement picked up by Zawya details.
• In its 2021 Sustainability Report, Dubai’s Roads and Transport Authority announced saving 68mn kWh of electricity through the implementation of 36 initiatives in line with the UNSDGs, according to a statement.

Liaoning province — once China’s coal and industrial center — launched a USD 87 bn plan to transition to renewable energy sources, according to a report from state-owned CCTV picked up by Bloomberg. The northeastern Chinese province bordering North Korea laid out plans to build 6 separate 10 GW energy hubs. The facilities will include “nuclear, offshore wind, pumped hydro energy storage, and two renewable energy installations.” The province has not set a date of completion for its planned bases, according to the newswire.

Watch this space: The Bloomberg report also notes that the Liaoning project will include “smart energy” which involves “virtual power plant networks that can monitor and optimize energy generation.” We’re looking into it and will get back to you all if this is worth an Enterprise Explains column.

FEAST YOUR EYES- Some trees may soon be emitting carbon instead of oxygen: Stunning photos from the Financial Times accompany a warning that boreal forests storing vast amounts of carbon could become mass carbon emitters. Boreal forests are vast areas of conifer trees that make up about a third of all Earth’s forests. Historically, they absorbed more carbon than they released, making them the “biggest land-based carbon store on Earth,” the FT reports.

Now, rising subarctic temperatures are bringing them dangerously close to a tipping point. These trees could start releasing more carbon than they absorb due to thawing permafrost, insect infestations and swelling fire activity. This could potentially spell catastrophe for our attempts to keep global temperature increases below 1.5°C. The FT notes that Russia’s half of the boreal forests have become virtually inaccessible to the international scientists who had been researching how they’re affected by climate change. The culprit: the Russia-Ukraine war.