The UAE and Saudi Arabia are not about to let go of fossil fuels just yet.

Good morning, friends, from the UAE, where we have a packed issue for you.

THE BIG CLIMATE STORY- Top UAE and Saudi officials appear to be arguing that full divestment of fossil fuels is impractical. Over a series of interviews and forums yesterday, Aramco chief Amin Nasser and the UAE energy ministry assistant undersecretary Yousef Al Ali suggest that the state of renewables and clean energy isn’t strong enough to wean the world off of fossil fuels. A gradual, longer-term approach is the answer, they say.

WATCH THIS SPACE #1- France will help the UAE build components for its nuclear program: State-owned Emirates Nuclear Energy Corporation (ENEC) signed an MoU with the French nuclear industry group CSFN to develop a local supply chain for the UAE’s nuclear program and ENEC-owned Barakah nuclear energy plant, the corporation said yesterday in a statement. This will involve expanding local manufacturing of components and equipment for nuclear energy, as well as sharing knowledge, skills and expertise, the statement notes.

Nuclear power will play an essential supplementary role in the UAE’s renewable energy strategy, Yousef Al Ali, the energy ministry’s assistant undersecretary for electricity, water and future energy, told Utilities Middle East.

^^ We have more on both stories in this morning’s news well, below.

WATCH THIS SPACE #2- Is Lebanon slowly becoming a case study for the importance of solar? Rolling blackouts and a dependence on expensive diesel-powered generators has driven Lebanese homes and businesses to increasingly look to solar energy and a viable replacement, France 24 reported last week. One of the success stories highlighted in the report is the mountain village of Toula, which used to run on only three hours of electricity a day, until donors funded a USD 100k, 185-panel solar farm. The village now has 17 hours of consistent electricity. Now businesses are getting in on the act: Spinney’s is investing in solar to cut down its USD 800k-1.4 mn monthly generator bill.

THE DANGER ZONE- Syria’s 2022 grain crop has been “decimated” by climate change and conflict, officials from the United Nations Food and Agriculture Organization (FAO), tell Reuters. The country’s 2022 wheat harvest was down some 75% from pre-crisis volumes and its barley harvest was almost “nonexistent.” 70% of Syria’s grain crop relies on rainfall, as the country’s irrigation system remains underdeveloped. This year, rainfall started late and fell in untraditional patterns, delaying the start of the planting season. An early stop to rainfall cut the season short.

This is now a global problem: The world’s top food and agriculture companies could see losses of USD 150 bn by 2030, if they don’t adapt to climate change policies and changing consumer behavior, according to a UN report published yesterday and seen by Reuters. Growers and folks in food retail could lose up to a quarter of their value in the coming eight years if they don’t get in step with both climate-change-driven government policy and consumer behavior, it warns. The report found that 40 big companies in the sector would see an average decline in value of 7%.

One knock on the report: It suggests there are opportunities in products including plant-based “meat.” Whether you’re an obligate carnivore or a vegan, we think whole foods, not frankenfoods, are the answer to the health problems caused by poor diet.

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THE BIG CLIMATE STORY OUTSIDE THE REGION- UN Secretary General Antonio Guterres wants windfall taxes to be redirected to countries suffering climate-caused loss and damages, as well as “people struggling with rising food and energy prices,” multiple news outlets reported yesterday. (Reuters | AP | CNBC | CNN)

ALSO- New research shows some of the biggest PE firms are still investing USD bns in dirty energy: Eight global private equity firms with substantial energy portfolios are exposing investors to unknown financial risks thanks to their continued investment in high-emissions projects amid escalating climate disasters and the energy transition push, according to a report (pdf) published last week by activist groups Private Equity Stakeholder Project (Pesp) and Americans for Financial Reform Education Fund (Afref). These firms manage a combined USD 3.6 tn in assets, including some USD 216 bn in energy projects — mostly fossil fuels, the report says. The PE industry as a whole has invested some USD 1 tn in energy since 2010, with most of this in oil, gas and coal, it adds.

The best and the worst: The activists looked at the climate credentials of eight firms, based on publicly available information. The highest rated firm, TPG, has only two fossil fuel companies in its energy portfolio, with an estimated investment of USD 1.3 bn — giving it a B. Carlyle has assets under management of about USD 24 bn in an energy portfolio that includes 42 fossil fuel companies, scoring an F.

Should PE watch out for the new Elliot Ness of climate finance? A US Treasury Department agency that oversees the country’s largest banks has hired its first “climate cop,” the New York Times reports, citing a statement published on Monday last week. The US Office of the Comptroller of the Currency (OCC) has hired Yue (Nina) Chen as its chief climate risk officer, the statement said. She will focus on establishing a new system to assess climate-driven risks to banks, and monitoring and managing these risks, it adds.

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THE COUNTDOWN TO COP- Activist set to gather in Tunisia pre-COP: Climate organizers and activists are descending on Tunisia on 27 September to set policy agendas and demand an “equitable and just” response to the climate crisis ahead of COP27, according to Greenpeace. Some 400 activists from MENA, Africa, South America and Asia will reportedly be there.

HAPPENING TODAY-

The Fleet and Mobility Summit kicks off today at Dubai’s Radisson Red in the UAE. The gathering will, among other things, focus on how the mobility and transportation sector in MENA can help the region meet its climate targets. Industry leaders as well as Saudi transportation officials will be in attendance, among them CEO of Al Masaood Automobiles Irfan Tansel. If you want to still catch it, it’s not too late to register here.

CIRCLE YOUR CALENDAR-

Our friends at HSBC are hosting an energy transition webinar series next Tuesday-Thursday (27-29 September). The series will look at the “latest climate analysis in relation to the global energy market and transition to net zero” in six different sessions covering energy security, what is required to ensure the success of COP27, financing and investment needs for the energy transition, and the scaling up of renewables in the region, among other topics. You can register for the series here.

WANT MORE on the region’s energy transition? Catch this op-ed in EnterpriseAM by HSBC’s Group Head, Center of Sustainable Finance and Head of Climate Change Middle East, North Africa and Turkey, Zoe Knight on to the capital that’s needed to help drive that shift.

A Spanish business delegation will be in Cairo on 27-28 September for the Egypt-Spain Multilateral Partnership Forum. The two-day event, which will take place at the Sofitel Gezirah Hotel, will bring together Spanish and Egyptian business execs in electricity, renewable energy and water treatment.

The World Cement Association’s (WCA)’s global conference will take place from 25-28 September at Emirates Towers in Dubai, UAE. The event will be attended by COP26 UN Climate Champion Nigel Topping, among other attendees, panelists,and keynote speakers. You can register for the event here.

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.

Fitch Solutions hosting a webinar on Saudi Arabia’s energy transformation next Thursday, 29 September at 12:00pm KSA. You can register here.

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

The UAE and KSA aren’t ready to do a 180 on fossil fuels just yet: Senior officials from the UAE and Saudi Arabia took to the press yesterday to argue for continued fossil fuel investment, saying that current renewables capacity can’t meet energy demand. Global energy transition goals — which include rapid divestment from fossil fuels to move towards renewables — aren’t viable as existing capacity can’t satisfy demand, Saudi Aramco CEO Amin Nasser and the UAE energy ministry assistant undersecretary for electricity, water and future energy Yousef Al Ali argued in separate conversations at the beginning of the week.

Clean energy “limitations” mean a full replacement of natgas as an energy source, which isn’t yet possible, Al Ali told Utilities Middle East in an interview published yesterday. Solar energy is an “intermittent” energy source, only available during the day, and energy storage costs are high, he said. “This presents a challenge in terms of what renewable energy can accomplish.” Gas or combined-cycle power will continue to play an important role in the energy mix, said Al Ali, stopping short of saying when he sees that changing.

The UAE in particular is limited by its natural resources: The UAE doesn’t have the “economical wind resources” available to some other countries to complement solar energy and increase the share of renewables in the nation’s energy mix, Al Ali said. Solar will lead on the renewables front and then “nuclear will have to be there to cover for the base load requirements,” he added.

The energy crisis spurred by the Russia-Ukraine war is making a full transition away from fossil fuels harder, Reuters cites Aramco’s Nasser as saying at a forum in Switzerland yesterday. A plan unveiled last week by the European Commission to cap consumer energy bills and tax energy companies amid energy shortages and soaring prices isn’t a long-term solution to the crisis, Nasser said, arguing instead that the root cause of the problem was continued underinvestment in hydrocarbons when viable alternatives still aren’t ready for prime time.

The energy crisis doesn’t mean climate goals should change, Reuters quotes Nasser saying, but that we need to amend our energy transition plans, he added. “The best help that policy makers and every stakeholder can offer is to unite the world around a much more credible new transition plan,” he said.

When it comes to gas, the increasing efficiency of combined cycle plants will help in emissions reduction: Greater efficiency in gas turbine technology has reduced the gas carbon footprint to 300 kg per megawatt from half a ton per megawatt — meaning emissions from gas are around 3x lower than coal, Al Ali said. Expanding the capabilities of natural gas tech to reduce the sector’s carbon footprint as much as possible — with renewable energy complementing the process — is very important, he said.

And the fuel will remain a core part of the UAE’s energy mix and transition strategy: Natural gas will be used by the UAE to produce blue ammonia and hydrogen until it’s able to make green hydrogen competitively “after many years,” Al Ali said.

SOUND SMART- Blue hydrogen is hydrogen extracted from fossil fuels, with the carbon waste trapped. Check out our explainer here.

The idea that we shouldn’t transition too quickly away from hydrocarbons isn’t controversial in the GCC: “Policies aimed at divesting from hydrocarbons too soon, without adequate viable alternatives, are self-defeating,” CNN quoted the UAE’s special envoy for climate change Sultan Al Jaber as writing in an August opinion piece. “They will undermine energy security, erode economic stability, and leave less income available to invest in the energy transition,” he added.

Either way, the GCC will have some USD 1.3 tn in additional oil revenues over the next four years to help sort out that transition, the IMF has noted (see previous coverage from the Financial Times here). CNN argues that could be the last hydrocarbon windfall for our region. A 2022 World Bank report (pdf) argues we need to put that funding to good use by getting into step with changing global patterns of energy consumption and an expected falloff in global fossil fuel demand.

French automaker Renault will start producing EVs at its Tangier plant in 2023, Ryad Mezzour, Morocco’s Industry and Commerce Minister, tweeted Wednesday. Renault Maroc is aiming to produce 17k Mobilize Duo brand EVs each ear at its existing auto assembly plant in Tangier when it becomes fully operational. Half of the production inputs going into the EVs will be made from recycled materials, the Africa Press Agency reports. Mezzour did not say whether the EVs made at the facility would be sold locally or marked for export.

SOUND SMART- Morocco has transformed itself into a regional automotive powerhouse through smart incentives and consistent government policy and is now a key exporter to Europe as well as to other MENA countries, including Egypt.

Morocco already has a thriving EV assembly industry with plans to make it bigger: Renault and Stellantis already operate EV assembly facilities producing 700k cars each year, Mezzour told Reuters back in July. Citroen also produces around 50k EV buses per year with plans to double that output in two years. All in all, Morocco is targeting the production of around 1 mn EVs in the next three to four years, Mezzour said.

Renault is also looking at Morocco to source materials for batteries: Renault signed an agreement with Moroccan mining firm Managem to supply it with 5k tonnes per year of cobalt sulfate, to be used for its electric vehicles. Managem will supply the cobalt for a period of seven years starting in 2025, Renault announced back in June.

Morocco is also in talks to build a EV-battery ‘gigafactory,’ Mezzour said, suggesting contracts should be inked by year’s end. He did not name the partners with whom the country is speaking.

SMART POLICY- Pundits are tipping Morocco as a regional leader in EVs and an EV export hub to Europe, including Fitch and the Middle East Institute (MEI) (pdf). The kingdom’s mineral reserves — crucial to EV battery production, as well as its solar and wind resources qualify it to lead a “green mobility revolution,” the MEI study finds. To get there, Morocco has put together a comprehensive agenda: From developing a national master plan for electric mobility by the end of 2022, designating zones where fossil-fuel cars are banned, giving tax exemptions on EVs, to developing the infrastructure through an iSmart charging station.

The Dubai Electricity and Water Authority (DEWA) is piloting a desalination system powered entirely through solar, according to a statement published yesterday. DEWA has hired Dutch firm Desolenator to design and test the system.

OTHER STORIES WORTH KNOWING ABOUT THIS MORNING-

• The first phase of Oman’s largest industrial waste treatment facility started operations last week, according to the Oman Daily Observer last week. At full capacity, the facility will treat 135k tons of waste annually.
• Oman-based recycling companies Wakud and Tadweer are partnering to recycle used cooking oil into biodiesel, the Oman Daily Observer wrote on Monday. Users will be able to sign up to have their used cooking oil collected by Tadweer through an app, which will then be recycled by Wakud.

More than half of survey takers say climate change has hit them directly: 56% of adults recently surveyed by the World Economic Forum (WEF) and Ipsos say climate change has already had a “severe” impact on the areas they live in, according to a WEF statement issued last week. Some 71% expect climate change to severely affect their regions in the coming 10 years, while 35% expect to be displaced from their homes because of climate change by 2047. Over 23.5k adults in 34 countries contributed to the survey between 22 July and 5 August of this year.

The results “affirm that across the world, people already feel the effects today and fear for their futures tomorrow,” WEF quoted Gim Huay Neo, head of its Center for Nature and Climate, as saying. “The crisis affects everyone.”