Climate makes headlines at the IMF and World Bank annual meetings

Good morning, wonderful people. For anyone who has anything to do with the climate industry, the only game in town is still the ongoing fall meetings of the IMF and World Bank. As the biggest global event until COP27, you cane expect the meetings topping global climate coverage until they end on 16 October.

PSA- Speaking of COP27, we have 26 days to go until the event kicks off in Sharm El Sheikh.

THE BIG CLIMATE STORY- The IMF’s World Economic Output report has a stern warning: stop procrastinating on climate policies or pay the cost. The Fund says delays in implementing meaningful policies — in addition to global conflicts — have made the green transition more expensive and will continue to do so unless a coordinated effort is made to chart a new course. We have the full story in this morning’s news well, below. We also dive into the agreements that came out of day two of the meetings.

WORTH NOTING FROM THE IMF REPORT- The Middle East and Asia’s GDP is expected to grow 5.0% in FY2022, up by 0.1 percentage points from the July 2022 update. The region’s growth is expected to shrink to 3.6% in 2023, the report states. That’s still 0.2 percentage points higher than the July update.

MORE TO COME TODAY- Climate will be a big theme at the IMF and World Bank meetings today. Among the high-profile sessions is a seminar headlined: “Getting to Net Zero with IFIs and Multilateral Partnerships.” The session will discuss how institutions can collaborate to design and finance climate mitigation policies. Speakers include World Bank President David Malpass, IMF Managing Director Kristalina Georgiev and OECD Sec-Gen Mathias Cormann. Tap or click here to get full schedule.

ALSO TODAY- The Middle East Facility Management Association’s seminar on sustainable development kicks off today in Riyadh, Saudi Arabia. The event will focus on how tech can help overcome challenges stifling the sustainable development of the facilities management sector in Saudi Arabia. You can register for the event here.

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WATCH THIS SPACE #1- The EU wants more gas, green hydrogen, solar, and wind energy from Algeria: The EU wants to help Algeria mobilize funding from the European Fund for Sustainable Development for renewable energy projects, EU Energy Commissioner Kadri Simson said during the EU-Algeria High-Level Energy Dialogue on Monday (pdf). Algeria, one of the top three gas suppliers to Europe, “has a great potential to become a global leader in the production of clean energy,” he added, referring to the country’s wind, solar and green hydrogen production potential. No financial details were disclosed as of yet.

THERE’S MORE- Algeria is planning legislation that will set a framework for renewable energy investments: Algeria is preparing new renewable energy legislation to spur the push to green energy, Renewable Energy Minister Benattou Ziane announced in June. We dive into what the private sector wants to see from Algeria’s new Renewable Energy Act in the news well below.

WATCH THIS SPACE #2- We need to talk about climate education: Climate change awareness has come a long way since scientists first raised the alarm back in the 1970s. But while awareness has been rising, climate education — both on the formal education level and on the capacity building side — remains weak in MENA on an institutional level. Below, we break down by the numbers just how weak climate education is here, as well as how that has been improving.

Want to know how this is playing out in Egypt? Egypt, broadly speaking, reflects much of what we found happening in MENA on the climate education front. While awareness is there, this has largely come from the actual impact climate change is having on the ground. Technical education remains pretty weak.

Check out Going Green, our weekly dive into Egypt’s green economy in EnterpriseAM, for more.

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WATCH THIS SPACE #3- Egypt's Senate has given final approval to an automotive bill that includes provisions for electric vehicles: Egypt’s Senate approved a new bill regulating the automotive sector, including electric vehicles (EVs) yesterday. If passed by the House of Representatives and ratified by the president, the bill would establish a Supreme Council for Vehicle Manufacturing and set up a fund to provide financing to the country’s EV industry. We have details of the legislation here.

*** Take our EV survey: Are you an ex-petrolhead shopping around for your first electric vehicle? EV-curious and wondering what all the fuss is about? Or are you not ready to say goodbye to that sweet smell of benzene as you wait at the gas station?

We want to hear from you: We’re taking the pulse on how the region feels about MENA’s EV transition. Take a few minutes to fill out our short survey. We’ll be back with the results in a couple of weeks.***

THE OTHER BIG CLIMATE STORY OUTSIDE THE REGION has to be Austria filing a suit to reverse the EU Commission’s to label gas and nuclear energy as green energy sources in the EU taxonomy for sustainable activities, Austria’s Climate Protection Minister Leonore Gewessler wrote (German) on Facebook on Monday. The country is looking for other EU members to back its claim. Luxembourg is already on board to remove both energy sources from the taxonomy. The taxonomy is a classification system for sustainable activities in the EU, and the EU Commission plans to classify several natural gas and nuclear plants as green in 2023. (VOA | Reuters | Bloomberg)

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CIRCLE YOUR CALENDAR-

Cairo Water Week 2022 will kick off on Sunday, 16 October and run for four days. Discussions will revolve around climate change strategies and development plans, sustainable financing solutions, as well as water recycling, among other topics.

The International Exhibition of Renewable Energies Clean Energies and Sustainable Development will run from 24-26 October in Oran, Algeria. The event will focus on the role of startups in the green transition and the bankability of renewable energy projects.

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

Procrastination is making the green transition costlier, says IMF: Uncertainty and concern about the green transition’s real economic cost and long-term benefits has led to policy procrastination, which, in turn, is making the green transition more expensive, according to the IMF World Economic Outlook report for October 2022 (pdf) published yesterday. The IMF’s conclusion is that the longer this continues, the more difficult and costly the transition will be. This would also lead to higher macroeconomic costs in the form of slower growth and higher inflation.

What needs to happen? A lot. To reduce emissions by 25% by 2030, we need to see a combination of higher taxes on greenhouse gas emissions; stricter emission regulations; and more investment both in low-carbon technologies and the decarbonization high-emitting sectors, such as electricity generation, the IMF said, without putting a price tag on the cost. Egypt’s UN High Level Champion Mahmoud Moheildin told us last month that the true financing gap is in the tns of USD each year.

All of this has to happen now, the report says. Credible climate policies will spur incentives for investment and R&D in the sector, while also shifting consumption patterns to greener alternatives. This needs to be coupled with monetary policy credibility to keep inflation low.

The economic cost of the green transition: The good news is that climate policies generally have a “limited impact” on output and inflation, which makes them less of a hassle for central banks. That said, the green transition could slow down global economic growth by 0.15-0.25 percentage points annually, adding up to a 0.9-2% slowdown by 2030. “To avoid amplifying these costs, it is important that both climate and monetary policies be credible,” the report notes. “Stop-and-go policies and further procrastinating on the grounds that ‘now is not the time’ will only exacerbate the toll.”

If action is taken now, the transition will be manageable: If countries do not further delay their transition efforts, the energy transition will remain manageable — though not without some cost.

It’s also important to de-escalate global political tensions: The Russia-Ukraine war and the tense relationship between China and the US are obstructing global climate cooperation. “If different international standards arose, carbon border adjustment taxes could help prevent excess leakage and accelerate the convergence of tax and regulations to the highest global standard,” the report reads. Other potential areas of cooperation include coordination on greenhouse gas taxation, data sharing, improvement of reporting standards, and increased access to climate finance in developing economies, it concludes.

AT THE IMF-WORLD BANK ANNUAL MEETINGS IN DC-

COUNTDOWN TO COP- The World Bank wants to launch a climate fund named Scale during COP27, president David Malpass announced Monday. The Scaling Climate Action by Lowering Emissions (Scale) fund will mobilize funding from the “global community” to provide grants to developing countries for green projects. Governments can also use the funding to cover interest payments on loans for green projects. No details were revealed about the size of the fund.

What will Scale fund? The results-based funding will target agriculture, forestry, and ocean-related projects, sustainable infrastructure funding in energy and transport, and fiscal and financial solutions that mobilize resources for climate action, Reuters reports, citing a World Bank paper it has seen.

Jordan signed a USD 125 mn loan agreement with the World Bank to develop the climate resilience of its agriculture sector, according to a World Bank statement yesterday. The program will provide financing to 30k farming households to adopt climate-smart and water-efficient agricultural practices between 2022 and 2027.

Algeria is aiming to push through new renewable energy legislation to spur the push to green energy, Renewable Energy Minister Benattou Ziane announced in June. The announcement was made at a gathering of business associations, with an eye to spur private investment.

No draft of the bill, which is expected to become law by the end of 2022, has yet been released — so much of it remains unknown. Particularly on issues of private and foreign ownership limits and a legal framework for renewables. We spoke to Jean-Jérôme Khodara (LinkedIn), partner and head of law firm Matouk Bassiouny’s Algeria practice, and Nahla Djabi (LinkedIn), counsel at Matouk Bassiouny’s Algiers office, to understand what the private sector hopes to get out of it.

Algeria is targeting substantial growth in renewables: Algeria’s energy transition and renewable energies ministry — created in 2020 — is targeting a total installed renewable energy capacity of 4 GW by 2024 and 15 GW by 2035, and total generation capacity of 22 GW by 2030 — with 62% coming from solar PV and 23% from wind, say Khodara and Djabi. The ministry has set up a state-owned renewable energy company, Shaems. In May, the government issued a tender for the country’s most ambitious renewables project to date: a 1 GW solar project.

So far, the absence of a legal framework for renewables has led to very limited investment in this field. A law on the development of renewable energy was passed in 2004 but it was very rudimentary, say Khodara and Djabi. As of 2021, renewables made up only 2% of Algeria’s installed capacity through 448 MW of solar, they add.

Now the government is aiming to establish a comprehensive legal framework to spur renewable energy development in Algeria, says Khodara. “In the last couple of years, this has become a top government priority,” he adds.

It’s hoped the bill will offer more flexibility in terms of financing: Algeria has several restrictions around project financing, including a requirement that funding come from local financial institutions, says Khodara. “We expect the new framework to be more flexible on this point, allowing for foreign funding.”

And incentives to foreign investors — including tax breaks, and technical and legal support, Khodara and Djabi say.

By providing a framework, the new law will hopefully open the market up to SMEs, they add. “The reform of Algeria’s 2002 electricity and piped gas distribution law is meant to allow SMEs to inject any excess renewable energy into the grid. But due to the lack of a legal framework, the implementation has proven challenging.”

The tender for the 1 GW solar project could shed light on what to expect from the new law, says Djabi. It allows for international project financing and stipulates that foreign investors can own up to 66% of the project — contingent on approval by Shaems. “This may give us indications of what the new law will include in terms of ownership, financing and participation,” Djabi adds.

The tender also requires that 30% of the equipment and services used in project construction come from local producers. “In terms of public policy, we can see it’s a general top objective of the government to push for local production,” Khodara said.

The project has already spurred international investor interest: At least 80 foreign companies applied for the prequalification stage of the tender offer, says Djabi.

There’s also a push to build local solar manufacturing capacity… “We now have something like 10 or 11 plants for solar panel production,” says Khodara.

The current hope is to have a final law issued by the end of 2022: Ziane said that a draft of the bill would be issued in September, but nothing has been released so far, Khodara and Djabi say. Typically, drafts go through a four to eight week process of parliamentary review and discussions before a vote, and investors might also give feedback, Djabi notes. “I hope that by 4Q, the law will be issued,” says Khodara.

It’s not enough to have school recycling drives. MENA’s current climate change education ambition is low, especially compared to the global average, notes a recent blog post from global organization Education International, which is running a campaign to mainstream science-based, civic action-focused climate education. Only five countries in the region — Tunisia, Jordan, Qatar, and Mauritania — even reference climate change education in their January 2022 Nationally Determined Contributions (NDCs) — which Education International analyzed to score climate change education based on quality, inclusiveness, green skills provision, teacher training, and the strengthening of education systems.

In the run-up to COP27, MENA needs to shift its current “alarming” climate change education ambition, and assume a leadership role in this key area, Education International argues.

At the university level, an effort is at least being made to run degree programs related to environmental issues. A 2019 survey of 57 top-ranked universities in the Arab region by the Beirut-based Arab Forum for Environment and Development (AFED) identified 221 university degree programs related to environmental topics, of which 71 were BAs, 102 MAs, 36 PhD programs, and 12 technical diplomas. There are more scientific and technical degrees — particularly ones focused on environmental sciences — than ones related to economics, law, education and policy, according to the AFED 2019 report (pdf) on Environmental Education for Sustainable Development in Arab Countries — the most recent available.

Some subjects get much more airtime than others: At the pre-university level, the trend of incorporating some discussions on the environment into all subject-matter courses is growing in the region, the AFED report found. But while pollution, environmental health, nature and biological diversity are the most commonly-examined topics in school curricula within the Arab world, food and water security, plastic pollution and resource efficiency are rarely addressed, it adds.

Ultimately, in terms of formal education, the region still lags behind: “Although a strong trend can be seen in the inclusion of environmental topics in curricula, progress remains uneven across Arab countries and educational institutions,” notes the AFED report. “More so, it is evident that there is a clear gap between the Arab region and other parts of the world when it comes to environmental education,” it adds.

Regional universities have started holding conferences on the role of academia in the climate crisis: This includes the 2019 MENA Environmental Law Scholars conference in Morocco, which looked at how law schools in the region could spur climate action through innovative teaching. A May 2022 webinar organized by research portal Nature Middle East brought together academics from the region — including representatives from the Royal Scientific Society of Jordan, Egypt’s Zewail City of Science, Technology and Innovation, and the Qatar Foundation — to look at the sustainability of Arab academic institutions. The Future Earth MENA Regional Center (FEMRC) regularly holds events on climate change mitigation, including most recently a water conference in collaboration with the University of Bahrain.

International climate-focused events are starting to focus more on MENA climate education: The first ever MENA Climate Week, held in March 2022 in Dubai, brought together stakeholders including governments, the private sector, financial institutions and civil society. Among other activities (pdf), it held events centered on climate change education. The Mohammed VI Foundation for Environmental Protection and African Youth Climate Hub held an event on climate education for African youth, while the Tunisian education ministry led a session focused on higher education and research for environmental change management in Mediterranean countries. Earth Day — an annual event to raise environmental awareness — has expanded to become an organization that advocates for climate literacy in all schools. In 2021, Earth Day held over 290 digital and in-person events in MENA and Pakistan to raise awareness on climate change.

And interest is growing among MENA youth in grassroots environmental education movements. Youth organizations like YOUNGO (the UNFCCC’s constituency of Youth Non-Governmental Organizations and Environment Association from the Arab region) are helping to produce educational and climate change-related studies and newsletters, notes Executive Director of the Arab Youth Climate Movement Qatar Neeshad Shafi, in a Cairo Review of Global Affairs article.

Saudi’s Red Sea International Airport will be fully-powered by renewables: The PIF-owned Red Sea Development Company signed agreement with Dublin-based aviation management company DAA that will it manage and operate the Red Sea International Airport in Tabuk, KSA. DAA will source 100% of the airport's energy needs from renewables, a company statement published Monday details.

OTHER STORIES WORTH KNOWING ABOUT THIS MORNING-

• Siemens Energy is setting up a Middle East innovation center in Abu Dhabi to incubate cleantech startups, according to an Abu Dhabi government statement yesterday.

Monkey business will no longer be conducted in trees: Global deforestation is driving dozens of species of monkeys and lemurs out of trees, where they normally feed and sleep, according to a new study published in the Proceedings of the National Academy of Sciences (PNAS) on Monday. Dozens of species are now adapting to living and hunting on the ground in the Americas and Madagascar. Higher temperatures, a decrease in canopy cover, a dietary shift away from fruits and larger group sizes all contributed to these critters moving to the ground.