Aramco launches USD 1.5 bn sustainability fund

Good morning, wonderful people. The region is bustling yesterday with climate news emerging from Davos in the Desert — as we prefer to think of the Future Investment Initiative, or FII — in Riyadh — but no worries, we have all the details in the news well below. The gathering wraps today.

THE BIG CLIMATE STORY- It’s Saudi Aramco’s USD 1.5 bn sustainability fund, which CEO Amin Nasser announced at the FII yesterday. It will invest in technology needed to support the green energy transition as the company looks it hit its 2050 net zero target.

ALSO- Abdul Latif Jameel Energy’s FRV acquired two battery storage projects in the UK with a combined capacity of up to 100 MW. FRV bought the projects from UK utility scale solar and battery project developer RE Projects Development Limited.

^^ We’ve got chapter and verse on these stories and more in the news well, below.

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WATCH THIS SPACE #1- Could shipping vessels be on track to see financial compensation for using cleaner fuel? The International Chamber of Shipping (ICS) has put forward a proposal that could see vessels receive financial compensation for using a specific set of “low-carbon” fuels, according to an article published on Tuesday by media outlet Riviera. Individual vessel rewards could reach up to USD 1 mn per year, calculated based on CO2 emission reductions made by using the greener fuels. These include ammonia, methanol, hydrogen, sustainable biofuels and synthetic fuels. The proposal also includes levying a flat-rate tax on vessels’ CO2 emissions, priced per ton. It’s set to be discussed at the International Maritime Organization’s greenhouse gas reduction working group meeting in December 2022.

MEANWHILE- Egypt discussed the possibility of cooperating with Danish shipping giant Maersk on a USD 15 bn project to produce clean fuel for ships last September. No details were given on how the two sides could cooperate, but Maersk CEO Soren Skou said Egypt could eventually be a main hub for supplying ships with green fuel in the region, according to a presidential statement.

THE COUNTDOWN TO COP (10 days to go)-

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Egypt wants the UK to honor climate pledges despite turbulence: Egypt’s top climate diplomat, Mohamed Nasr, urged newly-elected British Prime Minister Rishi Sunak to stick to the country’s climate pledges despite an incoming recession. “We know that there are challenges, economic challenges that are there, facing the UK and other countries, but we hope that those challenges do not lead to backsliding on the pledges,” Nasr told Sky News.

COP27 president optimistic there will be no backtracking on climate commitments: Backtracking on commitments from last year’s COP26 in favor of prioritizing energy security would mean “we are all lost” and push the world to a “point of no return,” COP27 President-Designate and Egypt’s Foreign Minister Sameh Shoukry tells Bloomberg (watch, runtime: 6:00). Implementation, revision of NDCs, endorsement of new initiatives, climate adaptation finance, and loss and damage finance will top COP27 priorities, Shoukry highlighted. He also reiterated the need for developed nations to support developing countries in a just transition to renewables and to see greater equity between finance for mitigation and adaptation.

AND- Could King Charles make it to COP27 after all? Egypt is still hoping the British monarch, who has long campaigned for environmental causes, will show up in Sharm El Sheikh, Nasr is quoted as saying. King Charles had reportedly been ‘advised’ by now-former PM Liz Truss not to attend the summit.

Hundreds of businesses call for mandatory disclosure on biodiversity impact: Over 330 businesses have signed a joint statement urging heads of state to make it mandatory for large companies to disclose their impact on nature by 2030, a Tuesday statement noted. The request comes ahead of the COP15 UN conference on biodiversity, which kicks off in Montreal on 7 December and will see countries try to deliver a global biodiversity framework to halt and reverse biodiversity loss. The signatories have combined annual revenues of over USD 1.5 tn, according to Reuters.

THE BIG CLIMATE STORY OUTSIDE THE REGION-

BlackRock hits USD 4.5 bn first close on its green infrastructure fund, Global Infrastructure Fund IV, Bloomberg reports. The financial outfit, which has some USD 8 tn assets under management, is looking to raise a total of USD 7.5 bn for the fund, which will target climate-focused infrastructure projects in energy, low carbon power, transport and logistics, regulated utilities, and digital infrastructure. The fundraising comes as investors are expected to have USD 1.87 tn to pour into the infrastructure sector by 2026, the business information service says, citing data provider Peqin. You can read BlackRock’s press release on the fund here.

BlackRock is increasingly looking to green investments: The asset manager group set up a unit called Transition Capital headed up by McKinsey’s former head of sustainability to invest in clean energy transition tech.

And they’re one the largest investors in energy globally: The firm has stakes in ExxonMobil Corp. and ConocoPhillips with over USD 50 bn in assets under management, according to Bloomberg. A decade ago it began investing in renewables, buying stakes in UK smart meter installer Calisen and American natural gas producer Vanguard Renewables, the business information service reports.

REMEMBER- BlackRock’s Larry Fink is too busy to bother attending COP27, according to a Bloomberg report a couple of weeks back.

A BIT OF GOOD NEWS FOR A CHANGE- We’re doing better than expected on global emissions, which could hit their peak before 2030: UN Climate Change has revised downward its projections for 2030 global greenhouse gas emissions by 3.1 percentage points from its 2021 forecast, saying in a report yesterday it now expects emissions to rise 10.6% compared to 2010. Current nationally determined contributions provided by 193 states suggest that global greenhouse emissions for 2030 would be 0.3% lower than 2019, and 1.9% lower than projected emission levels for 2025, “indicating the possibility of global emissions peaking before 2030,” according to the UN.

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CIRCLE YOUR CALENDAR-

African Society for International Law’s annual conference will take place tomorrow and Saturday in Giza, Egypt. The conference will focus on climate change from the perspective of international law, and includes panels on legal and institutional governance, mitigation and adaptation strategies, trade, the international investment law, and sustainable development. The event is being organized with help from law firm Zulficar & Partners. You can register here.

Indian economist Montek Singh Ahluwalia is giving a climate-focused lecture on financing the green transition in developing countries on Sunday, 30 October, in Cairo. The lecture is organized by the COP27 Presidency and several partners. You can register to attend in person here, or online here.

The Egypt Energy Conference will run next Sunday-Tuesday, 30 October-1 November in Cairo. The three-day event will include three smaller conferences on power generation, transmission, and distribution; sustainability and clean energy; and PPP, foreign investment, and energy funding. Some 120 startups and global exhibiting companies will attend the conference, according to the organizers. You can register for the event here.

The Arab Renewable Energy Commission’s international investment forum for renewable energy and energy efficiency in MENA will run from Sunday, 30 October to Wednesday, 2 November in Amman, Jordan. The event will explore the Arab world’s renewable energy legislations, focus on renewable energy project prospects in the region, and spotlight how technological advances in the agricultural sector can ensure the region’s food security.

ADIPEC will run from next Monday, 31 October to Tuesday, 1 November in Abu Dhabi, UAE. Some 40 ministers from around the world, including eight from MENA, will attend the event. Those include energy and oil ministers from the UAE, Kuwait, Bahrain, and Egypt. Discussions will partly focus on the transition toward carbon neutrality, a statement picked up by Zawya says. You can register as an exhibitor here, and as an attendee here.

Regional law firm Matouk Bassiouny and its German counterpart Freshfields Bruckhaus Deringer will hold a webinar on 2 November that will spotlight COP27’s potential impact on businesses globally. Register for the webinar here.

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

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Saudi Aramco launched a USD 1.5 bn sustainability fund at the Future Investment Initiative (FII), the company said in a statement yesterday. The fund, managed by Aramco Ventures, will invest in technology needed to support the green energy transition as part of its bid hit net zero by 2050. It will target global investments, initially focusing on carbon capture and storage, greenhouse gas emissions, energy efficiency, nature-based climate solutions, digital sustainability, hydrogen, ammonia, and synthetic fuels.

Will we see some of that cash deployed in MENA investments? Some of it, yes. Big GCC players have been on a shopping spree, snapping up green assets in the west, as we previously reported (here and here). Aramco’s fund is looking to develop both local and global technology, with a focus on carbon capture and green hydrogen, Aramco’s CEO Amin Nasser said at FII.

(Also: That shopping spree continues, as we note below, in our coverage of the latest acquisition by Abdul Latif Jameel’s FRV.)

FULL STEAM AHEAD FOR PIF’S REGIONAL CARBON CREDIT AUCTION-

PIF’s new carbon market company auctioned 1.4 mn tons of carbon credits: The new regional voluntary carbon market company set up by Saudi Arabia’s sovereign wealth fund, the Public Investment Fund (PIF), auctioned 1.4 mn tons of carbon credits at FII. Saudi Aramco, Olayan Financing, and Ma’aden purchased the largest number of carbon credits in the auction, with 12 other Saudi and regional companies participating. PIF had originally announced that 1 mn credits — including CORSIA-compliant, Verra-registered certificates — would be up for grabs, but sold a higher-than-anticipated number of carbon credits. We still don’t have any information about pricing.

NEOM TO EXPORT GREEN HYDROGEN TO GREECE?

Greece is eyeing green hydrogen imports from Saudi’s Neom, with plans to lay a cable connecting Saudi to Europe, Greece’s Minister of Investment and Development Adonis Georgiadi said at the FII (watch, runtime: 00:27). The cable will allow Greece to act as an energy hub for Europe, Georgiadi said. The two sides will sign an MoU once the details of the agreement have been finalized.

SOUND SMART- Greece is looking to emerge as a new EU energy player, working with Egypt on a 9.5 GW green energy project and working with Egypt and Libya on hydrocarbon exploration.

NEOM’s USD 5 bn Green Hydrogen Project promises to be the world’s largest utility scale green hydrogen facility, producing 650 tons of hydrogen daily. The project is a joint venture between NEOM, Air Products and ACWA Power, and is expected to be commissioned in 2026.

SAUDI-INDONESIA EV COLLAB-

Indonesia is looking at working with Saudi Arabia to boost EV production, Indonesian Chamber of Commerce Chairman Arsjat Rashid said at FII, according to Arab News. The southeast Asian country supplies over 40% of the world’s nickel — a key component of the lithium-ion batteries used in EV production, it adds. Saudi Arabia “with its capital and technology” and Indonesia could work together, especially given current shifting global supply chains, Rashid added.

ACWA, ARAMCO ON CONDITIONS FOR GREEN GROWTH-

Saudi could become the world’s largest producer of green energy, Tadawul-listed Acwa Power Chairman Mohammed Abunayyan said in a session at FII, Arab News reports. Public-private partnerships (PPPs) could help spur innovation and support the financial structuring of renewables projects boosting renewable energy production, Abunayyan said. In addition to green hydrogen exports, the kingdom will localize the renewables value chain to provide green energy domestically, he added.

Molten salt tech can bypass fossil fuels: The method involves heating liquid salt then storing it in insulated containers. The energy can then be harnessed by using the heated liquid to power generators, bypassing the need for fossil fuels. Acwa Power started using this technology in 2014, Abunayyan said, but noted that the shift from conventional to renewable energy will take time.

The world needs 8x more PV panel manufacturing plants to meet growing energy demands, Acwa Power CEO Paddy Padmanathan said at FII, according to Asharq Green. The cost of building solar plants will increase over the next five to seven years as rising global inflation and interest rates drive up costs faster than technology and the production of components at scale put downward pressure on the price of new builds, Padamanthan previously said.

Altogether, the green transition could take 30 years, as the current plan is “flawed,” Aramco’s CEO said at FII, Reuters reports. Alternatives cannot meet growing energy needs alone, and a more realistic plan was needed to balance growth with sustainability, he said.

Abdul Latif Jameel Energy’s FRV acquires two battery storage projects in the UK: Spain-headquartered Fotowatio Renewable Ventures (FRV) has acquired two battery energy storage (BESS) projects in the UK with a combined capacity of up to 100 MW, it said in a statement yesterday. FRV — a subsidiary of Saudi solar PV developer Abdul Latif Jameel Energy and Environmental Services — bought the projects from UK utility scale solar and battery project developer RE Projects Development (REPD). No information was given on the acquisition ticket size.

The BESS plants are scheduled to enter the ready-to-build phase in 3Q 2023, the statement says, although the cost of the new plants’ construction remains unclear. UK-based renewables developer Tyler Hill Renewables is also “assisting in the development process,” the statement says. When completed, they will be connected to the grid and able to import and export energy.

The acquisition adds to FRV’s growing BESS portfolio: FRV currently has five battery energy storage projects in various stages of construction and development with a combined capacity of 340 MW, according to the statement. FRV undertook a joint venture with Tyler Hill Partners to create a platform — FRV TH Powertek Limited — to design, construct and operate a portfolio of battery storage systems in the UK earlier this month.

BACKGROUND- It’s all part of the wider spending spree of GCC investment in western green assets, from the US to Europe and even Australia. We’ve seen a slew of these investments and acquisitions in the past several weeks, including from the UAE’s Mubadala, GCC-focused alternative asset manager Wafra, Kuwait’s Agility Ventures, and the QIA (here and here).

Egypt-headquartered renewables giant Infinity Power eyes USD 300 mn wind farm: Infinity Power, a JV between Egypt’s Infinity and UAE’s Masdar, has its sights set on developing a 200 MW wind farm in the Gulf of Suez, head of wind energy at Infinity Egypt Omar Nagi told Enterprise Climate at a workshop yesterday. The project could cost as much as USD 300 mn to build. Al Mal also has the story.

It’s also going deeper into EV territory: Infinity EV is looking to invest EGP 80 mn (c.USD 4 mn) in EV charging stations in the coming year, Managing Director Shams Abdel Ghaffar told Enterprise Climate. The company is planning to up the number of its charging stations to 300 from 115 2024, and increase charging points to 1k from 440 in commercial and residential areas, as well as gas stations, he added. Infinity EV also has regional expansion plans including Jordan and two other countries, which Abdel Ghaffar did not name.

Morocco lands green loans for SME on-lending: Bank of Africa – BMCE Group (BOA) has secured EUR 13 mn in loans from the European Bank for Reconstruction and Development (EBRD) and the Green Climate Fund (GCF) to support Morocco’s green transition, according to an EBRD press release. The multilateral lender will provide EUR 9.75 mn and EUR 3.25 mn will be provided by GCF. BOA and leasing subsidiary Maghrebail will use the funding to on-lend to SMEs investing in climate change adaptation and mitigation technology. The EU will separately provide a EUR 1.43 mn grant for climate change mitigation and adaptation tech investments.

The funds are an extension of a EUR 25 mn loan provided under Green Economy Financing Facility, signed by the EBRD and BOA in September last year.

KUDOS- UN commends Saudi Arabia + Yemen for their SDG reports: Saudi Arabia was recognized as the country with the best UN country results report among Arab states, while Yemen secured the accolade for the best UN country results report in a challenging setting, according to a UN statement.

The World Sustainability Organization’s sustainable seafood certification body Friends of the Sea awarded Oman-based Al Wusta Fisheries Industries its certification for wild sustainable fishing, according to a company statement released last week.

The National Bank of Bahrain was ranked the Arab world’s leader in ESG performance by financial market data firm Refinitiv’s ESG scoring metric, according to a statement picked up by Trade Arabia on Saturday.

Abu Dhabi headquartered firm Al Masaood Group Industrial’s CEO Hani El Tannir was given the CEO award for sustainability during the GCC Leadership Awards, a company statement released Tuesday notes.

EU adopts EUR 115 mn agricultural and forestry program from Morocco: The European Union adopted a EUR 115 program contributing to Morocco’s “Green Generation” and “Moroccan Forests” national strategies until 2030, according to an EU statement. The strategies aim to protect and manage the country’s forestry and agriculture, bolstering sustainable agriculture value chains, and ensuring decent working conditions for laborers. The program is part of the EU's Economic and Investment Plan for the Southern Neighborhood and aims to support the country in its green transition, according to the statement.

OTHER STORIES WORTH KNOWING ABOUT THIS MORNING-

• EV manufacturer Lucid Motors signed an MoU with KSA’s Human Resources Development Fund to upskill more than 1k Saudis working in the EV manufacturing industry, according to a company statement.

Unicorns of the sea are adapting to climate change, but it may put them at risk: Narwhals have been delaying their seasonal migration to adapt to the effects of climate change, which leaves them at risk of being trapped if extreme weather events occur suddenly, according to new research by the University of Windsor.

Migration plans derailed: The whales are a migratory species that spend summer months in coastal areas devoid of ice, then move to deeper waters between late September and mid-November. The findings suggest the horned water mammals have been acclimatizing to stalled ice formation in Arctic waters by delaying their migration by nearly 10 days each decade — that racks up a total delay of 17 days since tracking began in 1997. While the adaptation to their environment is a good sign, it could put narwhals at risk as extreme weather changes become more frequent, leaving them vulnerable to getting trapped in “landfast ice” — ice attached to the coastline which prevents the animals surfacing for air — and potentially killing off hundreds, the study’s authors warn.