Turkey, KSA are making big EV plays

Good morning, wonderful people. It’s not a particularly busy news day for the MENA region, but EVs are taking center stage as a US-based EV manufacturer plans to bring the majority of its production to KSA before the end of the decade at the same time as Turkey makes its foray in EV manufacturing. We have more on both stories in Around the World, below.

THE BIG CLIMATE STORY- We have an agenda for COP27, which kicks off in less than a week from today. We have the highlight reel of what to expect below.

Oh, and before we move on: Happy Halloween, folks. What’s your favourite Halloween episode? The Office? Friends? The Simpsons?

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UP FIRST- Egypt rolled out a series of reforms + announced a USD 3 bn IMF loan agreement could impact renewables projects — and unlock fresh climate funding: The Central Bank of Egypt (CBE) on Thursday floated the EGP, went for a 200 bps interest rate hike, and announced that letters of credit (L/Cs) system will be phased out by the end of the year. The IMF immediately followed up with an announcement it signed off on a 46-month USD 3 bn extended fund facility (EFF), according to a statement (pdf).

The EGP lost just over 22% of its value against the USD In the two business days that followed the float, closing yesterday at 24.13.

What does this mean for companies in green industries doing business in Egypt or eyeing the Arab world’s most populous market?

#1- Egypt is in line for an additional USD 1 bn coming from the IMF could support the country’s climate goals, IMF Mission Chief for Egypt Ivanna Vladkova Hollar said in Thursday’s statement. The funding could come from the fund’s resilience and sustainability trust, which was set up to provide general fiscal resilience but will include provisions for climate, too. The financing will be discussed in the coming months.

#2- The phasing out of measures that have effectively blocked non-food imports for months will be very good news for folks trying to get goods in for projects. Importers have struggled to get anything that isn’t edible into the country since the former governor of the central bank imposed restrictions earlier this year. Those restrictions, which required the use of letters of credit to finance imports, will be phased out over the next two months, EnterpriseAM reports, suggesting the logjam will ease.

The restrictions had hit the solar industry particularly hard, Solar Energy Development Association (SEDA) board member Hatem Tawfik told Enterprise Climate in August, calling at the time for “urgent action” in easing import restrictions to keep solar projects operational.

#3- Rising costs in EGP terms, accompanied by higher borrowing costs, will mean some companies need to revisit plans as investment and maintenance costs rise, regardless of how you finance them. We don’t expect the hit to be as sharp as it was last year when soaring global commodities prices drove up solar energy prices, forcing Egypt’s major solar players to increase their prices, delay projects, or accept squeezed margins — but there will be a period of adjustment.

#4- Exporting energy (and other goods and services — like, say, EVs and consulting on the green economy) from Egypt just got more interesting for players that can bias their cost structure toward local-currency inputs — something that will get easier as Egypt looks to give businesses more incentives to make production inputs there. Egypt is on an aggressive drive to position itself as the Eastern Med’s premier energy hub, including building transmission lines to Greece, Saudi Arabia and Sudan, among others.

#5- Thursday’s reforms underscores that the Sisi administration aims the reposition Egypt as an attractive destination for long-term capital — particularly as the announcement came the same week as the government promised to reveal soon policy on how to put the private sector in the driver’s seat when it comes to the economy. Restoring liquidity to the Egyptian market, implementing broad fiscal reforms and undertaking structural reforms to boost private sector participation will all encourage investors to commit capital to the country, EnterprisePM noted on Thursday.

Cue GCC investment in renewables? The devaluation may unlock money from the GCC in particular. While we don’t know if climate-focused investments are on the horizon, it’s reasonable to expect that the GCC could be eyeing climate investment in Egypt, given its recent major uptick in overseas climate investment.

HAPPENING TODAY-

In Abu Dhabi, UAE: Adipec runs today through Thursday, 3 November, gathering some 40 ministers from around the world including the UAE, Kuwait, Bahrain, and Egypt. Discussions will partly focus on the transition toward carbon neutrality. Hosted by Adnoc, Adipec bills itself as “the world's most influential gathering for energy industry professionals.” Tap or click here to register.

In Amman, Jordan: Its day two of the International Investment Forum for Renewable Energy and Energy Efficiency in MENA is taking place, the Jordan’s state news agency Petra reports. The three-day event is organized by the Arab Renewable Energy Commission and tackles renewable energy, energy efficiency, smart cities and grids, green hydrogen and sustainability. Participants include folks from Saudi Arabia, Egypt, Morocco, the US, the UK, Germany, Italy, Greece, and Turkey.

COUNTDOWN TO COP (6 days to go)-

As COP27 is less than a week away, here are some highlights to look out for:

• World leaders’ summit: 7-8 November (more details here)
• Finance day: 9 November
• Decarbonization day: 11 November
• Adaptation and agriculture day: 12 November
• Water day: 14 November
• Energy day: 15 November

A more detailed schedule is available for download as a pdf here and the COP27 phone app is available for download from the App Store and the Google Play Store.

Egypt will announce a new initiative to counter climate change at COP27, Foreign Minister Sameh Shoukry told Al Arabiya (watch, runtime: 27:48). The COP27 President Designate did not share details, but did say that Egypt will revise its national plan to reduce carbon emissions.

Hassan Allam Holding is now a provider sponsor at COP27, the company said in a statement (pdf).

US President Joe Biden is heading to Egypt next week to attend COP27 on Friday, 11 November, White House spokesperson Karine Jean-Pierre confirmed.

…but, British Prime Minister Rishi Sunak and King Charles will not be attending COP27, citing “other pressing domestic commitments,” Reuters reports.

Beijing turns up the Rhetoric-o-Meter: “Empty slogans” won’t solve the climate crisis, China tells the west: China, the world’s largest carbon emitter, says Western nations must contribute more than “empty slogans” in the climate-action fight, Reuters reports. Li Gao, head of the climate change office at China’s Ecology and Environment Ministry, said “real ambition” is needed ahead of COP27 to bankroll the USD 100 bn pledged by “rich nations” in 2009. China has been facing criticism for its continued reliance on coal consumption, which represented 56% of its energy consumption in 2021, according to Carbon Brief.

THE BIG CLIMATE STORY OUTSIDE THE REGION-

France’s largest state investment bank Caisse des Dépôts hopes to drum up EUR 60 bn by 2024 for an energy transition, according to a press statement. The investment bank also released its Adaptation Action Plan (pdf) centered on safeguarding infrastructure, real estate, and vulnerable territories against climate-related threats.

MEANWHILE- Greenhouse gases (GHG) in our atmosphere have hit an all-time high and “time is running out,” the UN’s World Meteorological Organization (WMO) said last week. Carbon dioxide, methane, and nitrous oxide — the three biggest contributors to climate change — are reaching record levels, the WMO reports in its Greenhouse Gas Bulletin (pdf), a document aiming to propel negotiations forward at COP27. Other findings show that GHG levels rose by approximately 50% between 1990 and 2021. More ominous still: Global methane concentrations increased at the fastest y-o-y pace in 2021, rising 18 parts per billion from 2020.

If transformational change does not take place, “the world is headed for 2.8°C of global heating” by 2100, UN Secretary General António Guterres stated in a video commenting on the findings of the UN Environment Programme’s Emissions Gap Report (pdf).

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WATCH THIS SPACE #1- Nearly 90% of MENA-based public companies don’t disclose any quantitative data on sustainability, making us a “laggard” in reporting, according to a press release by sustainability tech platform Clarity AI. Globally, only 30% of public companies disclose at least one quantitative sustainability metric. The platform recently reviewed 40k global public companies for insights into businesses’ environmental and social impact and financial performance, it says.

“Significant” regional variation on reporting: Within MENA, only 11% of public companies report anything on sustainability, compared to 44% in North America and 40% in Europe. Only 5% of public companies in MENA report scope 1 and scope 2 greenhouse gas (GHG) emissions — defined by the GHG Protocol Corporate Standard (pdf) as “direct emissions from owned or controlled sources” and “indirect emissions from the generation of purchased energy” — compared to 30% of public companies in Europe.

WATCH THIS SPACE #2- Tadawul-listed Acwa Power is entering new markets including Indonesia and Thailand while expanding its presence in existing markets, CEO Paddy Padmanathan told Arab News at last week’s Future Investment Initiative. The KSA-based company recently signed agreements to finance and build two new floating solar plants in Indonesia — with three similar projects in the pipeline — and is eyeing an unspecified project in Thailand. Acwa is also mulling new projects in existing markets like Uzbekistan, Azerbaijan, South Africa, Morocco, Senegal, and Egypt. Meanwhile, its 700 MW solar power plant in Dubai is set to come “fully online” in 2023.

ALSO- Acwa is getting EBRD funding for sustainable infrastructure: Acwa Power and the European Bank for Reconstruction and Development have signed an agreement to finance sustainable infrastructure projects over the coming five years, the Saudi developer said in a press release. The financing will cover green hydrogen, renewable energy, and green desalination projects in Uzbekistan, Azerbaijan and Egypt. No details on the financing, including the size or type of funding, have been disclosed yet.

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WORTH READING-

Digital public infrastructure could contribute to lower carbon emissions globally, the World Economic Forum (WEF) said on Wednesday. A digital platform would offer better measurement, reporting, and verification (what the nerds are calling MRVs) of Nationally Determined Contributions (NDCs) commitments made in the 2015 Paris Agreement. Seeing as there are no standardized measures against which NDCs can be evaluated, the WEF argues an open source, interoperable — “between reporting mechanisms and various climate finance platforms across countries” — platform will enable the collection and aggregation of data, monitor carbon markets, and contribute to implementing carbon capture. A climate DPI-MRV can be implemented by emulating digital payments platforms.

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CIRCLE YOUR CALENDAR-

The Egypt Energy Conference kicked off yesterday and is running until tomorrow 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 also kicked off yesterday and wraps this 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.

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

It’s been a big couple of days for the EV industry in our corner of the world, and recent policy developments in Europe suggest MENA’s electric future could be accelerated.

Turkey revealed its first locally-produced electric car on Saturday as part of its efforts to position itself as a key regional automotive producer, according to Bloomberg. Turkey’s Automobile Joint Venture Group (Togg) — a local joint venture set up in 2018 — plans to launch five models by the end of the decade, with a C-segment SUV the first to go on sale at the end of 3Q 2023.

By the numbers: The new EV will have 65% of its parts locally-manufactured by 2025, up from an initial 51%. Some 1 mn cars are expected to have rolled off the production lines by the end of the decade, with the project contributing USD 50 bn to the economy over the next 15 years.

This is what Egypt is aspiring to: Egyptian officials have been trying for years to get a foreign car manufacturer on board to help state-owned El Nasr Automotive produce an Egyptian EV. Following the collapse of talks with Dongfeng last year, the government has been negotiating with BAIC Group though a final agreement is yet to materialize.

MEANWHILE- 80% of all electric vehicles produced by US-based EV manufacturer Lucid Motors will be made in Saudi Arabia by 2030, Lucid’s Vice President for MENA, Faisal Sultan, told Bloomberg Asharq last week.

An ambitious target: The company plans to produce 155k EVs yearly in Saudi Arabia once full-fledged production capacity is achieved by 2025, Sultan said.

BACKGROUND- Lucid and Saudi Arabia signed an agreement in February to build a full production plant in the country that could potentially earn the EV manufacturer USD 3.4 bn over 15 years. Construction of the facility began in May. Lucid Motors recently signed an MoU with KSA’s Human Resources Development Fund to upskill more than 1k Saudis working in the EV manufacturing industry.

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The EU voted to ban the sale of new combustion vehicles and mandated carmakers cut 100% of CO2 emissions by 2035, the European Commission said in a press release on Friday. The standards will require average emissions of new cars cut by 55% and new vans by 50% by 2030 compared to 1990 levels. Manufacturers producing smaller fleets of less than 10k cars and 22k vans annually have lower initial targets, although all manufacturers are expected to reach the final target by 2035. The EU will draft a proposal on how to allow cars running on CO2 neutral fuels to be sold after 2035.

This is the first step in the adoption of the EU’s ‘Fit for 55’ package: The package is a set of proposals to ensure that policies enable the EU to reach its climate goal of reducing the bloc’s emissions by at least 55% by 2030. The bloc is also working on legislation to make the EU climate-neutral by 2050. Achieving the emission reductions is part of a plan to make Europe the world’s first climate-neutral continent by 2050.

Not on board: The European Automobile Manufacturers Association (ACEA), which called the decision “far-reaching” and “without precedent,” in a statement. ACEA, an association of Europe’s top 16 vehicle manufacturers, stressed the need for the EU to work on enabling conditions to make the transition including providing ample renewable energy, a robust private and public charging infrastructure network, and access to raw materials. ACEA President and CEO of BMW also stressed the need to address emissions from existing fleets in order to ensure affordability for car-owners.

US lithium-ion battery recycling company Ascend Elements has secured USD 300 mn in equity and debt financing, it said in a statement. USD 200 mn of the total investment consists of series C equity funding — with investors including the Oman Investment Authority — the statement noted, without giving any information about the size of funding from individual investors or their equity stakes. No further information was provided on the remaining USD 100 mn. Ascend was also recently awarded two grants totaling USD 480 mn from the US Department of Energy.

The series C funding will “accelerate construction” of Ascend’s new EV battery material facility in Kentucky — which it plans to invest up to USD 1 bn. Ascend is targeting production in the new facility of enough of the lithium-ion core materials CAM and pCAM from recycled batteries to equip up to 250k EVs per year, the statement noted.

Who else is investing: The funding round was led by US-based VC fund Fifth Wall — which recently closed a USD 500 mn climate fund — and joined by investors including South Korea’s SK Ecoplant and Mirae Asset Capital, Israel’s Doral Energy-Tech Ventures, Hong Kong-based GLy Capital Management‘s New Mobility Fund, and US-based TD Ventures, Lithium Americas Corporation and Orbia Ventures.

Who are Ascend Elements? The company recycles used lithium-ion batteries by extracting, refining, and selling core materials for new battery manufacture, according to its website. It expects to recycle over 150k metric tons of lithium-ion batteries per year globally by 2026 and is already generating revenue and processing end-of-life batteries at a facility in Georgia that is targeting 30k metric tons of EV battery recycling capacity by the end of 2022, according to the statement.

The trend of GCC investment in western green assets is far from slowing: In recent weeks, we’ve seen an accelerating trend of GCC acquisitions and investment in green assets, from the US to Europe and even Australia. These include investments from the UAE’s Mubadala, GCC-focused alternative asset manager Wafra, Kuwait’s Agility Ventures, and the QIA (here and here).

Lest we forget Uncle Joe’s big EV production plans: US President Joe Biden doled out USD 2.8 bn in grants earlier this month to spur EV manufacturing and domestic mineral production — with Ascend being one of the grant recipients. Biden is targeting 500k new EV charging stations by 2030 and wants 50% of all new vehicles sold by then to be electric or plug-in hybrid electric models, he said at the annual Detroit Auto Show in September.

Etihad Airways’ first SAF-fueled flight took off from Tokyo last week, WAM reports. The flight, which used an almost 40% blended sustainable aviation fuel (SAF), had lower CO2 emissions, and optimized flight planning using Satavia technology prevented contrails, reducing its net climate impact by 71 tCO2 equivalent (tCO2e). Contrails, or aircraft condensation trails, are responsible for up to 60% of the aviation industry’s climate footprint.

The fuel is courtsey Japan: Itochu Corporation established a SAF supply network at domestic airports across Japan for domestic carriers, which is now being expanded to international carriers starting with Etihad. The Japanese government set a goal of replacing 10% of the aviation fuel used by Japanese airlines with SAF by 2030.

Etihad aims to slash its 2019 emissions by 50% by 2035 and achieve net zero by 2050, WAM quotes Etihad’s VP of procurement and supply chain as saying.

Water concerns on the brain: A third of all respondents across MENA cited daily concerns about water scarcity and pollution as the main environmental challenge facing their country, according to Princeton University’s Arab Barometer report.

A variation of responses on water: The study, which surveyed over 26k people in 12 countries, found MENA citizens differ in what they found to be the most concerning water-related issues in their country. At least half of those surveyed in Egypt, Iraq, Tunisia, Sudan, and Jordan were concerned with the pollution of drinking water. In Kuwait and Libya, the pollution of waterways was a more important issue, while Algerians voiced more concern about a lack of water resources.

Waste management and hazardous waste contamination was the second greatest concern for MENA residents, while respondents who do not grapple with issues of food and water security spoke up about the need for governments to address climate change.

Water contamination is the leading cause of the region’s most recent cholera outbreak, which has returned to Lebanon for the first time in 30 years following an outbreak in Syria earlier this year, the World Health Organization reports.

The UAE has big green hydrogen ambitions: The UAE is eyeing 25% of global low-carbon hydrogen export markets and has seven projects in the pipeline, Asharq Green cites UAE Energy Minister Suhail Al Mazroui as saying. The UAE is looking to build large-scale hydrogen and ammonia production facilities and establish itself as a leading provider in EU, East Asia, Japan, South Korea, and Germany.

AND- Morocco’s OCP Group is setting up two new subsidiaries to lock in its water and energy needs, Morocco World News reports. The state-owned phosphate mining company is entering a joint venture, OCP Green Water, with unnamed partners to generate 85 mn cubic meters of non-conventional (recycled or desalinated) water by next year. The new water facility will be powered by a second subsidiary, OCP Green Energy, which will produce 30 MW to power the Green Water project by 3Q 2023.

ALSO- UAE retail giant Majid Al Futtaim rolled out in Egypt its multi-year plan to phase out its use of single-use plastics by 2025, according to a Environment Ministry statement.

OTHER STORIES WORTH KNOWING ABOUT THIS MORNING-

• Egypt-based chemical company ASCOM Carbonate and Chemicals Manufacturing is constructing a 7 MWh solar energy plant at one of its factories in Upper Egypt, Zawya reports. Taqa Arabia is the project’s contractor.
• Saudi Electricity Company is leasing 23 mn sqm of land in Al Badayea governorate to build solar, wind and waste energy-powered projects, according to a Saudi Press Agency statement.
• KSA’s national flag carrier Saudia will purchase 100 electric jets from German sustainable air taxi manufacturer Lilium, according to a company statement.
• South Africa and Indonesia will each get USD 500 mn from the Climate Investment Funds (CIF) to decommission coal plants and decarbonize as part of CIF’s Accelerating Coal Transition, according to a board announcement.
• Siemens Smart Infrastructure Middle East inked an agreement with Omani vehicle manufacturer OTE Group to upscale EV charging infrastructure throughout Oman, according to a company statement picked up by Zawya.
• State-owned Netherlands Enterprise Agency commissioned Dutch sustainable mobility firm EVConsult to help increase the number of EV charging stations in Morocco, according to a company statement (Dutch).
• Oracle Energy Limited signed an MoU on Wednesday with Dubai-based carbon management company Blue Carbon LLC to “develop a decarbonization roadmap,” according to a company statement.
• Abu Dhabi-based renewable energy giant Masdar opened a new office in Riyadh, Saudi Arabia, according to a company statement.

Who said you can’t reduce waste while enjoying some tunes? Moroccan developer Driss Ait El Haj rolled out a USD 3.5k road sweeping solar-powered vehicle in the southern Moroccan city of Ouarzazate, complete with bluetooth speakers to allow refuse collectors to enjoy music while they’re on the job, Morocco World News reported last week.

The solar-powered EV packs two photovoltaic panels, two storage batteries, a broom for road sweeping, and a shading system to protect drivers from Ouarzazate’s blistering heat during summer months.

The Moroccan developer has more solar-powered vehicles up his sleeve: El Haj plans to build solar-powered bikes for touristic joy rides in the sunny Moroccan cities of Marrakech, Ouarzazate and Zagora (watch, runtime: 2:03).