ACWA Power could build the world’s second-largest wind farm in Egypt

Good morning, wonderful people. It’s another relatively busy day for our neck of the woods as COP27 grows inexorably nearer.

THE BIG CLIMATE STORY- The UAE is already gearing up for COP28 — which it is set to host next year — with the signing of a USD 100 bn partnership agreement with the US to ramp up green financing in the two countries and roll out clean energy projects in underfunded emerging economies.

It’s also a big news day for Egypt, with news on what could be come among the world’s largest wind farms, fresh investment in green ammonia, and the latest in the country’s

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THE COUNTDOWN TO COP (4 days to go)-

Egypt is championing climate financing for Africa and emerging economies at COP27 — with an emphasis on loss and damage, Egypt’s COP27 lead negotiator Mohamed Nasr said during a webinar organized by Al Ahram. The continent is particularly vulnerable to climate change, but has been passed over by climate investment over the past decade, attracting only 2% of global investment in renewable energy despite its massive solar potential, Nasr said. African governments are spending up to 5% of their GDPs on adaptation, Nasr said, citing data from the Economic Commission for Africa and the African Union. The remedy? Egypt is spearhead talks about loss and damage and what, exactly, constitutes adequate climate financing for African nations.

Climate financing has emerged as one of the key issues of COP27: The developing world’s frustration with rich-country climate policies that have so far failed to provide financial compensation for climate-change-driven loss and damage is expected to prompt a showdown over climate finance, with the issue of economic compensation having gained fresh urgency after this year’s catastrophic floods in Pakistan (which displaced >30 mn people).

Who’s talking about it? A chorus of prominent voices, including UN Climate Champion Mahmoud Mohieldin and the IFC’s VP of cross-cutting solutions Emmanuel Nyirinkindi, both of whom spoke with us at length about the issue. They’re determined to keep the conference focused on securing sustainable, long-term financing for emerging economies struggling with the effects of climate change.

GO DEEPER- Chatham House and the London School of Economics have good primer on climate loss and damage

Our friends at the UAE’s Mashreq Bank is now a sponsor of COP27, after the bank signed an MoU with Egypt’s COP Presidency, according to a statement (pdf). Mashreq will take part in panel discussions on Finance Day (9 November) and Energy Day (15 November). It will also hold separate discussions with customers and partners on the ground to provide guidance and advice for those exploring sustainable financing, the statement adds. The bank has facilitated the provision of some USD 11.7 bn in sustainable finance across the GCC, Africa, Turkey and India in the past two years, according to the statement.

What they said: Group CEO Ahmed Abdelaal noted that beyond the clear need to “protect people and planet,” Mashreq sees “the transition to a low carbon and resilient economy as a real opportunity to double our commitment to sustainable finance and invest in sectors that will drive economic growth and create the jobs of tomorrow.”

We couldn’t agree more: Whether we’re Gen Z, Millennials or Gen X, climate has emerged as the largest and most important industries of our generations.

KEY COP DATES-

• 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

Detailed schedule: Download as a pdf here or check out the website here. COP27 app for attendees: App Store and the Google Play Store.

STILL FEEL LIKE YOU NEED A PRIMER ON COP27? The UN has a surprisingly good rundown here.

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HAPPENING TODAY- In Abu Dhabi: Day three of Adipec kicks off, 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.” The event will wrap tomorrow. Tap or click here to register.

THE GREAT DEBATE-

Africa defends the use of fossil fuels: Africa needs to tap into its natgas reserves for development and industrialization, Reuters reported some industry leaders saying yesterday at Adipec. Renewable energy growth is poised to be substantial but insufficient to meet the continent’s needs, they argued. “There’s a sense in which it is an unjust transition for Africa,” International Energy Forum Secretary General Joseph McMonigle said.

Case in point: The Democratic Republic of the Congo (DRC) defended a July auction of oil and gas permits in parts of the Congo basin rainforest, the Guardian reported yesterday. Conservationists aim to halt the exploration, but DRC officials maintain it’s vital for the country’s economic development and slammed developed countries — including the US, UK and Norway — for urging the DRC to stop fossil fuel exploration while continuing to do it themselves.

THE BIG CLIMATE STORY OUTSIDE THE REGION-

Brazil’s da Silva puts climate action back in the center stage, reversing the Bolsonaro era: Brazilian President Luiz Inácio Lula da Silva made climate a key cornerstone in his re-election campaign, promising that Brazil would “resume its leading role in the fight against the climate crisis.” Da Silva has called for saving tropical rainforests to be a priority at COP27 and wants wealthy countries to increase climate financing to protect forests. His policy team is especially focused on building a global carbon market and financing rainforest conservation. Deforestation fell by more than 80% during da Silva’s previous stint as president between 2003 and 2010.

The renewed climate commitment comes after the Amazon saw its worst wildfires in 12 years this year, in what was the worst August for the rainforest in over a decade, Reuters reported previously. Brazil lost more than 12k square miles (almost 200k square km) of the Amazon under Jair Bolsonaro. In addition to cutting funding for environmental protection agencies, encouraging illegal mining, and making it easy to ignore environmental fines, Bolsonaro is a longtime supporter of logging, mining and cattle.

The story is getting wide pickup this morning in the international press: Reuters | Washington Post | New York Times

Get Enterprise Climate

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CIRCLE YOUR CALENDAR-

The Hawkamah Annual Conference (Building Investor Confidence Through Governance) will kick off on Tuesday, 15 November in Dubai. The conference will address governance from the perspective of investors including expectations and interaction with boards as well as the role of regulators and companies in preparing for IPOs to attract the right investors.

Saudi Arabia’s Education Ministry will host the Global Conference on Sustainable Partnerships on Wednesday, 23 November to Thursday, 24 November in Riyadh, bringing together ministers and senior officials from the private and public sectors. The conference will focus on transforming innovations and scientific research to achieve integration between universities, research, development and the innovation sector.

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

UAE and US enter USD 100 bn agreement ahead of COP28: The US and the UAE have inked a USD 100 bn agreement the two are dubbing “PACE” (partnership to accelerate transition to clean energy). The pact aims to to boost green financing in both countries, according to a White House statement, and channel investment and “other support” to emerging economies. The goal is to scale drive the rollout of low-carbon energy with an eye to seeing an additional 100 GW of clean energy generation capacity built around the world by 2035.

What are the focus areas? PACE will “also invest in the management of harmful emissions like carbon and methane, the development of advanced nuclear technology, and the decarbonization of the industrial and transportation sectors,” the statement said. UAE state news agency WAM has more.

We think the focus on nuclear is spot on: Nuclear power absolutely has a role to play in our future energy mix, as we discussed last month.

PACE pillars: In a bid to move away from fossil fuels and ease the transition to clean energy, the partnership is built on four pillars of clean energy innovation along with deployment and supply chains, carbon and methane management, nuclear energy, and industrial and transport decarbonization, according to a fact sheet released by the White House.

Supporting new climate tech: The partnership will support investment in the extraction, production and processing of energy transition materials. Carbon sequestration and support for advanced nuclear energy is also on the cards, particularly for heavy industry and heavy-duty transport, as well as upscaling clean fuel production for long-distance transport.

Looking ahead to COP28: The partnership announcement comes less than a month after the UAE said next year’s gathering will be “the most significant climate conference since Paris.” We spoke with UAE Climate Change and Environment Minister Mariam Almheiri about the country’s preparations for COP28 in our first issue of Enterprise Climate.

Global media coverage: PACE is getting ink everywhere from The National in the UAE to CNBC in the United States.

Tadawul-listed ACWA Power could build one of the world’s largest wind farms in Egypt as the Saudi renewable energy developer looks to build a 10-GW wind farm in Egypt after signing an MoU with Egypt’s New and Renewable Energy Authority (NREA) and the Egyptian Electricity Transmission Company (EETC) yesterday, the Saudi Energy Ministry said in a statement yesterday. The MoU was signed during a meeting in Riyadh between Electricity Minister Mohamed Shaker and Saudi Energy Minister Prince Abdulaziz bin Salman.

The ACWA plant would be the second-largest wind farm in the world after the Gansu project in China, which has a planned capacity of 20 GW. For comparison, India’s largest wind farm ⁠— Jaisalmer ⁠— has a capacity of 1.6 GW while the 1.55 GW Alta Wind Energy Center in California is the biggest in the US. Egypt’s largest wind farm is the 545-MW facility in Zafarana.

What’s next: Egypt will provide land to conduct feasibility studies for the project ahead of the signing of final contracts, the statement said.

Two days, two wind farms: The news out of Saudi comes a day after Orascom Construction announced it had broken ground on the 500-MW Ras Ghareb wind farm it’s working on alongside Engie and Toyota Tsusho.

This isn’t the only large-scale wind project ACWA is looking at in Egypt: ACWA and Hassan Allam signed in June a 25-year power purchase agreement with the EETC to develop a 1.1 GW wind farm in the Gulf of Suez. The USD 1.5 bn project is expected to reach financial close by 4Q 2024 and begin commercial operations by the end of 2026.

Egypt has set itself an ambitious renewable energy target: Egypt is aiming to produce 42% of its energy from renewable sources by 2030, a target announced during last year’s COP26 summit. This is five years earlier than its previous target.

Qatar eyes USD 1 bn green ammonia plant in Egypt’s SCZone: The Qatar Investment Authority (QIA) is reportedly mulling an investment of over USD 1 bn to establish a new green ammonia plant in Egypt’s Suez Canal Economic Zone (SCZone), the newspaper Al Borsa reports, citing sources it says have knowledge of the matter.

In detail: The project will produce green hydrogen, some of which will go towards the production of green ammonia to be sold as ship fuel, with the aim to start exporting at a later stage. No specific time frame was given for getting the project off the ground, but initial investments could be imminent, the sources are quoted as saying.

Talks may have materialized during El Sisi’s Qatar visit last month: The project specs were agreed on during discussions between QatarEnergy and the Sovereign Fund of Egypt on the sidelines of Egyptian President Abdel Fattah El Sisi’s visit to Doha in September, Al Borsa quoted the unnamed sources as saying.

Egypt currently leads the pack of MENA economies in green hydrogen and ammonia production — while Qatar trails behind: Egypt leads the pack in MENA in terms of the value of green hydrogen projects, with some USD 63.8 bn — just over 35% of the USD 180 bn regional total — according to data from Middle East Business Intelligence picked up in early October. Qatar ranked last, along with Kuwait, with USD 15 mn each. Qatar’s focus has instead been on blue ammonia, with the country’s state-owned petroleum company QatarEnergy’s renewables arm signing agreements in early September to build the world’s largest blue ammonia plant, at a cost of USD 1 bn.

Qatar’s sovereign wealth fund has been eyeing investment in Egypt in recent months: Egypt and Qatar have been in talks for weeks over potential investments from Qatari firms and the QIA, but nothing has yet been officially announced. QIA’s Maha Capital recently paid a visit to the Damietta Port, shortly after inking an MoU to explore port investments with Egypt’s Transport Ministry. The two countries have also held talks about joint investments in oil and gas and in local listed firms. Qatar has pledged to invest USD 5 bn in Egypt, joining Saudi Arabia and the UAE to help shield the country from the fallout from the war in Ukraine.

Turkey’s Galata Wind is getting a USD 45 mn loan from the European Bank for Reconstruction and Development (EBRD) to finance up to 50 MW worth of expansions in two wind power plant projects in Mersin and Balikesir, according to an EBRD statement.

The projects: The onshore wind energy projects that will be expanded are a 105 MW plant and a 62.7 MW Sah wind power project, according to the company’s website. There are no details on how much capacity will be added to the individual projects.

About Galata Wind: Galata currently has an installed capacity totalling 269 MW, both from wind and solar energy projects. It aims to have a generational capacity from renewables to 500-550 MW, the statement quotes Galata Wind’s CEO as saying.

IN CONTEXT- Turkey’s wind energy potential lacks financing, the statement notes. The country currently generates 11 GW from wind power, but has an untapped potential of between 40 to 50 GW from wind energy sources, according to the EBRD.

Egypt pushes its energy hub ambitions in the UAE: Egypt’s Oil Minister Tarek El Molla highlighted moves to turn Egypt into a natural gas import and re-export hub as regional energy ministers met at the Adipec expo in Abu Dhabi, according to a cabinet statement. Egypt is looking to cooperate with the US, the EU, and regional powers to become a major player in the global natgas market, El Molla said, pointing to the work of the East Mediterranean Gas Forum and a recent pact to import and process Israeli gas for re-export to Europe. El Molla also called on international financial institutions to offer concessional financing for gas research and exploration in the region, especially in the eastern Mediterranean.

Mubadala Energy incoming: The UAE’s Mubadala Energy (formerly known as Mubadala Petroleum) will set up a regional HQ in Egypt and wants to invest in the country’s LNG and renewables sectors, CEO Mansoor Al Hamed said, according to a statement from Egypt’s cabinet. Al Hamed’s comments came during a meeting with El Molla on the sidelines of the Adipec conference.

MORE ENERGY NEWS-

Egypt’s Suez Cement is investing USD 25 mn in the waste heat recovery facility at its Helwan plant, Al Mal reports. The plant will use excess heat from production lines to generate 20 MW of power, replacing 30% of the plant’s electricity needs.

Intro Power is pouring more into Egypt’s renewables sector: Intro Group subsidiary Intro Power and Utilities’ renewables investments in Egypt will reach USD 80 mn by the end of the year CEO Hani Helali reportedly told Al Mal. The company is currently in negotiations with three unspecified banks to secure a USD 12 mn loan to cover some of its investment costs, Helali is quoted as saying.

A green growth strategy could more than double the GCC’s projected GDP growth to over USD 13 tn by 2050, according to a World Bank report (pdf). Baseline projections under a “business as usual” scenario would see the region’s GDP growing to USD 6 tn by 2050, compared to c.USD 2 tn penciled in for this year. The region could also establish itself as a “lead producer” of green and blue hydrogen, the report says.

Putting the windfall profits to work: Bumper oil revenues — which have surged this year on the back of the energy shock triggered by Russia’s invasion of Ukraine — present an opportunity to accelerate the transition towards greener energy sources, especially as energy importers begin to place greater emphasis on energy security and decarbonization. Saudi Aramco and BP just yesterday provided a reminder of how lucrative 2022 has been for the oil sector, reporting huge profits for 3Q 2022.

It’s as good a time as ever to double down on renewables, which are now cheaper than fossil fuels: Lower capital costs for renewable energy has already been acting as a major driver behind an increase in installed capacity across the region. “Between 2010 and 2020 the global cost of solar PV projects fell by 85% … while the costs of onshore and offshore wind projects also fell by more than half,” the report says, making solar and wind projects some 30% cheaper than “the cheapest fossil fuel plants.”

Capitalizing on green and blue hydrogen: Falling green hydrogen costs — driven by the falling costs of renewables — promises to make the industry competitive by 2030 for domestic use and for export, the report says. GCC economies are looking to utilize blue hydrogen, which uses fossil fuels with carbon capture and storage, to transition away from hydrocarbons. Projects like Saudi Arabia’s blue hydrogen plant in Jubail and a new USD 5 bn green hydrogen project in Neom, as well as the UAE’s green hydrogen pilot project at the Mohammed bin Rashid Al Maktoum Solar Park, demonstrate the uptake of the technology in the region.

Investing in carbon sequestration: The GCC has incentive to invest in carbon-removal technologies, which can offset its continued investment in fossil fuels as well as offset the emissions in sectors like cement, iron and steel. Carbon capture and storage (CCS), CO2 removal and long-term storage solutions are options, as well as reforestation and bioenergy, the report suggests.

EVs have potential: Saudi Arabia is making forays into the electric vehicle industry, which is projected to grow globally to 147 mn vehicles by 2050, up from almost 7 mn in 2021. The country’s sovereign wealth fund, the Public Investment Fund, invested more than USD 1 bn in US EV manufacturer Lucid Motors in 2018 and the company broke ground on its Saudi plant earlier this year.

Private-sector financing is the critical enabler: While the region’s sovereign wealth funds can kickstart key green investments in the short run, the GCC will need private sector investment to fund and operate large-scale green growth. This is part of a need to migrate away from public sector energy projects and establish green incubators and accelerators to support the private sector.

Green growth = new jobs: The clean energy transition promises to create 85 mn new jobs across the world by 2030 and 25 mn by 2050 in the areas of energy efficiency, power grids, clean hydrogen, energy flexibility and renewables.

BONUS- Clean electricity is the region’s biggest chance to slash emissions: Electricity is responsible for 75% of the GCC’s emissions, with countries already making pledges to increase the capacity of renewables and reduce the use of fossil fuels to power domestic electricity. Saudi Arabia leads the region with its pledge to achieve 50% renewable electricity capacity by 2030. Using renewables for electricity also means freeing up excess capacity of hydrocarbons for export.

Adnoc, India’s Gail look at joint LNG sales + decarbonization: State-owned Abu Dhabi National Oil Company (Adnoc) and Gail Limited signed an MoU yesterday to cooperate on decarbonizing liquefied natural gas (LNG), including monitoring carbon emissions from LNG cargoes, Adnoc said in a statement. The two companies signed the agreement during Adipec.

OTHER STORIES WORTH KNOWING ABOUT THIS MORNING-

• Adnoc set a new upstream methane intensity target of 0.15% from its oil and gas assets by 2025, WAM reports.
• Desert Technologies Group launched a subsidiary, Nurun Digital Energy, to produce solar containers for off-grid portable energy generation, Zawya reports.
• Saudi Arabian chemical manufacturer Sabic and Saudi mining company Ma'aden will each export 25k tons of blue ammonia to South Korean chemical producer Lotte Chemical by the end of the year, Argus Media reports.

Tress for trees: Syrian ecological initiative Green Tress is planning to plant four mn trees to raise awareness about climate change, Arab News reports. The volunteer group will also host climate awareness workshops and teach villagers how to compost.

Facing hurdles: Syria is facing massive environmental challenges including land desertification and a drought threatening the Tigris and Euphrates rivers, as well as geopolitical hurdles as Turkey’s 23 dams have dried up the Euphrates’ tributary rivers. Many lush forests along the northern border were destroyed during the prolonged Syrian civil war when citizens were forced to use trees for survival as fuel sources ran out. Despite these obstacles, Green Tress is determined to effect change, starting at the “household level.”