See you in 2023, folks

Good morning, wonderful people. Are you hearing the crickets as some 2.3 bn people around the world put their out-of-office responder on to get ready to celebrate Christmas and ring in the new year?

We’re taking your cue and will be on a one-week hiatus to take in the festivities. Expect us back in your inboxes on Tuesday, 3 January at our usual time.

THE BIG CLIMATE STORY- It was a big day for Saudi Tabreed: KSA’s Public Investment Fund acquired a 30% stake in Saudi Tabreed, the local arm of UAE cooling company Tabreed, in a transaction estimated to be worth USD 250 mn. The mother company also increased its stake in Saudi Tabreed to 21.8%.

^^ We have chapter and verse on this story and more in the news well, below.

THE BIG CLIMATE STORY OUTSIDE THE REGION- No big climate story is making the rounds this morning, but Africa could produce 50 mn tons of green hydrogen worth EUR 1 tn annually by 2035, Bloomberg writes. This comes thanks to the continent’s tremendous solar potential, according to a study (pdf) published yesterday by the European Investment Bank, African Union and others. The continent would be able to produce green hydrogen at less than EUR 2 per kg, equivalent to a barrel of oil, which stands at EUR 90.

Which countries can contribute? The document combines analysis of investment potential and export capacity by 2035 with an emphasis on three hubs: Mauritania-Morocco, southern Africa, and Egypt. Mauritania and Morocco can export up to 7.5 mn tons of green hydrogen through its Spain pipeline and international shipping, while Egypt’s is set to export 12.5 mn tons through its Greece and Calabria pipeline and shipping to Japan and India. Southern Africa is looking at 2 mn tons.

WATCH THIS SPACE- Dubai still plans to spend big on clean energy: The Dubai Electricity and Water Authority (DEWA) reaffirmed its commitment to spend AED 40 bn (USD 10.89 bn) on renewable and clean energy projects over the next five years, according to the Dubai Media Office. The comments were made following a meeting between DEWA and the International Finance Corporation on Tuesday.

Background: DEWA first announced its multi-bn USD plans to expand its electricity and water projects in Dubai last July. Investments will include some AED 16 bn (USD 4.4 bn) to improve and expand the electricity and water transmission and distribution infrastructure, some AED 12 bn (USD 3.3 bn) on IPP projects including the Mohammed bin Rashid Al Maktoum Solar Park and the Hassyan Power Complex and some AED 3 bn (USD 816 mn) on expanding Dubai’s district cooling capacity and network.

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THE DANGER ZONE- Coal consumption is rising to record highs with no signs of abating until 2025 amid a continued energy supply crunch, according to a recent International Energy Agency (IEA) report. The Russia-Ukraine war’s impact on the oil market has forced countries to increase their reliance on coal as supply chain disruptions continue to hike the price of natural gas. The use of coal is set to rise by 1.2% in 2022 surpassing 8 bn tons in a world first, IEA notes.

Extreme weather also played a hand in the surge: Record heat waves this summer drove countries like China — the world’s largest coal consumer — to rely more on the energy source as droughts crippled their hydroelectric generation capacity. Authorities in China’s Sichuan province imposed a closure order on factories in mid August to maintain power supplies to homes during a surge in demand, as the province saw its hottest weather in 60 years and a shortage of water powering its hydroelectric dams.

CLIMATE DIPLOMACY- UAE and Moroccan officials discussed renewable energy ties yesterday in Rabat, according to a statement. Emirati Industry Minister Sultan Ahmed Al Jaber visited Morocco and met with Moroccan Prime Minister Aziz Akhannouch and Energy Minister Leila Benali among other officials to coordinate on energy security and promote climate action.

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CIRCLE YOUR CALENDAR- Saudi Arabia will host the International Conference on Water Resources and Arid Environments next Monday, 26 December and Tuesday, 27 December in Riyadh. The conference will include panels on enhancing water conservation efforts, utilizing tech to maximize management of water resources, combating desertification and upscaling biodiversity efforts. You can register for the event here.

UAE renewable energy firm Masdar will host Abu Dhabi Sustainability Week from Saturday, 14 January to Saturday, 21 January. The event will gather eight presidents and prime ministers and 30k participants in a series of conferences and summits including the Atlantic Council’s Global Energy Forum, the World Future Energy Summit, Masdar’s Green Hydrogen Summit, The International Renewable Energy Agency’s Youth Forum, and the Abu Dhabi Sustainable Finance Forum.

The UAE is hosting the Atlantic Council’s Global Energy Forum on Saturday, 14 January and Sunday, 15 January in Abu Dhabi. The forum will discuss the ongoing global energy crisis and its impact on the green transition, energy security, and decarbonization.

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

PIF acquires 30% stake in cooling company Saudi Tabreed: Saudi Arabia’s sovereign wealth fund the Public Investment Fund (PIF) acquired a 30% stake in Saudi Tabreed through a private placement, according to a regulatory filing (pdf) to the Dubai Financial Market (DFM) yesterday. Saudi Tabreed is the Saudi arm of DFM-listed National Central Cooling Company Tabreed. The stake PIF is acquiring is estimated to be worth some USD 250 mn, Bloomberg reported, citing sources close to the matter.

Tabreed also upped its stake in Saudi Tabreed by acquiring additional shares from Riyadh-based Almutlaq Group, the filing said, bringing its stake to 21.8% in a transaction worth SAR 55 mn (USD 14.63 mn), according to Bloomberg. Saudi Tabreed is co-owned by Tabreed, Almutlaq, Saudi Arabia’s Vision Invest and IDB Infrastructure Fund II.

About Tabreed: Tabreed provides district cooling services across the GCC region, with 86 plants currently in operation, according to its website. In Saudi Arabia, Saudi Tabreed is the exclusive cooling services provider for the Red Sea Project and has long-term contracts with Saudi Aramco, Reuters notes. It is looking to IPO in the next 2-3 years, we noted yesterday.

France’s Total and KSA’s Zahid launch solar project in Saudi Arabia: Saudi Total Petroleum Products (STPP) will begin installing a rooftop solar system on its lubricants blending plant in the King Abdullah Economic City (KAEC) Industrial Valley to provide around 50% of the the plant’s annual electricity consumption, Arab News reports.

The details: The solar system will provide some 390 MWh of renewable energy annually — equivalent to around 50% of the plant’s annual electricity needs — STPP’s managing director Amine Ghezzar told the outlet. The project will be implemented by Saudi French for Energy Efficiency and Renewables (Safeer) — a JV set up by Total and Saudi’s Zahid Group subsidiary Altaaqa Alternative Solutions in 2021 to provide solar installation services to commercial and industrial companies, the outlet says.

Who’s financing? Safeer is investing in the project, Managing Director of Total’s refining and chemical operations in Saudi Ahmed Tarzi told Arab News, without disclosing the size of the investment.

For KAEC and Safeer, this is not their first rodeo: The companies signed a letter of intent to establish “a major hybrid solar power farm project” in August, according to a statement. The agreement sets out a framework to develop a project with an estimated 12.5 MWp capacity. The project will also target greener waste collection, recycling, and the construction of no-landfill certified factories, the statement added, without providing further details.

STPP and Total are increasing their renewable energy activity in KSA: STPP — a JV between France’s TotalEnergies and Zahid Group — is involved in a variety of large solar projects in different regions in KSA, eyeing growth in wind projects, and looking at partnerships with local players to build the circular economy through projects in plastic recycling and used cooking oil, Tarzi added.

Despite global bond market volatility, MENA green bonds and sukuk had a good year: MENA saw some major issuances of green and sustainability bonds and green sukuk in 2022, despite the region’s overall bond issuances remaining low. Investor appetite in green instruments was notably strong, and there are clear commitments from the region’s public and private sectors to raise more sustainable funding, head of MENA Debt Capital Markets at HSBC Khaled Darwish tells Enterprise Climate.

In a nutshell: “When it comes to the breadth of MENA ESG issuances and the sophistication of some of the structures we’ve seen, I would definitely term 2022 as a positive year for the ESG MENA market,” says Darwish. “And there’s more to come in 2023.”

MENA’s ESG issuances got off to a strong start this year, says Darwish. HSBC worked on a number of these transactions, including Saudi National Bank’s USD 750 mn debut ESG sukuk, Saudi’s Riyadh Bank USD 750 mn issuance of its first Tier 1 capital instrument as a sustainable sukuk, and Abu Dhabi’s Sweihan PV Power Company sale of amortizing green bonds — which raised almost USD 701 mn — for its Noor Abu Dhabi solar plant project. All of these transactions closed in the first six weeks of the year

Then market turmoil hit: Overall market issuances began dropping in February on the back of geopolitical developments, including Russia’s invasion of Ukraine, notes Darwish. In 1H 2022, issuance volumes in the GCC plummeted 80% y-o-y due to market volatility and rising interest rates, Reuters noted at the time. In the MENA bond market, overall issuances of bonds and sukuk stood at an estimated USD 60 bn in 2022 compared to some USD 122 bn in 2021, Darwish says. This correlates with the global sustainable bond market, which saw an estimated issuance of USD 775 bn in 2022 year-to-date, down from some USD 1.09 tn in 2021, according to HSBC estimates.

Some interesting MENA issuances still took place — including Majid Al Futtaim’s sale of USD 500 mn in perpetual green hybrid bonds in June — Darwish notes. Renewable energy provider Scatec issued a 19-year USD 334.5 mn green project bond in April in which the European Bank for Reconstruction and Development (EBRD) invested up to USD 100 mn. Morocco’s local rail operator Office National des Chemins de Fer du Maroc also issued the country’s first green infrastructure bond of MAD 1 bn (roughly USD 95 mn), in which the EBRD invested MAD 200 mn (roughly USD 19 mn) in July. These were among the key transactions undertaken by the EBRD in the Southern and Eastern Mediterranean region (SEMED) in 2022, EBRD Principal, Local Currency & Capital Markets Development Razvan Dumitrescu tells Enterprise Climate.

And towards the end of the year, MENA’s green finance was boosted by a landmark issuance: Abu Dhabi Commercial Bank raised USD 500 mn through its first-ever green bond sale in September.

This paved the way for PIF’s whopping USD 3 bn green bond debut: Saudi Arabia’s maiden green bond sale in October by the country’s sovereign wealth fund, the Public Investment Fund (PIF), was a major issuance in the market, says Darwish. PIF sold a total of USD 3 bn in green bonds in a three-tranche sale — which included the issuance of the world’s first 100-year green note.

And another sustainable sukuk sale: Dubai Islamic Bank sold USD 750 mn of its debut sustainable sukuks in November.

The ADCB, PIF and DIB issuances all saw very strong investor appetite: The ADCB issuance was 3.8x oversubscribed, drawing over USD 1.9 in orders. The PIF issuance appeared to be 6x oversubscribed, drawing in some USD 17.9 bn in orders, and the DIB issuance was a little over 2x oversubscribed, drawing more than USD 1.6 bn in orders. This was not unexpected, with Arqaam Capital Associate Director Noaman Khalid noting before the PIF issuance that for European and US investors in particular, “MENA will give them new exposure from a portfolio diversification point of view.”

And throughout the year, HSBC also worked with multiple stakeholders — including Qatar’s Masraf al Rayan — on establishing sustainable finance frameworks, Darwish says. “In general, this has been our busiest year yet in terms of helping MENA issuers establish sustainable finance frameworks,” he adds. Across North Africa, the GCC, and the Levant, Darwish sees a broad group of clients and potential issuers who are working to establish sustainable financing frameworks — or who have at least started the internal discussions that are a precursor to this.

Germany wants hydrogen from Algeria: Algeria’s state-owned oil producer Sonartech signed an MoU with German firm VNG AG to conduct feasibility studies for the construction of a 50 MW green hydrogen plant, Arab News reported. The agreement will see both parties explore the North African company’s green hydrogen and ammonia’s export potential, Sonartech stated. The MoU will also entail the study of joint marketing, generation, and transport capacities.

Australia is exploring green energy projects in Oman: Oman’s Sohar International bank signed an MoU with Australia’s Fortescue Future Industries (FFI) for green energy projects in Oman, according to a statement. The Islamic bank and Australia’s Fortescue Future Industries signed a non-binding MoU to identify potential green energy projects in the Sultanate for FFI, with Sohar making financing arrangements for the projects.

FFI has a pipeline of energy projects in Egypt: The company is currently in talks for land allocation with Egypt’s Suez Canal Economic Zone to begin production at its USD 10 bn, 9.2 GW green hydrogen plant in 2027. In November, the energy producer signed a framework agreement to set up a green ammonia production facility with an annual production capacity of some 2 mn tons in Egypt. It is also reportedly eyeing the extraction of rare earth elements, including silica, in Egypt with potential investments in the country’s mining sector. In September, FFI announced that it aims to produce a potential 9.2 GW of renewable energy in Egypt.

OTHER STORIES WORTH KNOWING ABOUT THIS MORNING-

• China’s Trina Solar appointed Taqa Engineering Solutions as its local authorized distributor in Sudan. (Statement)
• State-owned Hydrogen Oman Company issued a request for proposals for its planned green hydrogen projects. (Construction Week)
• Abu Dhabi’s DANA Global and Morocco’s Agadir Horticultural Complex established a joint innovation hub for resilient and eco-efficient agriculture in Morocco’s Agadir region. (Statement)

Have your cake and eat the spoon too: The UAE’s Green Aura came up with “eatlery” in lieu of cutlery for a more sustainable F&B industry, Khaleej Times reported. The entirely vegan, baked cutlery is a mixture of cereal grains and “doesn’t disintegrate while you’re eating soup, rice or curry,” Green Aura CEO Pooja Ravinath told the media outlet. The new range of biodegradable spoons and stirrers does not alter the taste of your food, but it does have its unique taste once you bite into it, Ravinath added. Some challenges do remain, however — like breakage — but the company is working towards developing sturdier products to ultimately include knives and forks.