Wednesday, 18 January 2023

Will Saudi Aramco invest in a hybrid engine JV with Renault-Geely?

TL;DR

WHAT WE’RE TRACKING TODAY

Good morning, wonderful people. The weekend is within our sights, but the regional news shows no signs of slowing down.

THE BIG CLIMATE STORY- UAE’s Amea Power is expanding its West African portfolio with a new 50 MW solar plant in the Ivory Coast, and Adnoc has teamed up with several international players to launch decarbonization partnerships. Over in Morocco, a factory for the production of solar-powered water heaters broke ground in a bid to curb imports and pave the way for carbon neutrality.

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

THE BIG CLIMATE STORY OUTSIDE THE REGION- The EU is preparing its own set of green incentives to rival Biden’s Inflation Reduction Act (IRA) and stop businesses moving to the US. The European Commission (EC) — the EU’s executive arm — is drafting a new law that will focus on boosting investment in green industry in Europe, EC President Ursula von der Leyen said at Davos yesterday. The new legislation will be complemented by state aid and a European Sovereignty Fund, von der Leyen added. This is all designed to make Europe a more competitive place for green industry, especially in light of US President Joe Biden’s IRA, which is set to heavily subsidize US-made products in a bid to boost renewable energy and address the climate crisis. The story is seeing widespread coverage: Reuters | Financial Times | Wall Street Journal | RTE | CNBC | Bloomberg

And at Davos, Kerry calls for “money, money, money” to keep 1.5°C target alive: US climate envoy John Kerry issued a stark warning at Davos yesterday that the world seemed unlikely to transition to a low-carbon economy in time to “avoid the worst consequences of the [climate] crisis,” with dire repercussions for mns of people all over the world. To fulfill emissions-slashing promises and preserve any hope of sticking to the 1.5°C target — which Kerry maintained the US is committed to — money is essential, he added. The story is being widely picked up: Reuters | Wall Street Journal | CNBC


SIGN OF THE TIMES- Is the generational gap around sustainability closing? While past studies have centered around younger generations of investors being more concerned about sustainability and climate change when it comes to making investment decisions, a recent Investcorp survey has proven otherwise. The survey polled global institutional investors and found that both senior and junior investment professionals use concerns about the future of the planet when making investment decisions. The survey found that renewables, energy security, and EV and battery storage ranked high as top trends in investment for both junior and senior investment professionals.

WATCH THIS SPACE #1– Kuwait’s renewable energy ministry is getting a makeover: The Kuwaiti cabinet has approved a plan to transform the Electricity, Water, and Renewable Energy Ministry into an institution with the authority to establish government affiliated companies within the sectors, Times of Kuwait reports. The study still needs another round of approvals required by the country’s Central Agency for Public Tenders for the inclusion of third party foreign consultants to conduct feasibility studies.

WATCH THIS SPACE #2- Renewables drive FDI surge in KSA: Saudi Arabia is expected to surpass the UAE in the amount of FDI this year for the first time since 2012, Arab News reports. Megaprojects like NEOM and others in the renewables sector are a key driver. KSA’s top seven infrastructure projects — which also include sustainability initiatives like the Red Sea Project and Diriyah Gate — will collectively cost USD 690 bn to construct, the outlet added.

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CIRCLE YOUR CALENDAR-

Bahrain will host the Energy & Sustainability Forum from next Sunday, 22 January to Tuesday, 24 January in Manama. The forum will host panel discussions on how to decarbonize the downstream industry and how to pave the way for regional net zero objectives.

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

SOLAR

Amea Power expands renewable energy presence in West Africa

The UAE’s Amea Power is set to build a 50 MW solar power plant in the Ivory Coast after signing a concession agreement and a 25-year power purchase agreement (PPA), according to a statement. The USD 60 mn plant will be the first solar Independent Power Project (IPP) in the country and will be developed under a Build-Own-Operate-Transfer (BOOT) model. Amea inked the PPA with the West African country’s Energy Ministry at the Abu Dhabi Sustainability Week this week. The timeline of the project has not been disclosed.

The details: The solar project will produce over 85 GWh of clean energy annually. Energy will be distributed through Compagnie Ivoirienne d'Electricité, a private provider operating under a concession agreement with the government.

Not Amea’s first foray in West Africa: The company expanded its project in neighboring Togo last November by adding 20 MW to the Mohammed bin Zayed solar power plant, bringing its total capacity to 70 MW. The Dubai-based renewable energy company previously developed the first two phases of the Mohammed bin Zayed solar power plant, which became operational in June 2021.

And there’s more in the pipeline: Amea is in the final stages of construction for a solar project in Burkina Faso and developing a solar project in Mali.

Amea’s regional presence is on the rise: The company’s portfolio includes a USD 800 mn, 500 MW green hydrogen plant in the Suez Canal Economic Zone in Egypt, a USD 100 mn, 100 MW solar plant in Tunisia, a 100 MW wind project in Morocco and a 500 MW wind project in Egypt with Japan’s Sumitomo, among others. The company also has 6 GW of renewables projects in 15 countries in the pipeline.

SOLAR

Morocco begins work on a solar powered water heaters factory

Morocco’s GI3 broke ground on a USD 4.9 mn solar-powered water heater production facility this week, according to a statement from Morocco’s Industry and Commerce Ministry. The factory is expected to come online by 2Q 2023, Bloomberg Asharq reports.

The details: The Mysol Ces factory will have a production capacity of 40k units annually by 2024, with plans of expanding production capacity to 90k in coming years, the statement notes. The second phase of the project will include a solar PV panels and modules factory production facility with an investment ticket nearing USD 59 mn, Bloomberg Asharq quotes GI3 CEO Badr Ikken as saying.

A step away from import reliance…: The country’s imports of solar powered water heaters amount to some USD 20 mn from China and India, Morocco’s Industry and Commerce Minister Ryad Mezzour told Bloomberg Asharq. The units produced in Mysol Ces will initially be earmarked for the Moroccan market, with plans to export to international markets after the production volume expansion.

…And a step towards larger carbon neutrality ambitions: Moroccan state-owned fertilizer manufacturer OCP Group is earmarking USD 12.3 bn to invest in solar and clean energy projects as it looks to rely entirely on renewables to power its facilities by 2027, OCP CEO Mostafa Terrab said in a meeting with Moroccan King Mohammed VI (watch, runtime: 5:48).

Morocco has a lot of clean energy projects in the pipeline: Egypt’s Hassan Allam Holding is mulling investing USD 50-150 mn in Moroccan renewable energy and desalination projects in 2023, while Egypt’s Orascom Investment Holding is eyeing an initial USD 100 mn investment in renewable energy, EV charging stations, and agro-industrial sectors in the North African country. Independent power producer Lekela is also exploring projects in Morocco, CEO Chris Antonopoulos told the Africa Report in November. Indian conglomerate Adani Group also signaled potential investments in renewables projects with a combined 10 GW capacity in Morocco to supply green ammonia to Europe last October.

ELECTRIC VEHICLES

Is Saudi Aramco hopping on the hybrid engine bandwagon in a new Renault-Geely venture?

Renault, Geely seeking to onboard Aramco in forthcoming JV: French car manufacturer Renault and China’s Geely are looking to finalize an agreement to bring Saudi Aramco into a joint venture (JV) intended to develop more efficient gasoline engines and hybrid automotive systems, Reuters reported yesterday, citing unnamed sources. The oil giant is reportedly in “advanced” discussions to potentially assume a stake of up to 20%, Reuters quotes its sources as saying. The value of Aramco’s potential investment is not known. If the agreement moves forward, it would make Aramco the first major oil producer to invest in the car business, the outlet added.

Next steps: The agreement between Aramco, Renault and Geely needs approval by the boards of the carmakers, according to one of the sources quoted by Reuters. The three firms reportedly plan to finalize a letter of intent within the coming weeks.

What we know about the new company: Geely and Renault plan to set up a powertrain tech company this year with the capacity to produce over 5 mn low-emission and hybrid engines and transmissions annually, Reuters noted, citing a document it’s seen. The JV would make use of Renault’s existing combustion-engine production and Geely’s gasoline and hybrid tech, the sources reportedly said. Renault and Geely would each hold a 40% stake in the JV, Reuters notes.

A cross continental plan in the works: Renault and Geely first announced their establishment of the JV in November last year, saying the company would eventually have 17 powertrain plants on three continents, with five research and development centers and some 19k employees.

What would Aramco bring to the table? Funds from Aramco’s investment in the JV would go towards developing decarbonization technologies for gasoline engines, according to a document seen by Reuters. Aramco “would also contribute to research and development of powertrain technologies, especially synthetic fuel solutions and next-generation hydrogen technologies,” it added.

This isn’t the first time Aramco has shown interest in hybrid engines: Last year, the oil company entered into a two-year partnership with Hyundai to jointly research and develop an emissions-reducing fuel for hybrid vehicles.

But why hybrid as opposed to fully electric? Industry leaders, including Toyota CEO Akio Toyoda, have cautioned against setting targets that are too ambitious for the EV transition, saying that EVs are expensive and charging infrastructure needs to be extensive for widespread adoption to take hold. Toyota sees hybrids as a more affordable option in cutting emissions.

DECARBONIZATION

UAE’s Adnoc + friends launch decarbonization partnerships

Adnoc, Thyssenkrupp collaborate on ammonia cracking: UAE’s Adnoc and German industrial engineering multinational Thyssenkrupp signed an MoU this week for the joint development of large-scale ammonia cracking to extract hydrogen from ammonia after transportation, according to a Thyssenkrupp statement.

Enterprise, what is ammonia cracking? Hydrogen can be generated from ammonia through a process called thermal decomposition or catalytic cracking, a US Energy Department study (pdf) notes. This basically involves splitting ammonia into hydrogen gas and nitrogen using metal catalysts like nickel at very high temperatures.

And why is this process important? To address the challenge of transporting hydrogen. Effectively transporting hydrogen is notoriously difficult, and ammonia is an ideal way to distribute hydrogen, as it’s much easier to compress and transport. The Adnoc-Thyssenkrupp partnership aims to address how to drive the global green hydrogen trade to scale and pave the way for green hydrogen exports to Europe and elsewhere, the statement notes.

How would the new partnership work? Under the agreement, Thyssenkrupp’s Uhde construction engineering unit would provide Adnoc with its ammonia cracking technology, already in use in over 130 chemicals plants globally, Reuters notes. Thyssenkrupp and Adnoc would then work together to set up “large scale” ammonia cracking plants — presumably in the UAE.

IN OTHER ADNOC NEWS-

Adnoc-funded projects seeks to permanently trap CO2 in rocks: Adnoc is investing USD 15 bn in a partnership with the Fujairah Natural Resources Corporation, renewables developer Masdar, and Omani carbon removal and mineralization firm 44.01 to pilot technology that will permanently mineralize CO2 in rock formations in Fujairah, according to a Wam statement. If successful, the pilot — due to start this month — could pave the way for bns of tons of captured CO2 to be mineralized across the region, the WAM statement adds.

The details: The project will use 44.01’s proprietary Carbon Capture and Mineralization (CCM) technology to capture CO2 from the air, dissolve it in seawater, and inject it into formations of peridotite — a kind of rock that naturally mineralizes CO2 — deep underground in Fujairah, an area with abundant reserves of peridotite, the statement notes. This traps the CO2 in mineral form, removing it from the atmosphere. Masdar will supply solar energy to power the project.

What we don’t know: It is unclear whether Adnoc is footing the entire bill for the pilot project, nor what the total cost of the project will be.

Lots of decarbonization agreements signed between Adnoc and Japanese firms: Adnoc CEO — and newly-appointed COP28 President — Sultan Al Jaber signed an agreement to collaborate on decarbonization technology with Japan’s Minister of Economy, Trade and Industry Yasutoshi Nishimura, according to Gulf News. Adnoc also signed a joint study agreement with Japan’s Tsubame BHB on new ways to manufacture ammonia, and Emirati renewables firm Masdar signed an MoU with Japan’s JERA on green hydrogen and renewable energy, Gulf News notes. Adnoc owns a 43% stake in Masdar’s nascent green hydrogen business and a 24% stake in its renewables business as of December.

CLIMATE FINANCE

New World Economic Forum initiative aims to unlock tns for climate action

The World Economic Forum launched an initiative that could drum up USD 3 tn for climate action by leveraging global philanthropic capital, according to a statement. The Giving to Amplify Earth Action (GAEA) initiative aims to finance public, private, and philanthropic partnerships (PPPPs) and expand on existing ones to achieve net zero targets by 2050. GAEA has garnered support from 45 partners including academic and philanthropic institutions, individuals and governments including Egypt.

How will that happen? GAEA will convene public and private stakeholders to agree on specific climate targets where they can influence positive change, pilot new funding models, and amend existing ones to accommodate PPPP participation, and scale up and emulate best practices.

Why is this important? The climate finance gap is huge with the need for private capital to drive efficient climate action topping the COP27 agenda last November. The world currently needs USD 100 tn to plug the deficiency, according to WEF. Other proponents of climate action think the outlook is bleak, with Egypt’s UN high-level climate champion Mahmoud Mohieldin telling Enterprise Climate in an interview last month that “USD 100 bn is less than 3% of what’s needed.”

… but the money is there: Philanthropic donations accounted for over USD 800 bn in 2021, but only 2% of that amount went to climate and nature-focused efforts, WEF says. GAEA intends to wield philanthropy as a driving force to advance capital mobilization beyond private funds and take advantage of PPPPs to plug the gap.

ALSO ON OUR RADAR

Is KSA lining up mining regulation ahead of the minerals push? Saudi Arabia’s Industry and Mineral Resources Ministry recently signed an MoU with the country’s Diriyah Gate Development Authority (DGDA) — a government agency focused on the ecological preservation and cultural development of the Diriyah Gate area north-west of Riyadh — to regulate the country’s mining businesses, Arab News noted on Sunday, citing reports from the Saudi Press Agency. The story is light on details — including specific information about how the two organizations will collaborate — though it notes that they will exchange geophysical and geotechnical data, as part of determining locations to mine materials.

Sabic inks agreement for ammonia production tech: KSA fertilizer company Sabic Agri Nutrients signed an agreement with Icelandic firm Atmonia to use its sustainable ammonia production technology in Saudi Arabia, Bahrain, Kuwait, and Oman, according to a statement. The Icelandic company is developing a nitrogen electrolyzer that will produce ammonia using electricity, atmospheric nitrogen, and water.

Japan, UAE partner on clean energy adoption and decarbonization: The UAE signed several MoUs with Japan to boost the clean energy transition, Wam reports. Agreements inked covered several areas across the renewables and clean energy sector including boosting cooperation on advanced technologies for carbon reduction targets, research and development in ammonia manufacturing, and green hydrogen. The MoUs fall within the framework of a comprehensive economic partnership signed by the two countries in September 2022.

OTHER STORIES WORTH KNOWING ABOUT THIS MORNING-

  • Regeny and EvGateway are supplying the UAE with 10k EV fast charging stations by 2030. (Statement)
  • Chinese solar components manufacturer JA Solar signed an agreement to supply Amea Power with Deep Blue 3.0 PV panels for Amea’s 560 MW Kom Ombo Abydos solar plant. (Statement)

ON YOUR WAY OUT

Toyota electrifies cars from the 80s: Japanese automaker Toyota Motor has unveiled retrofitted versions of their 1980s AE86 sports car models powered by electric and hydrogen engines (watch, runtime: 9:47). The two retrofitted models that Toyota will roll out — the AE 86 Trueno which has a hydrogen engine and the Levin EV — are part of a push by the company to supply car enthusiasts with carbon-free vehicles. The company is investing USD 70 bn in electrifying their cars and manufacturing EV batteries by 2030, with a target to sell no less than 3.5 mn electric vehicles by the same year.

MENA is no stranger to the retrofitting game: Egyptian electric mobility company Shift EV has developed a retrofitting process based on proprietary Lego-like, locally manufactured batteries that can turn any conventional vehicle into an EV. We interviewed Shift EV founder Aly Eltayeb last year, and discussed with him how to build a USD bn climate business at the Enterprise Climate X Forum last month.

CALENDAR

JANUARY 2023

14-21 January (Saturday-Saturday): Abu Dhabi Sustainability Week, Abu Dhabi, UAE.

22-24 January (Sunday-Tuesday): Energy & Sustainability Forum, Manama, Bahrain.

January 2023: Bid submission deadline for green hydrogen projects to Hydrogen Oman (Hydrom).

FEBRUARY 2023

6-8 February (Monday-Wednesday): Saudi International Marine Exhibition and Conference, Riyadh, Saudi Arabia.

4-9 February (Saturday- Wednesday) International Association for Energy Economics’ International Conference, Riyadh, Saudi Arabia.

13-15 February (Monday-Wednesday): The Egypt Petroleum Show, Cairo, Egypt.

21-22 February (Tuesday-Wednesday): The Arab Green Summit, Dubai, UAE.

21-23 February (Tuesday-Thursday): World Environment, Social and Governance (ESG) Summit, Dubai, UAE.

MARCH 2023

15-19 March (Wednesday-Sunday): Qatar International Agricultural and Environmental Exhibition, Doha, Qatar.

MAY 2023

1-4 May (Monday-Thursday): Arabian Travel Market, Dubai, UAE.

2-7 May (Tuesday-Sunday): Salon International de l’Agriculture au Maroc (SIAM), Meknes, Morocco.

16-18 May (Tuesday-Thursday): Seatrade Maritime Logistics Middle East, Dubai, UAE.

29-31 May (Monday-Wednesday): Electric Vehicle Innovation Summit, Abu Dhabi, UAE.

JUNE 2023

Bloomberg New Economy Gateway Africa Conference, Marrakesh, Morocco.

1-3 June (Thursday-Saturday): Envirotec and Energie Expo, Tunis, Tunisia.

SEPTEMBER 2023

Chariot Limited and Total Eren’s feasibility study on a 10 GW green hydrogen plant in Mauritania to be completed.

OCTOBER 2023

2-4 October (Monday-Wednesday): WETEX and Dubai Solar Show, Dubai, UAE.

NOVEMBER 2023

6-17 November (Monday-Friday): Conference of the Parties (COP 28), Dubai, UAE.

EVENTS WITH NO SET DATE

End-2022

KSA’s Neom wants to tender three concrete water reservoir projects to up its water storage capacity by 6 mn liters.

2023

Early 2023: Egypt’s KarmSolar to launch KarmCharge, the company’s EV charging venture.

1Q2023: Oman will award two blocks of land for green hydrogen projects in Duqm, Oman.

Mid-2023: Sale of Sembcorp Energy India Limited to consortium of Omani investors to close.

Phase C of the 900-MW of the Mohammed bin Rashid Al Maktoum Solar Park in Dubai to be completed.

Saudi Basic Industries Corporation (Sabic) steam cracker furnace powered by renewable energy to come online.

4Q2023: Oman to award four blocks of land for green hydrogen projects in Thumrait, Oman.

2024

End-2024: Emirati Masdar’s 500 MW wind farm in Uzbekistan to begin commercial operations.

QatarEnergy’s industrial cities solar power project will start electricity production.

First 1.5 GW phase of Morocco’s Xlinks solar and wind energy project to be operational.

2025

Second 1.5 GW phase of Morocco’s Xlinks solar and wind energy project to be operational.

UAE to have over 1k EV charging stations installed.

2026

1Q 2026: QatarEnergy’s USD 1 bn blue ammonia plant to be completed.

End-2026: HSBC Bahrain to eliminate single-use PVC plastic cards.

Iraq’s Mass Group Holding wants to invest EUR 1 bn on its thermal plant Mintia in Romania to have 62% of run on renewable energy, while expanding its energy capacity to at least 1.29k MWh.

2027

MENA’s district cooling market is expected to reach USD 15 bn.

2030

UAE’s Abu Dhabi Commercial Bank (ADCB) wants to provide AED 35 bn in green financing.

UAE targets 14 GW in clean energy capacity.

Tunisia targets 30% of renewables in its energy mix.

Qatar wants to generate USD 17 bn from its circular economy, creating 9k-19k jobs.

Morocco’s Xlinks solar and wind energy project to generate 10.5 GW of energy.

2035

Qatar to capture up to 11 mn tons of CO2 annually.

2045

Qatar’s Public Works Authority’s (Ashghal) USD 1.5 bn sewage treatment facility to reach 600k cm/d capacity.

2060

Nigeria aims to achieve its net-zero emissions target.

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