Egypt’s green SMEs will get a extra boost of funding from phase II of the Green Economy Financing Facility

Good morning, wonderful people. We have a mixed bag of news from the region as we inch closer to the weekend — let’s dive in.

THE BIG CLIMATE STORY- The European Bank for Reconstruction and Development and partners launched the second phase of the Green Economy Financing Facility program in Cairo yesterday, which will provide funds to Egyptian financial institutions for on-lending to private sector companies — especially SMEs — focusing on climate change adaptation and mitigation. We have chapter and verse in the news well below.

And while there isn’t much buzz on climate news outside the region, the embattled Adani Enterprises’ second offering continues to make headlines after the USD 2.5 bn share sale successfully closed yesterday. (ICYMI, you can catch up on our coverage here and here.) The downside? Indian mogul Gautam Adani — previously the third richest man in the world — has dropped eight places on the Bloomberg b’naires index as the value of his conglomerate Adani Group sank by USD 70 bn in the wake of chaos triggered by a damning report from short seller investment firm Hindenburg Research. The story is getting widespread coverage in the international press: Bloomberg | The Financial Times | New York Times | Reuters | Guardian | CNBC

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WATCH THIS SPACE #1- Saudi Energy Minister Prince Abdulaziz Al Saud says the kingdom will invest USD 266 bn in “cleaner” energy and distribution infrastructure to export green hydrogen worldwide, Al Arabiya reports. The investment will also go towards creating industrial centers for green steel and aluminum, fertilizers, and other products needed for green hydrogen production, Al Saud added.

KSA isn’t budging on gas production… but wants to lower emissions: Saudi intends to ramp up gas production by 60% and work is underway to extend gas lines by 4k km — but all new energy projects will be developed with carbon capture facilities, Al Saud says. No further details were disclosed on timelines or carbon emissions targets on new projects.

WATCH THIS SPACE #2- Renewables outpaced fossil gas in terms of power generation in the EU for the first time last year, according to a report (pdf) by energy think tank group Ember. Renewable energy accounted for 22% of the EU’s energy mix, compared to 20% for gas. The rise of solar power generation helped save approximately EUR 10 bn in gas expenditures, with Germany being the biggest contributor with 59 TWh followed by Spain at 33 TWh.

Reliance on fossil fuels could drop significantly this year: While EU fossil fuel generation rose 3% y-o-y in 2022, it is predicted to fall by 20% in 2023, according to the report. Solar and wind power plant development will expand on the continent, nuclear plants are coming back online, and hydropower generation will be replenished after droughts, the report expects.

The reason? A record amount of renewable power installations: Renewables installations added 41 GW worth of power generation capacity in 2022 — 47% more than in 2021 — as 20 nations reached their highest solar energy share to date, the report finds. Renewables industry groups say solar and wind power generation is expected to increase by roughly 20% in 2023, it adds.

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CLIMATE DIPLOMACY- US, Egypt further green cooperation: The US and Egypt reaffirmed their partnership on climate cooperation with a commitment to raise USD 50 mn through a public-private partnership to preserve the Red Sea coral reef, US Secretary of State Antony Blinken said at a joint press conference with Egyptian Foreign Minister Sameh Shoukry, according to a press readout. Blinken also indicated a green economy trade mission had recently visited Egypt to explore the possibilities for American companies to compete in Egypt’s renewable energy market.

And Australia is interested in working with Egypt on mining: Mineral extraction and green energy, alongside gas, were the focus of talks at a meeting in Cairo between Egyptian Oil Minister Tarek El Molla and Australian Ambassador Axel Wabenhorst, according to a statement. Wabenhorst noted increased investment interest by Australian companies in mining, hydrogen, and gas, according to a statement by Egypt’s State Information Service.

CIRCLE YOUR CALENDAR-

Egypt will host the CSR Forum from 2-5 March at Somabay, Hurghada. The event aims to further discussions put forth during COP27 and boost private and public sector cooperation on climate action. You can register for the event here.

The Arabia CSR Awards is accepting applications until Friday, 30 June. The awardwinners will be announced during a ceremony on Wednesday, 4 October.

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

EBRD and partners launch GEFF II in Cairo: Egypt will receive USD 175.5 mn for on-lending to the private sector from the European Bank for Reconstruction and Development (EBRD), the European Union (EU) and the Green Climate Fund (GCF)’s Green Economy Financing Facility program (GEFF), according to an EBRD statement issued yesterday. EBRD and its partners formally launched phase two of the GEFF program (GEFF II) at an event in Cairo yesterday, which Enterprise Climate attended.

The details: GEFF II will provide funds to Egyptian financial institutions for on-lending to private sector companies focusing on climate change adaptation and mitigation — with a particular focus on encouraging SMEs to invest in green tech promoting efficiency in water and resource use, sustainable land management, and the circular economy. GEFF II combines financing and technical assistance from the EBRD, financial incentives from the EU and concessional co-financing from the GCF. The first phase of GEFF raised EUR 140 mn for on-lending in 2017, followed by a EUR 150 mn extension in November 2020.

Private sector engagement and scaling green activity: “The role played by development partners in pushing private sector engagement is important,” Egypt’s International Cooperation Minister Rania Al Mashat said in an opening speech. The EBRD has helped boost private sector investment in and financing for Egypt by leading the energy pillar of Egypt’s Nexus on Water, Food and Energy (NWFE) initiative — which is expected to help bring USD bns of private sector inflows to Egypt’s renewables sector, Al Mashat noted. By supporting the uptake of new tech and practices, GEFF can help scale green activity in the Egyptian market, enhance economic competitiveness, and create a platform for policy dialogue in the energy sector, the EU’s Ambassador to Egypt Christian Berger said in an introductory speech.

And Egypt’s SMEs are hungry for more green finance: SMEs “perfectly understand” the market shift towards greenifying operations, the increased consumer demand for environmental action from businesses, and the growing demand for green finance, said Karim Kamal, head of Support Functions & Sustainability Division at National Bank of Kuwait (NBK) — one of several partner banks to offer on-lending through GEFF. While large corporates were NBK’s primary GEFF loan-seeking clients in the program’s first phase, GEFF II “is very focused on SMEs” and there’s a lot of demand, Kamal added.

GEFF isn’t just about financing — it also offers important technical support: Much of the value provided by the GEFF program comes from the technical assistance provided by the EBRD, banking sector representatives noted. This includes helping SMEs understand the importance of green investment and identify climate-friendly tech to invest in. “An integral part of these programs is to convince and educate. The technical assistance is the most valuable thing,” said Tarek Fayed, assistant CEO of QNB Al Ahli — another partner bank.

For banks, this helps to de-risk on-lending to SMEs: Banks take the same credit risk with SMEs as they do issuing any loans, but SMEs are particularly vulnerable because of their size, noted Fayed. “When an economic crisis hits, they are first — and possibly most — affected,” he added. SMEs are often perceived as risky by both banks and customers, but there are ways to boost their resilience and enhance their contribution to the economy, noted partner bank Ahli United Bank’s Senior Deputy CEO Mohamed Assem. These include expanding SMEs’ access to finance — especially green finance — while helping them put governance and risk management structures in place, and building technical and management capacity, he added.

Is there a wider role for DFIs? DFIs could contribute to building the pipeline of SMEs for on-lending, as banks still struggle to find bankable SME clients, Kamal said. There is also more room for capacity building by providing more internal guidance for banks and financial institutions to help them adapt to a more stringent green reporting environment, he added, as it is particularly important in regards to compliance when the Central Bank of Egypt’s climate framework — which outlines new reporting requirements for banks — becomes mandatory.

UAE, France ink decarbonization agreement: The UAE and France have agreed to launch a program to increase green investments and focus on the decarbonization of hard to abate (HTA) industries, Wam reports. The agreement came during French Finance Minister Bruno Le Maire’s meeting with the UAE’s Industry and Advanced Technology Minister and COP28 President-Designate for COP28 Sultan bin Ahmed Al Jaber in the UAE. The program will officially launch at COP28 next November.

REMINDER- HTA industries are industries where carbon emissions are inherently difficult to lower — either due to the cost it incurs on businesses or because of insufficient technology to do so — and account for roughly 30% of global greenhouse gas emissions. Examples of HTA industries include cement and steel production, shipping, and aviation.

How they’ll do it: The program aims to develop commercially viable avenues to accelerate clean energy development with a focus on HTA industries, especially in the sectors of green hydrogen and sustainable fuel. The program will leverage industrial expertise and the financing capacities of the public and private sectors in both countries.

Are UAE investors bailing out a defunct UK EV battery producer? UAE-based entrepreneur and former CEO of Britishvolt Orral Nadjari has raised between GBP 25-30 mn from undisclosed Emirati investors to submit a bid to buy back his company, the Financial Times reports, citing sources familiar with the matter. Nadjari founded the business in 2019 but was ousted as its chief executive last summer.

Britishvolt’s future seemed promising: Nadjari founded the startup — once touted by former British Prime Minister Boris Johnson as being key to the country’s clean energy transition — in 2019, raising some USD 2.4 bn over 5 funding rounds. The company had ambitions of developing a 30 GWh battery manufacturing plant worth GBP 3.8 bn making batteries — including EV batteries and battery storage solutions — with a plan to generate energy from a 200 MW solar farm on site, according to their website.

How did it all go wrong? Plans went south nine months after breaking ground on its gigafactory near Blyth in Northumberland. The company’s valuation allegedly dropped more than 90% compared to its 2022 standing after failing to secure the capital needed to build the plant, did not have enough of a customer base, and did not have a solid track record in tech development, David Bailey, a professor of business economics at Birmingham Business School told Wired. Nadjari reportedly resigned last year after leaked documents stating that the company was on “life support” to reduce costs were published.

What now? Nadjari entered a non-binding bid last week and was expected to submit a binding offer by yesterday’s deadline, the FT reports. He is reportedly interested in securing the company’s battery technology — which needs more funding to develop beyond the prototype stage — rather than the factory site, the outlet adds.

KSA, Qatar enter JV with Japan for district cooling: Saudi Arabia’s Ajlan & Bros for Trading, Qatar’s the United District Energy International, and Japan’s Marubeni Corporation will set up a district cooling joint venture in the kingdom, Trade Arabia reports. No financial details or timelines were disclosed.

Need a refresher on district cooling? Our Green Tech explainer has you covered.

OTHER STORIES WORTH KNOWING ABOUT THIS MORNING-

• Algeria has tapped Sonelgaz for the production of 15 GW from renewables, and will invite bids from local and international firms for phase one of the project — with a capacity of 2 GW — by the end of 1Q 2023. (Algerie Eco)

Global warming could lead to deadly heat-resistant fungi: The post-apocalyptic TV series The Last of Us may have foreseen a real life heat-adapting fungus that can wreak havoc on human bodies, according to a study published last week. Well, minus the zombie part, co-author of a study on the impact of rising temperatures on disease-causing fungus Asiya Gusa told the Independent.

How would that work? The microbes in disease-causing fungus are not likely to survive in the heat of healthy bodies, but rising external temperatures brought on by global warming can cause the microbes to change the way they act on humans during infection, a study says. In other words, as the fungus develops heat resistance to adapt outside the human body, it also develops increased disease-causing potential in humans.

But there is still a lot we don’t know: Researchers found that the rate of some mutations were five times higher in fungi raised at body temperature, compared to those raised at 30°C, it is still not clear how high the risk to humans can be or at which temperatures it can begin to cause serious harm.