UAE’s Taqa has 2023 green bonds in its sights

Good morning, wonderful people. We’re inching closer to the weekend and the green finance news doesn’t seem to be abating on this fine Wednesday morning.

THE BIG CLIMATE STORY- UAE’s Abu Dhabi National Energy Company (Taqa) plans to issue “several USD hundred mn” of green bonds in 2023 for specific projects as part of its growth strategy, and Masdar — in which Taqa holds a controlling stake — will likely spend some USD 50 bn by 2030 to buy solar and wind assets. We have chapter and verse on this story and more in the news well below.

IN OTHER NEWS- Aramco CEO bashes “biased” ESG policies: Saudi Aramco’s CEO Amin Nasser criticized ESG-driven policies, saying they undermine energy security by holding a bias against traditional energy projects, Bloomberg reports. While Nasser did briefly acknowledge the increased integration of ESG policies in capital markets, he mainly targeted the difference between biased and neutral policies, stating that biased policies will lead to a level of underinvestment in oil and gas that can have “serious implications for the global economy.” Nasser made similar statements last September, attributing the energy crisis to underinvestment in traditional energy sources.

THE BIG CLIMATE STORY OUTSIDE THE REGION-

New Zealand declared a national state of emergency as a cyclone devastates the country just two weeks after mass flooding, making it just the third time the country has imposed a state of emergency. The climate-induced Cyclone Gabrielle has battered the country’s North Island with wind and rain since Sunday, leaving some 5% of the country’s population without power and destroying infrastructure in several regions. Under the state of emergency, the government will provide additional resources — targeting the most affected areas, in which nearly one-third of New Zealand’s 5.1 mn population live. This follows extensive flooding in Auckland and Northland just two weeks ago. Australia and Britain have both pledged support.

There’s no missing the direct link to climate change: “This is climate change,” said New Zealand’s climate change minister, James Shaw, in a speech to parliament. He urged immediate action, decrying “the lost decades that we spent bickering and arguing about whether climate change was real or not, whether it was caused by humans or not, whether it was bad or not, whether we should do something about it or not.”

The story is getting widespread coverage in the international press: Guardian | Reuters | BBC | Washington Post | AP | BBC | Bloomberg | Guardian | Reuters | CNN | BBC | Wall Street Journal

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WATCH THIS SPACE #1- The world’s current infrastructure cannot support the rapid growth of renewables to keep up with the Paris Agreement requirements, International Renewable Energy Agency Director Francesco La Camera said at Abu Dhabi’s World Government Summit, according to the National. While the Ukraine war created a chance to ramp up the development of renewables, progress isn’t fast enough. The 10% y-o-y increase seen in renewables investment between 2022 and 2023 is “definitely not” sufficient and needs to be multiplied tenfold over the next decade to achieve net zero, Masdar CEO Mohamed Al Ramahi added.

WATCH THIS SPACE #2- IMF chief commends GCC’s diversification efforts: GCC economies are weaning themselves off of oil and leveraging private investments to diversify their economies, IMF Managing Director Kristalina Georgieva says, according to Bloomberg. Georgieva told attendees at Dubai’s World Government Summit earlier this week that oil income is not the only reason that the GCC is doing well, pointing to efforts to foster a better environment for private investment by reforming how funds are raised and increasing tax collection. The UAE and Saudi Arabia have been investing oil windfalls into sovereign wealth funds, which are channeling funds into the energy transition — including green hydrogen production — at home and abroad.

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COME TO OUR NEXT ENTERPRISE FORUM-

We’re excited to unveil our next C-level event in Cairo: The Enterprise Exports & FDI Forum, where we will take a deep dive into two of the most critical topics affecting our community.

Interested to learn more about how Egypt is planning on drumming up foreign direct investment (FDI) for all these green hydrogen, solar and wind agreements? Exports and FDI have never been more important to Egypt’s economy — or its businesses — than in the wake of the float of the EGP and the country’s positioning as a regional renewable energy hub. We think there’s a unique chance to build an export-led economy that makes Egypt a magnet for FDI and all the benefits that will come with it.

Want to join the conversation? Drop us a line on events@enterprisemea.com.

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CIRCLE YOUR CALENDAR-

The UAE will host the World Environment, Social and Governance Summit from next Tuesday, 21 February to Thursday, 23 February in Dubai. The summit will host discussions on reducing carbon emissions and the urgency to incorporate ESG. Stakeholders from various fields will address the financial and strategic implementation of ESG.

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.

The first MENA Solar Conference is accepting applications from published researchers specialized in PV technology until Sunday, 30 April. The Dubai Electricity and Water Authority will be hosting the conference from 15 to 18 November, in conjunction with the Water, Energy, Technology, and Environment Exhibition and the Dubai Solar Show 2023. Researchers can submit their papers here.

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

UAE state-owned Abu Dhabi National Energy Company (Taqa) plans to issue “several USD hundred mn” of green bonds in 2023 for specific projects, Taqa CEO Jasim Husain Thabet tells Bloomberg. No details were given on which projects specifically were being tapped for investment, or the detailed timeframe of any green bond issuances.

It’s all part of Taqa’s growth plan: Taqa aims to sell bonds, acquire assets, and expand in both its core industries — power generation and desalination — and nascent sectors like renewable energy, as part of its overall growth strategy, according to Bloomberg. “Our focus is on growth,” Thabet said, adding that the company was “in discussions” over possible agreements and would follow through on any offering value to shareholders.

And follows the trend of oil revenues driving renewables activity: Gains in its oil and gas businesses have fueled Taqa’s push to expand in renewable energy projects, Bloomberg noted. Taqa saw its net income rise 35% y-o-y in 2022, spurred by soaring oil prices that averaged nearly USD 100/ barrel. This trend has also been seen in GCC sovereign wealth funds (SWFs), with high oil prices and currency stability boosting inflows — much of which is then being directed to green investment — according to a January report by data platform Global SWF.

This follows Masdar’s recently announced plans for a USD 750 mn maiden green bond issuance: UAE clean energy firm Masdar plans to raise as much as USD 750 mn in a maiden green bond issuance — likely to happen in 2H 2023. Taqa recently purchased a 43% stake in Masdar’s renewables business and 24% in Masdar’s nascent green hydrogen business, with Abu Dhabi National Oil Company (Adnoc) also acquiring shares in the company. UAE SWF Mubadala — which sold its majority stake in Masdar to Taqa and Adnoc — also remains a shareholder.

This is fueling Masdar’s massive growth plans: Masdar is “likely” to issue green bonds on an annual basis to support its ambitious growth plans, CFO Niall Hannigan told Bloomberg last month. The aim is to grow within and beyond MENA, with the company aiming at a renewable energy capacity of at least 100 GW by 2030, and a production quota of up to 1 mn tons of green hydrogen. Masdar aims to ultimately expand its renewable energy portfolio to over 200 GW by an as-yet undetermined time.

M&A will be a “major component” of Masdar’s growth strategy, Bloomberg noted Thabet saying. The clean energy firm will likely spend some USD 50 bn by 2030 to buy solar and wind assets, he added.

Masdar, IFC boost deployment of renewables in EMs: Renewables company Masdar signed an agreement with the International Finance Corporation (IFC) to bolster generation capacity from renewable energy sources in emerging markets, according to a statement. The agreement will cover collaboration on green hydrogen development, renewable energy distribution, and the development of innovative tech, the statement notes. No details were provided on the financial details, expected timeline, or which economies will be targeted.

The details: The agreement — signed on the sidelines of the World Government Summit in Dubai this week — will see both parties collaborate on establishing green hydrogen production facilities and increasing solar generation capacities in emerging economies, as well as facilitating avenues for climate finance in developing countries. The IFC and Masdar will also jointly explore the structure and financial feasibility of green energy projects in Africa.

The IFC has been busy this week: The agreement with Masdar comes two days after the IFC signed an agreement with state-owned Abu Dhabi Fund for Development (ADFD) to jointly invest USD 1.5 bn in the energy transition for emerging markets. The co-financing will boost IFC investment in green hydrogen in particular, IFC Director General Makhtar Diop told BloombergTV (watch, runtime: 4:32).

Brazil’s Vale reacquires its shares in Vale Oman: Brazilian mining group Vale repurchased its 30% stake in Vale Oman from Omani state-owned energy investment company OQ, Oman News Agency reports. The acquisition leads Oman-based Vale Oman to be wholly owned by foreign investors. The stake transfer process is expected to be finalized before the end of 2Q 2023.

Will Vale Oman go green? Brazil’s Vale signed an MoU with Oman’s Commerce and Industry Ministry in November to conduct a feasibility study exploring the possibility of establishing a green iron ore pellet mega hub in the country’s Duqm Special Economic Zone. Vale Oman owns and manages an iron ore pelletizing facility through which it produces some 9 mn tons of pellets per annum, and has a distribution center in Oman’s city of Sohar with an export capacity amounting to 40 mn tons of iron ore and pellets annually, according to their website.

So, how is the Vale’s ore green anyway? The company has set out a target to push down their net scope 3 emissions by 15% by 2035, according to Zawya. It currently produces hot briquetted iron using natural gas, which it says contributes 60% less carbon compared to carbon intensive pig iron production methods. Vale is also exploring replacing natural gas with hydrogen in its production — coupled with the use of renewable energy — to help eliminate carbon emissions altogether, Zawya notes, citing Vale’s press release.

“Green steel” hubs are also coming to Saudi Arabia and UAE soon: Vale signed an MoU with Saudi Arabia’s National Industrial Development Center during Saudi Arabia’s Future Investment Initiative in November to study establishing a USD 1.1 bn iron ore pellet mega hub producing some 4 mn tons of iron ore pellets annually in KSA’s Ras Al-Khair industrial zone. The company will also study the feasibility for an iron ore pellet mega hub in Kezad with the UAE’s Steel Arkan.

The Dubai Electricity and Water Authority (Dewa) and the Dubai Municipality inked a 35-year power purchase agreement with the Dubai Waste Management Center, according to a statement (pdf). The energy purchased by the waste-to-energy center will be used to power the Warsan Wastewater Treatment Plant. Dewa also purchased the energy produced by the 132 Kv Warsan substation, the statement notes. Financial details have not been disclosed.

OTHER STORIES WORTH KNOWING ABOUT THIS MORNING-

• Morocco-based early-stage VC firm UM6P Ventures is eyeing deeptech investment in areas including climate tech and agriculture with the Israeli market being of particular interest. (Reuters)

Denmark’s Vestas advances wind turbine recycling efforts: Denmark-based wind turbine manufacturer Vestas says it has developed a chemical dissolvent capable of breaking down wind turbine blades in a bid to crack down on landfill waste levels, according to a company statement. Brussels-based wind energy advocacy group WindEurope previously estimated about 25k metric tons of blades a year will reach the end of their life cycle by 2025, with projections of that number rising to 52k tons a year by 2030. The group made a request for European authorities to institute a ban on the landfilling of wind turbine blades.

Making gummy bears out of turbine blades: As crazy as it sounds, wind turbine blades could be recycled into candy and sugary drinks. Michigan State University scientists developed a new resin coating for blades that can be dissolved and used to help make a range of other products including car tail lights, windows, laptop covers, diapers, and countertops — or even new wind turbine blades.