IFC to invest USD 50 mn in Jordan’s maiden green bond issuance

Good morning, friends, and welcome to a stacked issue with regional updates across the board. We have a bit of green finance, renewable energy projects, and an interesting read on the intersection of people’s vaping habits (read: addictions?) and the production of EV batteries. Let’s jump right in.

THE BIG CLIMATE STORY- The International Finance Corporation is set to invest USD 50 mn in Jordan Kuwait Bank’s planned five-year green bond issuance with the proceeds of the sale going towards the development of energy-efficient buildings, renewables plants, and EV projects in the country.

THE BIG CLIMATE STORY OUTSIDE THE REGION- A transatlantic bargain on minerals: The EU and US will begin negotiations on the supply of critical minerals essential for EV manufacturing, after EU Commission President Ursula von der Leyen and US President Joe Biden agreed to the talks in a meeting at the White House on Friday. The allies are looking to reach a preliminary limited trade agreement that would see minerals extracted in the EU count toward EV tax credits under Biden’s landmark Inflation Reduction Act as both sides of the Atlantic look to wean themselves off Chinese dependency in the energy transition. The recent diplomatic developments come on the heels of a months-long climate spat over concerns the climate bill would spur clean energy investments across the Atlantic.

The story got widespread coverage over the weekend: Reuters | Bloomberg | The Financial Times | The Washington Post | The New York Times

ALSO- UK pension funds Borders to Coast and Britain’s Universities Superannuation Scheme — two of Britain’s largest pension schemes, overseeing a combined c. GBP 130 bn of assets — will vote against the reappointment of several incumbent directors at energy giants BP and Shell at annual shareholder meetings unless they commit to stronger carbon reduction targets. BP and Shell have come under fire for backtracking on commitments to reduce oil and gas outputs in line with their 2050 carbon neutrality targets.

The story is also getting ink from Reuters, Bloomberg, and the Financial Times.

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HAPPENING TODAY- The Abu Dhabi-Japan Economic Council is kicking off today in Tokyo, advancing bilateral cooperation between the UAE and Japan in a number of areas including renewable energy. Adnoc and Masdar will be presenting avenues for cooperation in the renewable energy sector.

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WATCH THIS SPACE #1- Egypt, Greece move closer to firming up feasibility studies on interconnection project: Egypt and Greece are in talks with 10 international consultants to conduct a feasibility study on their EUR 3.5 bn 3 GW subsea interconnector (GREGY), Asharq Business reports, citing sources familiar with the matter. French electric utility player EDF, Canada’s Elie Grid, Norwegian DNV, and German firms CESI and Lahmeyer are among the potential firms, along with Greek, Belgian, Chinese, and US consultants. Both countries have been looking to appoint a third party to complete the study on the powerline since January.

WATCH THIS SPACE #2- Siemens Energy eyes renewables projects in KSA and Iraq: Siemens is looking to participate in upcoming Saudi wind energy tenders totalling 7 GW as part of its 2050 strategy, Al Arabiya reports, quoting company board member Karim Amin. Financial details, a timeline or specific projects targeted were not disclosed. The company is also looking to invest USD 450 mn in Iraq’s flare gas-to-energy sector, with the aim of using the captured gas to convert it into 15 GW of clean energy.

WATCH THIS SPACE #3- UAE restricts VW EV imports: The UAE’s Economy Ministry restricted the import of Volkswagen electric vehicle models from unauthorized dealerships due to concern over manufacturing specs failing to take the UAE’s climate conditions into consideration, Gulf News reported. Volkswagen and Al Nabooda Automobiles — the only official dealer in Dubai and the Northern Emirates — published a statement in support of the ministry’s decision, saying the move ensures that all VW cars “are built and tested to meet UAE market requirements.”

WATCH THIS SPACE #4- KSA mulls mining prospects in Serbia: Serbian Energy Minister Dubravka Đedović presented Serbia’s long-term mining and energy strategies to a delegation from the Saudi Fund for Development, Balkan News Energy reported on Friday. Đedović emphasized that the country’s energy sector is about to enter an intensive investment cycle and is drafting a national energy and climate strategy, with the first five-year plan expected to require “investments of several bn EUR.”

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THE DANGER ZONE- Droughts threaten North Africa’s water and food security: An acute drop in precipitation levels owing to climate-induced droughts and warm winters is affecting soil moisture and river flows in the majority of cereal-growing centers in Morocco, Algeria, and Tunisia, with wheat yield potentials expected to plunge between 15-24% compared to the last five-year average in the three countries, according to Global Drought Observatory (GDO) forecasts. Barley potentials are also expected to drop between 10-30% below 2017-2022 averages in the region, GDO notes. GDO warns of water stress in Morocco during the coming months as precipitation continues to decrease water reservoir filling rates.

Algeria is taking urgent measures: Algeria — which saw output drop below-average volumes across all its major production areas — approved a water rationing strategy in 2021 in a bid to shore up its water supplies. More recently, the country, which in January reactivated its Water Police force to optimize water management, announced it would take “urgent measures” in the face of climate-driven water scarcity, including the establishment of new desalination plants and groundwater wells to alleviate its water stress.

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COME TO OUR NEXT ENTERPRISE FORUM-

We are delighted to share with you that the Enterprise Exports & FDI Forum will be taking place on 15 May at the Four Seasons Hotel at Nile Plaza in Cairo.

DO YOU WANT TO ATTEND? The first wave of invites is going out soon. If you’re a C-suite exec, exporter, investor, official, banker, or someone who should be part of the conversation, please click here to request a spot at this exclusive event.

What’s the Enterprise Exports & FDI Forum? It is the latest in our series of must-attend, invitation-only gatherings for C-suite-level business leaders. The Enterprise Exports & FDI Forum will discuss the critical topics of exports and foreign direct investment (FDI) in Egypt.

We will be taking an in-depth look into some of the most vital industry topics, including:

• How to effectively break into new export markets
• How to leverage domestic trends in order to create export opportunities
• What foreign investors are looking for
• What the government's role should be

Why now? Exports and foreign direct investment (FDI) have never been more important to Egypt’s economy — or businesses — than in the wake of the float of the EGP. We think we have a once-in-a-lifetime chance to build an export-led economy that makes Egypt a magnet for FDI, and all the benefits that will come with it.

Think of the Enterprise Exports & FDI Forum as a hands-on lab for how to turn the devaluation of the EGP into something that will turbocharge your company and our economy.

WANT TO SHARE YOUR STORY ON STAGE? Drop a note to Patrick here and let’s talk.

WANT TO BECOME A COMMERCIAL PARTNER? Ping a note to Moustafa, our head of commercial, here.

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CIRCLE YOUR CALENDAR-

The UAE will host the Arab Aviation Summit from 14-16 March in Ras al Khaimah. The event will bring together global stakeholders to address sustainability in the aviation industry among other topics.

Germany will host The Infrastructure Investor Global Summit from 20-24 March in Berlin. The four-day event will gather industry leaders from the global infrastructure sector to map out a course for the industry to upscale its ESG-focused operations and investments. 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.

The International Finance Corporation (IFC) will invest USD 50 mn in Jordan Kuwait Bank’s planned five-year green bond issuance, according to a statement. The proceeds of the issuance will be directed towards the development of energy-efficient buildings, renewable energy plants, and electric vehicle projects in the country, the statement notes. The date of the green bond’s issuance was not disclosed, nor was the total sum the bank is looking to raise from the debt instrument.

Where’s the money coming from? The IFC will provide USD 36 mn of its investment in the green facility from its own account, along with a blended co-investment of up to USD 10 mn from the Canada-IFC Blended Climate Finance Program and USD 4 mn from the IFC-implemented, Dutch-funded MENA Private Sector Development Facility.

Jordan’s clean energy transition will require a lot more capital: The country needs to rake in c. USD 9.5 bn in investments between now and 2030 to move towards low-carbon development, according to the World Bank’s Country Climate and Development report. The country will have to source 60% of the funds from private sector financiers.

The IFC has been upping its investment in MENA renewables: The IFC plans to allocate 35% of its investments to green sectors — including MENA renewables — its MENA head of regional operations Sufyan Al Issa said in December. This followed news that the IFC is co-financing renewables projects of roughly 1 GW launched by UAE firm Al Nowais’ subsidiary Amea Power in Egypt. The IFC, Dutch development bank FMO and Japan International Cooperation Agency will collectively provide USD 500 mn for a 560 MW solar plant, while the IFC, three commercial banks and the Japanese Bank for International Cooperation will provide USD 500 mn for a 505 MW wind farm.

China may pour up to USD 13 bn in Egypt’s green hydrogen sector: China International Energy Group is exploring the possibility of establishing a USD 5-8 bn green hydrogen production plant in Egypt, according to a statement released on Saturday. The project’s timeline and targeted production volume were not made public.

Another Chinese-Egyptian green fuels facility in the offing? China Energy CEO Yee Jianming said his company could begin working on another planned USD 5.1 bn green hydrogen facility in Egypt as early as May this year, according to a separate cabinet statement. A delegation from the Chinese firm will visit Egypt next month to iron out the project’s details, the statement notes. The production capacity of the green hydrogen plant was not disclosed.

REMEMBER- China Energy was among several players to sign MoUs last year to conduct feasibility studies on new projects to produce green hydrogen and its derivatives. Those include framework agreements worth c. USD 83 bn for nine green hydrogen and ammonia plants at COP27.

Masdar set to expand on renewables in West Africa: UAE renewable energy giant Masdar signed an agreement with the Ivory Coast’s Mining, Petroleum and Energy Ministry on Friday to explore the development of a solar power plant with a capacity between 50 MW and 70 MW, according to a company statement. No financial details were announced for the project.

Masdar’s on a roll in Africa: Last week, Infinity Power Holding — a JV between Egypt’s Infinity and Masdar — and Germany’s Conjuncta signed an MoU with Mauritania last week to build a mega green hydrogen plant in the West African country. The company also signed an agreement with Ethiopia in January to develop up to 2 GW of solar capacity. The renewables giant inked another three agreements to develop solar projects in Angola, Uganda, and Zambia with a combined generation capacity of 5 GW on the sidelines of the Abu Dhabi Sustainability Week in January. The value of the three projects were not disclosed, but Reuters revealed later that the Zambian solar projects were estimated to cost USD 2 bn. Last August, Masdar also signed an agreement with Tanzania to develop renewable energy projects with a total capacity of 2 GW without disclosing the project cost.

Some of the expansion is part of the Etihad 7 initiative: The initiative — launched by the UAE’s Foreign Ministry in January of last year — aims to attract public and private funding to invest in Africa’s renewable energy sector enabling the continent to generate 20 GW of renewable energy by 2035.

And Masdar is not alone: UAE’s Amea Power inked an agreement for a new 50 MW solar power plant in Ivory Coast last January and has solar projects in Burkina Faso and Mali. It also added 20 MW of capacity to its existing solar project in Togo reaching a generation capacity of 70 MW last November.

Tunisia’s 100 MW Kairouan solar plant “will be ready” this year, Tunisian Energy Minister Neila Nouira Gongi said in an interview with Zawya (watch, runtime: 16:04). Her statements come nearly a year after Dubai-based renewable energy developer Amea Power was awarded a concession and power purchase agreement for the solar plant in March 2022.

BACKGROUND- The solar plant was awarded to a consortium that includes Amea Power and Chinese energy solutions provider TBEA Xinjiang New Energy Company in 2019. Construction at the plant began late last year.

All part of a renewables bonanza: The Kairouan project is part of Tunisia’s push to build solar plants with a combined capacity of 500 MW across the country. As part of its national strategy to develop solar plants, Tunisia is looking to build a 200 MW plant in Tataouine, a 100 MW plant in Gafsa and two 50 MW plants in Tozeur and Sidi Bouzid. In total, the country aims to increase the share of renewables in its energy mix to 35% by 2030, equivalent to an additional installed capacity of approximately 4 GW.

Metito + BII launch Africa water investment platform: Metito and British International Investment (BII) launched yesterday the Africa Water Infrastructure Development (AWID), an investment platform targeting water infrastructure and provision in Africa. Metito is a Dubai-headquartered water management solutions provider and BII is the UK’s development finance institution and impact investor.

About AWID: The joint venture will target sustainable water projects at scale to address the funding gap in water security, Metito Managing Director Rami Ghandour and BII’s Managing Director and head of Africa Chris Chijiutomi said at the launch event at the British Embassy in Cairo. The headquarters of the venture have not yet been set but AWID will initially operate from Dubai.

The JV has been seeded with two existing projects: The first is a desalination project that has been operational in Egypt’s Sharm El Sheikh since 1999, providing around 63 hotels with potable water and some wastewater management services. The second project is a water treatment facility that has been operating in Kigali, Rwanda for two years.

Metito has a track record in Egypt’s water infrastructure industry: The company, alongside Orascom Construction, Hassan Allam Construction and Arab Contractors is developing the Al Mahsama agricultural drainage treatment plant. Focused on providing water infrastructure in emerging markets, Metito wants to take a “bold [investing] approach” that “brings in private sector capital”, Ghandour said. AWID will target Egypt as the government has positioned the water infrastructure and security as a key priority for its privatization strategy, he added.

Climate change could trigger disputes in MENA: A survey by UK-based Law firm Pinsent Masons showed nearly a third of respondents forecasting the Middle East to see the most significant uptick in disputes on the back of climate change and energy transition, The Global Legal Post reported last week. The results of the energy arbitrations study it conducted with London’s Queen Mary University was announced during Abu Dhabi Global Markets (ADGM) flagship disputes event Resolve in Abu Dhabi earlier this week.

What type of disputes are we talking about? Most sources of contention are believed to be coming from the price volatility of raw materials and energy, the report said. Some 28% of respondents see price volatility as the most likely reason for energy disputes over the next five years. Price volatility in raw materials could lead to commercial uncertainty and additional disputes in the key industry, it added.

Details: Almost 29% of respondents see the Middle East seeing an acceleration in energy disputes, the report (pdf) showed. A majority of 73% see Europe as the region set to be most hit with disagreements, with 36% and 27% of respondents picking Asia and Africa, respectively. They also see disputes related to energy transition accelerating significantly in the short to medium term. This would lead to parties to disagree on the design and delivery of new technologies as new players enter the market.

UAE’s ENEC aims to boost development of renewables production: The Emirates Nuclear Energy Corporation (ENEC) signed a letter of intent with Idaho National Laboratory (INL) to boost development of nuclear energy and green hydrogen production, according to a statement released last week. ENEC and INL will work on the development of clean molecule generation systems for deployment at the Barakah nuclear plant and explore the development of systems for the commercial-scale production of hydrogen, ammonia, oxygen, water and steam to aid in the export of clean hydrogen and ammonia.

OTHER STORIES WORTH KNOWING ABOUT THIS MORNING-

• The UAE, Algeria, Jordan and Kuwait are among 12 countries that pledged EUR 5.5 mn to fund the International Atomic Energy Agency’s ReNuAL2 projects, which advance work in soil and water, among other things. (Statement)
• Oman is developing new exploratory concessions to mine chrome, copper, limestone, and other minerals for sale to local and global investors in 1Q 2023. (Statement)

Niger’s renewables ambitions are getting a push: The OPEC Fund for International Development (OFID) will provide a USD 25 mn loan to back Niger’s Solar Plant Development and Electricity Access Improvement Project (RANAA) in a bid to boost renewables in the West African country, Wam reported last week. This brings the total financing to the project to USD 167 mn from OFID, African Development Bank, Power Africa, and the Green Climate Fund.

Details: RANAA will see the construction of three solar plants in the country’s Maradi, Dosso and Diffa regions. The plants will have an overall generation capacity of 40 MW, with some 750k people benefiting from the projects. The ambitious project will also include the extension of 2.6k km of new transmission lines connecting cities in the country’s south and the capital Niamey. The loan will also fund the construction and grid integration of the 10 MW Dosso solar plant.

2022 was a big year for OFID: The OPEC Fund adopted its first dedicated Climate Action Plan last year, earmarking some 40% of all fresh financing to climate action by 2030. The adoption of the plan saw it announce a USD 24 bn climate facility with the Arab Coordination Group (ACG) in Egypt during COP27. The facility will “support the acceleration of the energy transition, the increased resilience of food, transport, water and urban systems, and the promotion of energy security in countries including the least developed countries and small island developing states”.

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African Development Bank issues AUD 50 mn green bond in Australia’s debt market: The African Development bank sold a 15-year Kangaroo green bond worth some USD 33.5 mn to Japan’s Taiju Life Ins. Company, according to a statement. The bank says it will channel proceeds from the green facility into Africa-focused climate mitigation and resilience efforts, including biodiversity protection projects. The green security issuance was arranged by RBC Capital Markets.

Not the only Africa-Japan bond sale last week: AfDB also approved a similar AUD 50 mn 10-year green Kangaroo bond to Japan’s TD Fukoku Mutual Life Ins. Company in a transaction that was arranged by TD Securities, according to a separate AfDB statement. The bank plans to use the financing to deploy clean energy projects across Africa.

OTHER STORIES WORTH KNOWING ABOUT THIS MORNING-

• A consortium comprising French energy company Engie, logistics firm CMA CGM, and motorway operator Sanef are partnering to establish EV, hydrogen, and biogas fueling and charging stations in Europe. (Reuters)
• India and Australia want to advance an extensive trade agreement including in vital minerals to support efforts to meet their targets for lowering CO2 emissions. (Reuters)
• The UK will invest GBP 20 bn in carbon capture and storage projects over the next 20 years. The move will see 20 to 30 mn tons of CO2 stored per year by 2030, equivalent to emissions from 10 to 15 mn cars. (Reuters)
• Malaysia will need to double its clean energy transition investments to between USD 375- 415 bn to realize its 2050 carbon neutrality target. (Reuters)
• Namibia is set to finalize an implementation agreement for a USD 10 bn green hydrogen plant in 2Q 2023. The plant — which would be powered by 5-6 GW of clean energy — will have a 300k ton yearly production capacity once fully operational. (Zawya)

Concern over waste from single-use vapes grows: 90 tons of lithium and 1.2k tons of copper have ended up in landfills last year alone due to waste from the booming single-use vape industry, The Financial Times reports, citing data from research group Euromonitor, consultancy ECigIntelligence, and nonprofit Material Focus. The disposable vape has become the “fast fashion” of e-cigarettes, the chief executive of UK-based vape manufacturer Riot Labs said, while calling for “a lot more scrutiny” on the environmental credentials for his own industry.

Disposable vapes are not easy to recycle, since they contain flammable batteries and nicotine liquid, which requires each one to be dismantled by hand while taking extra health and safety considerations, the FT explains.

Policymakers are struggling to regulate the polluting industry: While companies in the UK and EU are legally obliged to finance a quantity of recycling equivalent to the amount they put on the market, analysis by Material Focus has found that only 16 of 150 vape producers and importers in the UK are registered to do so. The EU is set to pass a regulation making rechargeable batteries in all consumer products mandatory by 2027, but similar battery legislation in the UK has been delayed twice.

Effective policy for retail collection of used vapes is needed: Despite a UK policy requiring retailers selling more than GBP 100k worth of vapes to offer take-back services — a service to collect used products from consumers to reintroduce them to the original manufacturing cycle — a sample survey carried out by the FT in central London found that none of the staff were aware of recycling schemes. Vape manufacturer Riot Labs attempted to roll out a take-back-scheme across 800 shops but recorded a take-back rate of less than 1%.

The vaping industry competes with EVs over lithium and copper supplies: The quantity of lithium and copper in vapes dumped in landfills last year alone was enough to supply 11k electric vehicle batteries and 1.6 mn home EV chargers with their key components, the FT estimates. As companies race to expand their EV production, the International Energy Agency has warned that lithium may be in short supply within two years, pushing producers to think creatively for alternative sources, the news outlet adds.