Flat6labs launches USD 95 mn fund to invest in climate action startups

Good morning, lovely people, and welcome to the accidental Oman issue. We have some key updates from the sultanate today as it heats up its renewables push.

THE BIG CLIMATE STORY- Egypt-based seed and early stage venture capital firm Flat6Labs will launch a USD 95 mn fund targeting greentech, agritech, and climate tech startups based in Africa. We have all the details on this story and more in the news well, below.

THE BIG CLIMATE STORY OUTSIDE THE REGION- No single story is dominating the climate headlines this morning, but one big story is the European Parliament giving its final approval of two laws that will see the bloc increase capacity of natural carbon sinks like forests and push down emissions of sectors not covered in the EU’s carbon market, including the road transport, heating and cooling, and waste management industries. These unregulated sectors generate nearly 60% of the EU’s total carbon footprint and new regulations aim to slash their emissions by 40% compared to 2005 levels by the end of the decade.

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HAPPENING TODAY- Saudi Arabia is hosting the Financial Services Conference today and tomorrow in Riyadh. The event is co-organized by the Finance Ministry, the Saudi Central Bank, and Capital Market Authority to shed light on a number of topics including financing the green transition and environmental, social, and governance (ESG) investments.

The COP28 Presidency is hosting its first Road to COP28 event at Expo City Dubai today, which will debut important initiatives offered by young people to support COP28’s goals. Through interactive workshops and debates, youth will engage with senior government officials and UAE diplomats to advance global climate goals.

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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.

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CIRCLE YOUR CALENDAR-

Denmark will host the Copenhagen Climate Ministerial from Monday, 20 March to Tuesday, 21 March in Copenhagen. The event is the first political high-level gathering to follow-up on the COP27 summit’s conclusions and agreements. Denmark and co-hosts Egypt and the UAE will address the need to establish continuity between the last climate summit and next November’s COP28, and progress on how targets align with the Paris agreement.

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.

Flat6Labs launches a new fund targeting climate-focused startups: Egypt-based seed and early stage venture capital firm Flat6Labs will launch a USD 95 mn fund targeting greentech, agritech, smart city, and climate tech startups based in Africa, Flat6Labs Chief Investment Officer Dina El Shenoufy (My Morning Routine) told Enterprise Climate. The new Africa Seed Fund (ASF) will invest in over 160 startups across North, West, and East Africa, marking the outfit’s entry into new investment territories including Morocco, Senegal, and Kenya, according to a statement (pdf).

The details: ASF will provide ticket sizes ranging between USD 150-500k to each startup, generating some USD 700 mn in revenues by the end of its five-year lifecycle, the statement notes. ASF will also reinvest in follow-on rounds with selected portfolio companies. Flat6 has not set in stone specific chunks of the USD 95 mn financing package for each sector eligible for sponsorship under ASF to allow for flexibility, El Shenoufy notes.

Who is eligible? Startups from pre-seed funding stage to pre-series A companies will be eligible to receive funding from the fund, the statement notes. “As per our requirements for all our portfolio startups, we want to see a proven minimum value product; we want to back companies with impactful products or solutions in the early stages of commercialization, or ones with a proven market fit,” El Shenoufy tells us.

Flat6Labs anticipates rapid expansion in the climate-action startup sector by 2024: “The climate-action startup sector remains relatively nascent in the regional market, partly because it’s a very R&D-intensive sector. Historically, VCs firms had been shying away from funding climate-focused companies for lack of visible growth in the sector. We expect to see a humongous expansion in the agritech and climate tech sector in the next 12-24 months on the back of massive [potential] in the market, and government mandates aimed at bolstering agricultural expansion and improving climate management,” El Shenoufy says.

Flat6Labs is not planning on launching new funds for the next 24 months. “ASF will be our leading program. We’re very bullish in our support of companies providing climate-driven solutions, especially for agritech and climate tech, because we see the market need for them,” El Shenoufy told us.

Flat6’s portfolio already includes a number of climate-focused and agritech startups including Tunisia’s Kumulus, MooMe, and Wattnow, as well as Egypt-based Agrona, Mycelium, and Zr3i, El Shenoufy noted.

Oman’s OPWP picks developer for Manah 2 solar plant: A JV made up of Singapore’s Sembcorp Utilities — a subsidiary of Sembcorp Industries — and China’s Jinko Power will develop the 500 MW Manah 2 solar plant in Oman under a build-own-operate model, according to a company statement. The JV — which is 80% owned by Sembcorp Utilities — also signed a 20-year power purchase agreement with Oman’s Power and Water Procurement Company (OPWP).

The details: Construction of the two projects will begin in 3Q 2023 and commercial operations will be completed by the middle of 2025. The combined cost of the projects will amount to over OMR 300 mn (c. USD 780 mn) and will be the largest in the sultanate.

Where’s the money coming from? This project will be financed through the JV’s funds and external loans, according to the statement, with no impact expected on Sembcorp’s earnings for the financial year ending December 31, 2023.

Oman and Sembcorp aren’t strangers: The project marks Sembcorp’s first foray into MENA’s renewables sector but the company owns 40% of Oman’s Salalah Independent Water and Power Plant, the statement notes.

Oman moves forward on green hydrogen plans: Oman’s state-owned green hydrogen company Hydrom — owned by Energy Development Oman — signed six binding term sheet agreements worth a combined USD 20 bn with several regional and international developers for the production of green hydrogen, Oman News Agency reports. The agreements are with companies from Belgium, the Netherlands, the UK, Japan, Singapore, Germany, India, Kuwait, and the UAE.

A solid step forward: The signing of term sheet agreements cements preliminary agreements signed before regulatory framework is issued by Oman’s Energy and Minerals Ministry, Trade Arabia reports. Oman allocated land in January within special economic zones for green hydrogen and green ammonia production. Oman unveiled a strategy last October to boost investment in green hydrogen to USD 140 bn by 2050.

The details: The projects will span an estimated area of 1.5k sq km in Al Wusta and Dhofar with agreements covering a period of 47 years — seven years for the development and construction of projects and 40 years for operation, the news agency reports.

BP was behind two of the investments: BP Alternative Energy Investments signed two agreements to develop green hydrogen facilities, one in Duqm spanning ​​320 sq km, and the other in Dhofar on an area of 427 sq km, according to the news agency. Each project will produce 3.3 GW of electricity and generate 150k tons of green hydrogen.

And the four remaining agreements firm up previously announced projects:

• SalalaH2: The Salalah Green Energy project covers an area of ​​419 sq km and will generate volumes similar to the BP agreements, the news agency reports. Saudi’s Acwa Power and US-based Air Products teamed up with Omani OQ last May on a “multi-bn USD” green hydrogen project in Oman’s Salalah Freezone.
• Green Energy Oman: The project covers an area of 337 sq km and will generate volumes similar to the BP agreements, the news agency reports. In January, Oman’s OQ signed an agreement with Oman Shell to jointly produce some 1.8 mn tons of green hydrogen in Oman.
• The Hyport Duqm: The project covers an area of 150 ​​sq km with a production capacity of 2 GW of electricity used to generate 70k tons of hydrogen annually. The Hyport consortium is a joint venture between Belgian DEME and Omani OQ.
• Green Hydrogen and Chemicals: The project covers an area of ​​80 sq km with a production capacity of 1 GW used to generate 38k tons of hydrogen per year. The project is being developed in partnership with India’s ACME Cleantech Solutions.

Oman’s Jindal Shadeed Iron and Steel (JSIS) will break ground on its mega green steel complex in the Duqm Special Economic Zone this year, CEO Harssha Shetty tells Zawya. The USD 3 bn hydrogen-fueled project will be powered by some 7-9 GW of clean energy and have a yearly production capacity of 5 mn tons of green steel.

The timeline: The first phase of the project will begin production in 2026 and a second phase is slated to become operational in 2027, Zawya notes.

Where are they sourcing the energy from? JSIS is exploring the development of new solar and wind energy farms to produce energy feedstock for hydrogen generation, indicating that there are ongoing “advanced talks” with renewables developers to source the clean energy needed to power the 2k sq km facility and its electrolyzers, Shetty tells Zawya. Specific company names were not disclosed.

What will the steel be used for? The new facility will be the first of its kind in the GCC to produce auto-grade flat sheets for the automotive, wind turbines, and appliances industries in international markets including Europe and Japan, Shetty says.

The export market is expected to heat up: ESG awareness will drive a double digit growth in demand for the sustainable steel in European markets over the coming decade, Shetty says, and only 30-40% of the green metals produced in the JSIS complex will be earmarked for the Omani and wider GCC market. He expects demand for flat steel in the GCC to grow to 11 mn tons in 2030, up from 7.2 mn tons in 2021.

Egypt and Denmark have extended a bilateral energy cooperation agreement through to 2025, which will see the two countries work on Egypt’s clean energy transition, according to a statement released this week. This came during Danish Prime Minister Mette Frederiksen’s visit to Cairo on Monday, where she held talks with Egyptian President Abdel Fattah El Sisi and Egyptian Prime Minister Moustafa Madbouly.

Could Denmark help with Egypt’s green hydrogen ambitions? During his meeting with Frederiksen, Madbouly talked about expanding relations to include green hydrogen projects and pharma, according to a statement. Frederiksen also highlighted her country’s desire to boost cooperation with Egypt across the board in energy, maritime transport, and logistics, among other fields.

Frederiksen + El Sisi also met: El Sisi wrapped up his meeting with the Danish PM with a 15-minute presser (watch, runtime: 14:23), highlighting renewable energy and water security as important topics of discussion.

The Danish private sector is already showing interest: Egypt’s Planning Minister Hala El Said met with a delegation from Copenhagen Infrastructure Partners (CIF) earlier this month to discuss joint cooperation on potential investments in Egypt’s green sector. No information was disclosed on which specific projects were discussed. CIF has approximately EUR 20 bn invested in wind and solar energy around the world.

SVB collapse leaves “a big hole” in climate startup financing: Climate startups who initially turned to Silicon Valley Bank (SVB) for its willingness to work with fledgling companies pursuing ambitious ideas will turn to more rigid financing institutions, Bloomberg reports, citing analysts and sources from the energy industry. SVB — known as a climate bank — lent sizable funds to small renewable energy companies with projects under 100 MW. SVB’s implosion is also likely to be used as a reason to increase the cost of financing, according to an analyst at Guggenheim. The impact, however, may be short-lived given that the bank has secure underlying assets and is not at risk of default despite being short of funds, one source told the business information service. You can read more about the potential impacts for the region in EnterpriseAM.

UAE’s Tadweer is eying expansion in Jordan: The Abu Dhabi Waste Management Company (Tadweer) inked an agreement with the Greater Amman Municipality (GAM) to explore potential investments in waste management in Jordan and the UAE, Trade Arabia reports.

Jordan is exploring geothermal energy: Jordan’s Energy and Mineral Resources Ministry signed an agreement with Tawazun Investment to research the use of geothermal energy for industrial and electrical power production, according to a statement. The agreement will explore the conversion of non-gas-producing wells into geothermal energy generating wells in Jordan’s Risha gas field.

OTHER STORIES WORTH KNOWING ABOUT THIS MORNING-

• Russia’s nuclear power company Rosatom sent a delegation to Algeria to discuss collaboration between Russia and the Atomic Energy Commission on nuclear power and its energy applications. (Statement)
• Algeria and Djibouti signed an MoU to purchase mining products from Algeria and exchange knowledge on the mining sector. (Statement)
• The UAE issued a license for an electric cargo plane with the goal of promoting sustainability and reducing carbon emissions in the logistics sector. (Statement)

Volkswagen will build its first non-European battery factory in Canada in a bid to localize its EV production chain in North America, Reuters reports. The move comes several months after the German automaker signed an agreement with the country to access key battery raw materials. The new plant is “the largest single investment in the auto sector in the history of Canada,” the newswire quotes Canadian federal innovation minister Francois-Philippe Champagne as saying.

Canada is an EV hotspot: The country’s rich mining industry — which includes rare earths like lithium, nickel, and cobalt — along with its supportive legislation (think tax credits) are attracting EV business, the newswire reports. More investments could be on the way since Volkswagen announced it will invest EUR 180 bn over the course of five years in battery production, raw material sourcing, and more to attempt to lower EV prices and consolidate its sales in the market, Reuters reported separately.

OTHER STORIES WORTH KNOWING ABOUT THIS MORNING-

• China is set to nearly triple its planned wind and solar energy generation capacity to 3.3 GW by 2030. (Bloomberg)
• UK EV start-up Arrival received a USD 300 mn equity financing line from Westwood Capital to start producing electric vans in the US next year. (Reuters)
• A British tidal power facility on Liverpool’s Mersey river could provide 1 GW of clean power to 1 mn households in the UK. (CNBC)
• US energy giant Chevron is partnering with agribusiness companies Corteva and Bunge for the production of low-carbon biofuels from canola crops. (Reuters)

Conservationist sheep come to the rescue in Pompeii: In a bid to protect the unexcavated ruins of Pompeii from being overrun with plant growth, archeologists have deployed a flock of 150 sheep to graze around the historical site, Reuters reports.

Low cost, low emission approach: “We try to have a sustainable approach to the whole environment to avoid using [harmful] substances,” director of the Pompeii Archaeological Park Gabriel Zuchtriegel said, adding that the initiative also saves money while preserving the Roman city’s landscape. Only two thirds of the 163 acre city — buried under meters of pumice and ash from a volcanic eruption 2k years ago — have been uncovered since excavations began 250 years ago.

But not all grazing is zero-risk: Overgrazing can destroy native vegetation, damage soil, disrupt natural processes and ecosystems, and contaminate surrounding water sources, the Center for Biological Diversity explains.