Taqa raises USD 1.5 bn in dual-tranche green bond issuance

Good morning, friends. The climate news cycle seems to be slowing down as Ramadan winds to a close, giving us the last few regional climate finance updates to dive into.

A quick programming note: Enterprise Climate will be off from tomorrow until next Tuesday, 25 April in observance of the Eid El Fitr. We’ll be back in your inboxes on Wednesday, 26 April at our regularly scheduled time.

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THE BIG CLIMATE STORY- The UAE’s Taqa has raised USD 1.5 bn in its dual-tranche green bond issuance, with the proceeds earmarked for financing green projects outlined within Taqa’s green finance framework and general corporate purposes. Elsewhere in the region, Jordan signed two loan agreements worth USD 650 mn with the World Bank to finance two projects targeting climate responsive investments and upgrades to the country’s electricity sector.

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

THE BIG CLIMATE STORY OUTSIDE THE REGION- Environmental campaigners sue the EU for labeling gas and nuclear investments “green”: Environmental groups are suing the European Commission for its decision last year to count nuclear energy and natural gas projects as “green” investments under the bloc’s Taxonomy of Sustainable Activities — a rulebook for investors aimed at channeling bns of EUR toward investments in renewable energy and green tech assets. Two separate lawsuits have been filed against the Commission in a bid to exclude the energy sources from the taxonomy: One suit by Greenpeace as well as another action by a coalition of NGOs and campaign groups including the World Wildlife Fund and Client Earth.

REMEMBER- Nuclear energy’s inclusion in the taxonomy has had EU members locking horns for some time: Debate over whether nuclear-derived hydrogen should be allowed to count towards the EU’s renewable energy generation targets has delayed the finalizing of a text outlining the EU’s diplomatic priorities ahead of COP28 — which was supposed to be agreed on by member countries back in February.

The story dominated headlines in the international press: Reuters | Associated Press | Euronews | Bloomberg | Deutsche Welle | The Washington Post | The Guardian

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WATCH THIS SPACE #1- The EU approves legislation in line with 2030 climate target: The European Parliament approved sweeping reforms to carbon markets cracking down on European countries’ access to gratis CO2 permits by 2034 and adding shipping emissions to the carbon market starting 2024, according to a press release. The ambitious new climate policy — set to be approved by EU countries in the coming weeks — also includes a plan to phase in a levy on the import of high polluting goods including steel, cement, aluminum, fertilizers, electricity, and hydrogen by 2026. A decision to launch a separate EU carbon market for emissions from cars and buildings was among the reforms passed yesterday and will go into effect in 2027, Reuters reports.

ALSO- The parliament approved the allocation of EUR 87 bn to support individuals and groups impacted by the green transition. The Social Climate Fund, set to be launched in 2026, will support those likely to be negatively impacted by the transition to more climate-friendly fuels, especially in the areas of energy and transport, according to a press release. EUR 65 bn of the funds will be obtained by auctioning carbon permits to industries, while the rest will come from government budgets.

REMEMBER- The price of EU carbon permits has skyrocketed recently in anticipation of the reforms passed by the parliament yesterday. The rising prices helped the EU raise bns that have been allocated to EU governments to invest in climate measures, the newswire said.

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WATCH THIS SPACE #2- Dewa expected to award construction contract for its new HQ in 2Q 2023: The Dubai Water and Electricity Authority (Dewa) is expected to select by June a developer for its new renewables-powered, carbon neutral, 15-storey headquarters, which is set to be built by 4Q 2024, Zawya reports, citing sources it says have knowledge of the plans. Dewa’s new HQ — for which it had awarded Ghantoot Transport & General Contracting and Ghantoot Gulf Contracting an AED 982 mn construction contract in 2019 for a previous development phase — will span some 2 mn sqm and generate 6.5 GWh of solar energy annually through building-integrated and other photovoltaic networks. Dewa extended last month the deadline on the tender for completion of its new HQ, which will be located in Dubai’s Jaddaf district, to 4 May from its previous closing date of 5 April.

WATCH THIS SPACE #3- US and EU climate bills may spur growth of green steel production: Incentives under the US’ Inflation Reduction Act and the EU’s Carbon Border Adjustment Mechanism (CBAM), coupled with an expected growth in steel demand and a lack of recyclable scrap metals, could drive an inflow of investments toward green steel production, a new report by the Energy Transitions Commission (ECT) finds. Though most commercial-scale green steel production projects have not yet secured final investment decisions, a viable investment case for projects centered on direct iron ore production via green hydrogen is “within reach” in the US, Spain, the UK, and France.

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COME TO OUR NEXT ENTERPRISE FORUM-

The Enterprise Exports & FDI Forum, our latest industry-specific conference, is taking place on Monday, 15 May. The Enterprise Exports & FDI Forum will give insiders and newcomers alike the chance to talk about how to develop an export-centered business and how their companies can help Egypt build an export-led economy that makes us a magnet for foreign direct investment (FDI).

Why exports & FDI? In the wake of successive floats of EGP, exports and FDI have never been more important to our economy — or our businesses. We’re gathering some of the CEOs, top execs from local companies and multinationals, investors, bankers and finance folks to speak on how businesses can adapt their strategies to be export-oriented and what Egypt as a country can do to draw foreign investment and much-needed FX. Expect it to be heavy on lessons learned in Egypt and other global growth markets — and lots of success stories. You can learn more on our conference website here.

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CIRCLE YOUR CALENDAR-

Germany will host the first COP27 transitional committee workshop from Saturday, 29 April to Sunday, 30 April in Bonn. The workshop will address climate-driven loss and damage impacts, will spotlight the findings of a report prepared by the UN on current funding arrangements for climate mitigation efforts, and bring together a host of international financial institutions to discuss pathways to upping funding capacity for climate-induced loss and damage.

Turkey is hosting the International 100% Renewable Energy Conference from 4-6 May in Istanbul. The event will bring together experts to discuss the integration of renewables, renewable energy technologies and applications, and the Roadmap to 2050.

The UAE is hosting the UAE Climate Tech forum on 10 and 11 May in Abu Dhabi. The event will gather over 1k policymakers, CEOs, experts, and investors to discuss collaboration on innovative technologies and economic opportunities in advancing decarbonization across all sectors.

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 UAE’s state-owned Abu Dhabi National Energy Company (Taqa) has raised an aggregate USD 1.5 bn in its dual-tranche green bond issuance, according to a disclosure to the Abu Dhabi Securities Exchange (pdf). This is the first green bond issuance under guidelines from Taqa’s new Green Finance Framework issued earlier this month, and the company’s second green bond issuance after it raised USD 701 mn in green senior secured bonds last January with the Emirates Water and Electricity Company.

The details: The USD 1 bn 10-year tranche — issued at a coupon rate of 4.696% — matures on 24 April 2033. The proceeds from these notes will be used to finance, refinance, and invest in green projects outlined within Taqa’s green finance framework, the statement notes, including renewable energy, energy efficiency, sustainable water and wastewater management, clean transportation, and terrestrial and aquatic biodiversity. Taqa also sold USD 500 mn in five-year notes — issued as conventional bonds at a coupon rate of 4.375% — with a maturity date of 24 January 2029. Proceeds will be allocated to general corporate purposes, the statement notes.

There was strong demand: The sale was almost 10x oversubscribed at a final order book nearing USD 15 bn “with a very strong demand from domestic, regional and international investors,” the statement reads.

Regional green bonds and sukuk have been doing well: The Saudi Electricity Company’s green sukuk issuance earlier this month was nearly 7.6x oversubscribed, drawing some USD 9.2 bn in demands and attracting regional and international interest.

Advisors: A syndicate of joint lead managers comprising BNP Paribas, Emirates NBD Capital, First Abu Dhabi Bank, HSBC, ICBC, IMI-Intesa Sanpaolo, Scotiabank, SMBC Nikko and Standard Chartered helped arrange and offer the issuance.

Jordan and the World Bank (WB) have signed two loan agreements worth USD 650 mn to finance two projects targeting climate responsive public and private investments and improvements to the country’s electricity sector, according to a statement. The agreements were signed on the sidelines of the World Bank Spring meetings in Washington.

Where’s the money going? The bank will provide c. USD 400 mn to support the country’s climate responsive public and private investments to promote jobs for women and boost the government’s effectiveness through data and evidence-based policy making, according to the statement. The financing will “further strengthen the quality of public investment and prioritize climate responsive public investment, including through public-private partnerships,” the statement noted, and pave the way for the possible issuance of sovereign green bonds and the implementation of a National Green Taxonomy.

Jordan’s electricity infrastructure will also get a boost: USD 250 mn will be earmarked for improving the efficiency of the country’s electricity sector by introducing reforms with a focus on cost saving and revenue enhancement measures. Despite the country’s achievements of increasing the share of renewables in the electricity supply mix and introducing private investments to the sector, Jordan’s electricity sector still faces hurdles that hinder long-term growth, the statement notes, including losses by Jordan’s National Electric Power Company, a rise in electricity purchase costs, and an increase in debt service costs.

REMEMBER- Jordan 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.

How healthtech can reduce MENA’s healthcare emissions: Healthcare has one of the biggest carbon footprints globally — accounting for 4.4% of emissions worldwide — which would make it the fifth largest emitter of carbon were it a country, according to a report by sustainable development firm Arup and NGO Health Care Without Harm. In most developed countries, the industry accounts for nearly 10% of emissions, placing it ahead of aviation or shipping with the US, China, and the EU collectively accounting for over 56% of the planet’s climate footprint.

Where are all these emissions coming from? The industry is powered primarily by fossil fuels, and hospitals alone emit 2.5x more greenhouse gasses (GHG) than any other public sector buildings. The report finds that 71% of emissions come from energy use in healthcare’s supply chain including production, transport, and the disposal of goods and services. 17% of healthcare’s emissions come from healthcare facilities and associated vehicles, while indirect emissions via purchased energy, including electricity, steam, cooling, and heat make up 12%.

As a region, we are most affected by climate change: Although MENA is not a top emitter when it comes to healthcare, the region is disproportionately affected by climate change, with up to two in three deaths from heat attributable to global warming — compared to the global average of one in three.

And the impact of climate-induced health problems will rise: As countries increase healthcare spending in the wake of climate-induced health problems, the carbon footprint of the healthcare sectors, although Arup reports “significant data gaps” global healthcare’s supply chain, and the footprints of anesthetic gasses and metered dose inhalers, as well as in national estimates of the sector’s emissions — particularly for countries of the global south. It also calls for a better understanding of the trajectory of healthcare emissions.

Enter healthtech: Healthtech includes all direct or indirect digital services that service patients, including telemedicine, remote monitoring, home testing, and surgical robotics. Healthtech is impact-driven, it can facilitate access to healthcare in remote areas, CEO of healthcare impact investment fund Elevate Capital Tarek Moharram tells us, and primary prevention can reduce healthcare-related disease. Amin Elhemaily, founder and CEO of Esteshara, tells us that healthtech players have a vision to transform healthcare from “sickcare” through the facilitation of early detection and prevention services.

ESG compliance and incentives can also slash emissions: Moharram and Elhemaily say increased adoption of ESG regulations — which mandate that publicly listed companies report their environmental impact, including carbon footprint, waste management, water, and energy consumption and environmental protections — can create awareness within the sector about its environmental impact. Moharram, whose firm invests in healthcare and mandates ESG compliance, tells us that as impact investors pour funds into the sector, setting ESG KPIs will be key to creating a long-term sustainability framework. He notes that compliance — which can be a burden for startups with scant resources — can be further encouraged and enforced through subsidized financing and incentives.

Supply chain, waste management and energy consumption are low-hanging fruit: Despite a lack of data regarding the sector’s emissions in MENA, Moharram and Elhemaily point to supply chain and energy consumption as top sources of emissions. Although Africa currently has the lowest healthcare-related emissions due to its under-development, the continent has an opportunity to “leapfrog” the west’s carbon heavy development phase and move towards designing greener, more sustainable economies that adhere to environmental standards, Moharram notes.

And measures can be taken to sweeten the pot: Incentives are key to ensuring that hospitals and healthcare providers are built and operated with the latest compliance guidelines in mind, Moharram adds. While a handful of startups are working in medical waste disposal, current policy frameworks do not offer clear guidelines for local companies and hospitals on how to dispose of medical waste and equipment, Elhemaily tells us. Waste management companies have a good opportunity to introduce circular waste management practices to the sector, provided that there is enough incentives and investment, CEO of healthtech startup Yodawy Karim Khashaba adds, and incentivizing hospitals to switch to renewable energy will require structural, policy-level incentives.

There’s efforts being undertaken in the UAE: Emirati medical vehicle manufacturer Naffco showcased its electric ambulance at the Arab Health 2023 conference in January and Schneider Electric partnered with Microsoft and Emirates Health Services to launch a digital twin solution — EcoStruxture™ for Healthcare — to improve operational performance and improve energy efficiency by up to 30% for hospitals in the country. Beeah’s medical waste management service Wekaya is training UAE healthcare workers in best practices for medical waste disposal as well as providing hazardous and medical waste management services in the form of treatment facilities and consulting.

And the regional healthtech industry is attracting big money: Investments in healthtech digital infrastructure are expected to rise from USD 500 mn to USD 1.2 bn in the next two years in the GCC, with 80% of funding coming from domestic VCs, a report by Dealroom found. A McKinsey report estimates that digital healthcare services in Saudi Arabia and the UAE alone could reach USD 4 bn by 2026. The five top healthtech startups in MENA attracted over USD 70 mn total funding in the past seven years — though that number excludes startups that were acquired, merged, or went public, according to a Forbes report. Despite increased investments, the sector remains relatively small with only a handful of platforms acknowledged as healthtech players in the region, Khashaba tells us. Moharram points to the regulatory environment for healthtech as lagging behind, making it challenging for e-pharma or telemedicine to pick up pace.

Could we see a resurgence of interest at COP28? The Alliance for Transformative Action on Climate and Health launched at COP26 with the aim to support countries develop climate resilient and low-carbon sustainable health systems. The COP26 Health Program will conduct climate change and health vulnerability assessments and develop national adaptation plans for health, as well as set target dates to achieve net zero emissions and develop a roadmap to achieve low-carbon health systems. 50 countries have joined the program including Bahrain, Egypt, Ethiopia, Jordan, Morocco, Oman, Tunisia, the UAE, and Yemen. As of COP27, 62 countries had committed to build climate-resilient and low-carbon health systems and 22 set a target to reach net-zero from their health systems before 2050.

Sustainable Debt Alliance by Egypt coming our way this year? Egypt plans to launch the Sustainable Debt Alliance in September to regulate sustainable debt transactions and lift debt burdens for emerging markets, Finance Minister Mohamed Maait said in a speech on the sidelines of the IMF / World Bank spring meetings in Washington. 20 countries have expressed interest in joining the alliance to push climate and developmental action, he added.

OTHER STORIES WORTH KNOWING ABOUT THIS MORNING-

• The Egyptian government has begun allocating land in western Sohag and Aswan to the New and Renewable Energy Authority under a plan to expand wind energy projects in the country. (Attaqa)

Burundi, Kenya, Congo, Ghana, and Rwanda receive funding for nature restoration: The World Resources Institute has secured USD 100 mn from the Audacious Project funding initiative to accelerate nature restoration activities in three African regions over the next four years, Bloomberg reports. The grant will be used to encourage tree planting and deepen local knowledge and skills on restoration. It will also be used to propose, implement, and monitor supportive policies through direct investments in local community-based organizations and SMEs. This is part of a USD 500 mn fundraising target by the African Forest Landscape Restoration Initiative — a group of 33 countries that aims to restore 100 mn hectares of land by 2030. USD 50 mn were already secured from the Bezos Earth Fund last year. The three regions covered by the initiative are the Great Rift Valley of Kenya, the Ghana Cocoa Belt, and the Lake Kivu & Rusizi River Basin in Rwanda, Burundi, and the Democratic Republic of the Congo.

Minerals jackpot for the UK? Several areas in the UK have been identified as potentially prospective for critical raw materials, a report by the British Geological Survey (BGS) finds, as the country aims to establish a minerals supply chain amid a clean transition push. Eight key areas have been identified as worthy of more research, according to BGS, although it stressed that there are no assurances that deposits will be found. “Much more research is required and, if prospectors find evidence of commercially viable [critical raw material] deposits, they will have to go through the well-established planning process. Only one in a thousand potential mineral exploration projects ever becomes an operating mine,” said BGS Mineral Resource geologist Eimear Deady.

Critical raw materials? These are minerals that are considered “economically important,” such as those used to make batteries and other equipment needed for clean transition, BGS explains.

More funding for Tanzania’s renewables: Tanzania, the African Development Bank and the French Development Agency signed two development project loan agreements worth USD 300 mn for the construction of the country’s 87.8 MW Kakono hydropower plant, according to a statement released on Friday. The hydropower project aims to raise renewable generation capacity and lessen the hydrological risk through a dam located on a new watershed less impacted by droughts. It is set to slash greenhouse gas emissions by c. 216k metric tons per year and serve 4 mn people, according to the statement.

Regional players have their eye on Tanzania: Masdar signed an agreement with Tanzania to develop renewable energy projects with a total capacity of 2 GW without disclosing the project cost or location last year.

OTHER STORIES WORTH KNOWING ABOUT THIS MORNING-

• Indian steel manufacturer Tata Steel is reportedly looking to raise some USD 400 mn from its planned maiden green bond issuance. (Asharq Business)
• Japan's Nissan Motor revealed its new electric SUV, the Arizon, during a Shanghai auto show on Tuesday. Nissan is looking to compete in the EV market with local Chinese manufacturing companies including BYD. (Reuters)

More efficient hydrogen production on the way: A team of researchers at the Swiss Federal Institute of Technology has developed a prototype of electrolyzer-packed solar cells to produce green hydrogen more efficiently, according to research published by Nature. Green hydrogen production typically involves channeling solar and wind power to electrolyzers to split water molecules into oxygen and hydrogen, but the new Swiss prototype comes equipped with its own solar heat-powered electrolyzers. Although this solar-to-hydrogen generation technique is not novel, the researchers say their prototype successfully converted more than 20% of the solar energy it stored into green fuels at a rate of 2 kilowatts, “which is more than two orders of magnitude higher than previous results and puts the world one step closer to sustainable fuels,” according to the study’s authors. Bottlenecks facing researchers developing similar solar-to-hydrogen PV cells include difficulties maintaining consistent efficiency and stability rates, and high hydrogen production costs associated with the method of green fuel generation, according to the study.

REMEMBER- Increasing the efficiency of green hydrogen is crucial for the energy transition: The global and regional hydrogen economy have both been riddled with technological and infrastructure barriers. A study published last December found that steam methane reforming and coal continue to dominate the supply side of hydrogen given their low production costs which stand at under USD 3.50 per kg compared to USD 10 per kg for solar-powered hydrogen production. This leaves little room for economic incentive to transition to a cleaner fuel supply. According to the International Energy Agency, hydrogen demand in 2021 was almost entirely met by “unabated fossil fuel-based hydrogen” — producing CO2 emissions over 900 mega tons — while low-emission hydrogen production represented less than 1% of global hydrogen production.

Cheaper production methods are in high demand: Green hydrogen is gaining traction as fossil-fuel-based hydrogen prices surge by 70% on the back of soaring natural gas prices though, and MENA already has ambitious hydrogen development plans. MEED estimated in November that the 50 signed projects in the region would net over USD 150 bn in investments. With the increasing interest in hydrogen production in the region, new tech advancement in hydrogen production could help in improving the feasibility of mega projects. Surging demand and accelerated generation of renewable energy powering hydrogen production could see green hydrogen priced at under USD 2 per kilogram by 2030. From our neck of the woods, Egypt expects the cost of its green hydrogen production to be at USD 2.68 per kilogram in 2025, while solar and wind energy deployments could push down the cost of green hydrogen per kg in Morocco to USD 2.54.