Infinity Power and Copelouzos Group ink an agreement to explore the joint development of renewables

Good morning, ladies and gents. We have a busy morning of climate updates to dive into before the week comes to a close.

THE BIG CLIMATE STORY- Infinity Power — a JV between UAE’s Masdar and homegrown renewable player Infinity — signed a MoU with Greece-based Copelouzos Group — through its subsidiary companies Damco Energy and Elica Mediterranean Interconnection — to explore the feasibility of jointly developing renewable energy projects to supply energy to the 3 GW Greece-Egypt Interconnector.

^^ We have the details on this story and more in the news well, below.

THE BIG CLIMATE STORY OUTSIDE THE REGION- Breach of the 1.5°C warming target “more likely than not” by 2027, WMO says: There is a two-out-of-three chance the world will temporarily surpass the Paris-agreed 1.5°C warming threshold in the next five years, according to a report by the World Meteorological Organization (WMO) out yesterday, which warns of a 98% chance the planet will record its hottest year yet between 2023 and 2027. The naturally occurring El Nino weather pattern — which is expected to develop in coming months and warm waters in the Pacific — coupled with human-induced climate change from fossil fuel consumption will result in the uptick in warming levels. Breach of the warming target, which is expected to occur in at least a year of the next five, marks the first time in history that it’s more likely than not the warming target will be missed, and would send the world into “unchartered territory,” WMO said.

The story got widespread coverage in the press yesterday: Washington Post | Financial Times | Associated Press | France 24 | Bloomberg| Reuters

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OVER IN COPLAND- UAE’s approach to COP28 is “dangerous,” UN ex-climate chief warns: The UN’s former climate chief Christiana Figueres warned that COP28 President Designate Sultan Al Jaber’s language on phasing out emissions through carbon capture and storage rather than cutting fossil fuels is “very dangerous” and a “direct threat to the survival of vulnerable nations,” the Guardian reports. Figueres — a key negotiator in the landmark 2015 Paris agreement — said that the UAE cannot put forward its own position and has to be “neutral,” adding that Al Jaber is “trying to dance on two dance floors at the same time” by pushing for the continued use of fossil fuel energy for the “foreseeable future.”

REMEMBER- Many climate stakeholders are skeptical about Al Jaber’s presidency of the climate conference given his position as chief executive of Adnoc. The continued expansion of Adnoc’s production capacity raises doubts about whether Al Jaber will push for goals that are crucial for avoiding large-scale climate disasters. Some climate groups have also flagged Adnoc’s track record of exaggerating its renewables operations and its failure to report its aggregate emission. Research has shown that most fossil fuel reserves must stay in the ground in order to avoid climate disasters.

ALSO- The UAE’s sustainability-focused social enterprise Goumbook has launched a new podcast series titled Climate Leaders: Rising Up to COP28 on its podcast network Forward Talks, Wam reports. The series will feature interviews with experts and stakeholders who have made exceptional contributions to the sustainability and climate action movement in the UAE and around the world. The air date has not been announced, but episodes will be released on their website soon.

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WATCH THIS SPACE #1- BMW to establish EV production plant in KSA: German auto manufacturer BMW has selected Saudi Arabia as its MENA-based production hub for its hydrogen-powered EV iX5, general program manager of BMW’s hydrogen division Juergen Guldner told Asharq Al Awsat. BMW will leverage the kingdom’s investments in renewables and low-carbon hydrogen as well as its strategic geographical location to expand its operations in the region, Guldner added. No timeline or financial details about the production plant were disclosed.

WATCH THIS SPACE #2- BP looking to triple biofuel production by 2030: British oil giant BP is considering obtaining stakes in biofuel feedstock production companies as part of its target to triple its annual biofuel production capacity to some 4.5 mn tons, Reuters reports, citing an unnamed BP senior executive. BP plans to establish five processing plants to convert hydroprocessed esters and fatty acids (HEFA) waste feedstock, the news outlet quotes BP head of biofuels Nigel Dunn as saying. Demand for biofuels is expected to grow to 30 mn tons by the end of the decade from 10 mn tons this year, Reuters notes, citing Barclays’ market forecasts for the sector.

WATCH THIS SPACE #3- Biden vetoes legislation to repeal tariff waivers on solar imports: US President Joe Biden vetoed a bill passed by Congress to repeal tariffs on solar panel imports from Malaysia, Vietnam, Cambodia, and Thailand, arguing the waivers are needed to plug a supply gap while the country ramps up its own solar PV production capacity, according to a White House statement. Biden had threatened last month to veto congressional attempts to overturn the tariff waivers, however the statement added that “given the strong trends in the domestic solar industry, the President does not intend to extend the tariff suspension at the conclusion of the 24-month period in June 2024.

The logic: Domestic manufacturers argue that the tariffs — which Bloomberg had estimated could go as high as 254% — are necessary to compete with cheap panels manufactured outside of the US. Chinese solar panel developers were also believed to be evading the decade-old import duties after a US Commerce Department investigation found that the Chinese companies were directing their shipments through the four Asian nations before sending their goods to the US.

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CIRCLE YOUR CALENDAR-

Japan will host the G7 Hiroshima Summit from tomorrow through next Sunday, 21 May in Hiroshima. One of the key topics addressed at the summit will be ensuring energy security with the goal of achieving net zero by 2050 based on the Paris Agreement.

Oman will host the Power and Energy Conference from next Monday to Thursday, 22-25 May in Muscat. The event will bring together local and global industry leaders to discuss global energy market policy updates, future demand and growth projections in the sector, integration and power grid obstacles, and growth potential associated with renewables and EV deployments.

Germany will host the second meeting of the COP27 Transitional Committee from 25-27 May in Bonn. The meeting will build on the loss and damage fund established during COP27 with the aim of establishing institutional mechanisms and governance structures for financing, and will bring together a host of international financial institutions to discuss pathways to increasing funding capacity for climate vulnerable countries.

The UAE will host the Electric Vehicle Innovation Summit from 29-31 May in Abu Dhabi. The conference will bring together state representatives, industry players from the EV sector, as well as engineers and researchers to discuss policy trends and tech innovations in the industry and provide attendees with networking opportunities across value chains.

Qatar will host the Carbon Capture, Utilisation and Storage (CCUS) Forum from 29-31 May in Lusail City. The event aims to spotlight MENA’s CCUS regulations and policies, map out paths and business models that would bring down CCUS project costs, promote regional and international cooperation to advance the international carbon capture sector, and discuss the role CCUS will play in helping Gulf countries meet their net zero targets.

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

We might be looking at a potential line-up for GREGY: Infinity Power — a JV between UAE’s Masdar and Egyptian renewable player Infinity — signed an MoU with Greece-based Copelouzos Group to explore the feasibility of jointly developing renewable energy projects to supply energy to the 3 GW Greece-Egypt Interconnector (GREGY), according to a joint statement (pdf). Copelouzos Group will work on the projects through its subsidiary companies Damco Energy and Elica Mediterranean Interconnection.

We first heard of this big renewables plan last year: Egypt and Greece said they were working on a plan to add 9.5 GW of renewable power generation capacity in Egypt for export to Greece last September. Both sides said at the time the electricity would be generated by wind and solar plants and would be shipped across the Mediterranean via subsea cables. They did not provide details on who is taking part in the wind and solar plants, the cost of the project, and where the funds for the project will come from.

What they said: “By supplying renewable energy to Europe, we are not only bolstering our own economy but also positioning ourselves as a key player in the global energy market,” Infinity Power Chairman Mohamed Ismail Mansour said. Copelouzos Group Chairman and CEO Christos Copelouzos said the project — slated to be one of the largest green energy projects in the East Mediterranean — will help “support Europe in its efforts towards achieving energy diversification and security and bringing earlier the attainment of Fit-55 and elimination of CO2 emissions targets.”

About GREGY: The planned electricity link will run directly across the Mediterranean to mainland Greece through a submarine cable, with the possibility of bidirectional energy transmission. It will have a maximum capacity of 3 GW and transmit only renewable energy generated in Egypt to Europe through Greece. Some 9.5 GW of renewable energy projects will be necessary to maximize the utilization of the planned interconnection project. Elica is reportedly applying to the EU for funding, with the European Investment Bank and a number of Greek banks possibly contributing money to the EUR 3.5 bn project.

REMEMBER- Work on GREGY has accelerated in recent months as the EU steps up its search for new energy supplies following Russia’s invasion of Ukraine. The EU imports 40% of its gas from Russia, forcing it to go in search of new suppliers in the eastern Mediterranean, Africa and the Middle East.

Investcorp grabs majority stake in Chinese renewables components player: Bahrain-based alternative asset manager Investcorp has acquired a controlling stake in China’s renewable energy critical components manufacturer Shandong Jianuo Electronics, marking the asset manager’s “first control buyout in China,” according to a statement. No details on the size and value of the acquired stake or immediate changes to the Chinese company’s leadership were disclosed.

About Jianuo: Jianuo provides critical energy components used in EV power management, battery charging infrastructure, solar and wind power generation, and 5G base station infrastructure, the statement notes. The company is a manufacturing partner to several alternative energy solution providers globally, including providers in the US, Europe and Japan.

What they said: “This acquisition reflects our strategy of investing in innovative and growing mid-sized companies and offering investors high-quality alternative investment opportunities in future-focused industries that are key to the global energy transition efforts,” Investcorp Co-CEO Hazem Ben-Gacem said.

REMEMBER– China continues to dominate the clean energy supply chains with the necessary manufacturing capacity to meet global demand. Several countries are on a mission to build up critical supply chains for the energy transition to help meet their respective zero-emission targets in the coming decades as some in the West try to sidestep China.

We saw this coming: Investcorp’s first controlling buyout in the world’s largest economy comes months after it partnered with Hong Kong-based private equity investment arm Fung Capital to set up a USD 500 mn fund to invest in mid-cap companies across China’s Greater Bay Area (GBA). The fund would mainly target control buyouts of profitable mid-cap enterprises across the GBA, which includes companies in the Guangdong province, Hong Kong, and Macau.

Egypt greenlights green hydrogen incentives: The Egyptian Cabinet approved yesterday a package of incentives aimed at stimulating the country’s nascent green hydrogen industry and increasing FX inflows, according to a statement. Under the draft decision, companies implementing green hydrogen projects within five years and deriving a certain percentage of their financing from foreign lenders will receive VAT and income tax breaks.

What’s on offer: Companies will receive tax breaks of between 33-55% on income earned from the plants, and will pay no VAT on raw materials, plant and machinery purchased for the projects. The facilities will be exempt from real estate tax, stamp tax, and a number of administrative fees. Companies will also be permitted to import and export without having their names in either of the registers.

To be eligible: Companies will need to have their projects up and running within five years and obtain at least 70% of their financing from foreign lenders. They will also be expected to source at least 20% of their inputs from local suppliers as part of the country’s push to increase localization and reduce reliance on imports.

Desalination projects and power stations are also eligible — if they link up with green hydrogen plants: The incentives also target water desalination projects that allocate a percentage of their production to green hydrogen projects, and green power plants that allocate no less than 95% of their production to green hydrogen.

New Red Sea wind farm also fast-tracked: Egyptian ministers yesterday approved a golden license to fast track work on the 500 MW Gulf of Suez wind farm being built by Egypt’s Orascom Construction, France’s Engie, and Japan’s Toyota Tsusho and Eurus Energy, according to a statement.

REFRESHER- The USD 680 mn project — which is slated to become Africa’s largest wind facility when it begins operating at full capacity in 3Q 2025 — reached financial close last month. It is being financed by a syndicate of Japanese and French banks alongside DFIs the European Bank for Reconstruction and Development (EBRD) and the Japan Bank for International Cooperation (JIBC).

A wind plant for Scatec and Maersk’s green projects: Egypt’s Cabinet also approved requests by Norwegian renewables producer Scatec and Danish shipping giant Maersk to allocate a piece of land in the Gulf of Suez for a 320-MW wind farm that will power their green projects: a green hydrogen plant and a USD 15 bn clean fuel project.

Aldar’s debut green bond issuance has an initial price guidance: Abu Dhabi’s Aldar Investment Properties — a unit of Aldar Properties — plans to issue a USD 500 mn 10-year inaugural green sukuk bond next Wednesday, Reuters reports, citing a bank document. Initial price guidance for the bond, which comes under the company’s Green Framework, was set at 185 bps over US treasuries, the document notes. The new details come one day after Aldar asked banks to arrange a global investor call and one-on-one small group fixed income investor calls over the sukuk issuance.

Advisors: HSBC and Standard Chartered Bank are acting as joint global coordinators, while Abu Dhabi Commercial Bank, Abu Dhabi Islamic Bank, Dubai Islamic Bank, Emirates NBD Capital, First Abu Dhabi Bank, and Mashreq are acting as joint lead managers and joint bookrunners.

REMEMBER- Interest in green bonds and green sukuk has been on the rise in the region in recent months ahead of COP28 in the UAE. Last month, the UAE’s state-owned Abu Dhabi National Energy Company (Taqa) raised an aggregate USD 1.5 bn in a dual-tranche green bond issuance that was almost 10x oversubscribed at a final order under the company’s new Green Finance Framework.

Mercedes-Benz debuts electric SUV in UAE: Mercedes-Benz Cars Middle East made the regional debut of its all-electric EQS SUV during the Mobility Live 2023 conference in Abu Dhabi, according to a statement. A timeline on the EV’s rollout in the country and the wider MENA region has not been disclosed.

The specs: The seven-seater EV has a range of up to 617 km — one of the highest among all EVs — with a more modest output of up to 400 kW, putting it in 68th place in the EV market in terms of power. The EQS 580 SUV produces 536 horsepower, has a 633 pound-force foot of torque between its rear and front electric engines, while the EQS450 has 355 horsepower, and 419 pound-feet of torque. The EV packs an energy-dense battery with high charging performance of up to 200kW and 250 km WLTP range in 15 minutes, the statement notes.

The bells and whistles: The SUV packs an MBUX Hyperscreen extending the length of the car’s entire 56 inch dashboard, two 11.6 inch display screens for backseat passengers, a Dolby Atmos sound system, sports a panoramic roof, and offers front passengers a “personalized and intuitive” driving experience through the car’s artificial intelligence-powered MBUX Zero Layer operating system, which aside from infotainment also sets out navigation plans to connect drivers to rapid charging stations.

What’s the price tag? The EV will cost between USD 105.5k for its EQS450 + Premium SUV to USD 133.3k for the highest category of the car, the EQS580 4Matic Pinnacle SUV, according to Car and Driver.

Mercedes just updated their strategy for EV SUVs: Mercedes-Benz Vans is targeting an up to 20% EV share by 2026 and more than 50% by 2030, according to their website. So far, Mercedes has sold 40k eVans worldwide.

Don’t expect anyone to be the Saudi Arabia of green hydrogen: The ability to make hydrogen almost anywhere in the world will likely frustrate the aspirations of some nations to become the “Saudi Arabia of the green hydrogen era,” Bloomberg writes. The abundance of hydrogen’s raw materials globally makes shipping them over long distances unnecessary, as opposed to high-quality reserves of iron ore and crude oil, which are scarce. Hydrogen products can be manufactured nearly anywhere in the world, meaning they are usually consumed close to where they are produced. “Many countries may aspire to become the Saudi Arabia of the green hydrogen era. None will achieve that dream,” Bloomberg writes.

Companies need USD 7 bn to set up first nuclear fusion plants: Energy companies looking to set up nuclear fusion power plants will need to shell out around USD 7 bn to realize their targets, according to a new Fusion Industry Association report (pdf). Companies and state-sponsored labs spent USD 500 mn last year on their nuclear fusion supply chains, and will need to earmark USD 7 bn by the time their fusion facilities kick off operations with an extra potential ticket “USD tns” for the development of a mature nuclear fusion market, according to the report. The nuclear fusion market is expected to mature between 2035-2050, according to the survey of some 24 nuclear fusion developers.

OTHER STORIES WORTH KNOWING ABOUT THIS MORNING-

• Tyre makers are under pressure to find alternative production materials as countries look to regulate tyre emissions amidst rising tyre pollution. EVs are increasing the emittance of tiny particles from tyres due to their extra weight from batteries. (Reuters)
• The global refrigeration market is expected to nearly double in size before 2040 as climate-vulnerable countries like India and the Philippines increase their use of air conditioners to combat climate-induced extreme weather. (Bloomberg)

Egypt looks to expand partnership with Belgian company Jan De Nul: Egyptian Electricity Minister Mohamed Shaker met with Belgian company Jan De Nul’s Managing Director Jan Pieter De Nul to discuss expanding cooperation in Egypt’s renewable energy sector, according to a statement. De Nul and Shaker discussed potential collaboration in the electricity interconnection projects with Europe, with De Nul expressing interest in investing in Egypt’s solar, wind, and green hydrogen projects.

A Qatari-US green steel project in the works? The Qatari Businessmen Association (QBA) discussed a potential green steel project with a US delegation from the Energy and Minerals Group, according to a statement. The delegation, led by former US Assistant Secretary for Energy Resources Francis Fannon, said it is looking for joint cooperation and funding to develop and operate an advanced pellet plant in Qatar with a local partner, the statement notes. The Gulf states tend to develop green steel and iron as only 4% of global imports meet international quality standards.

OTHER STORIES WORTH KNOWING ABOUT THIS MORNING-

• Azerbaijani Minister of Energy Parviz Shahbazov and Masdar CEO Mohamed Jameel Al Ramahi celebrated the installation of the first PV panel at the Garadagh solar project in Baku. The plant is scheduled to come online in 4Q 2023. (Twitter)

Stellantis set to acquire stakes in hydrogen fuel cell company: Multinational automotive manufacturing corporation Stellantis will buy a 33.3% stake in hydrogen fuel cell designer and manufacturer Symbio — a JV between France’s Michelin and Faurecia — in 3Q 2023, Reuters reports. The value of the stake stands at EUR 150 mn (USD 165 mn) and the transaction comes at a time when Stellantis is looking to boost its “position in hydrogen-powered vehicles by supporting our fuel cell van production in France,” CEO Carlos Tavares said in a statement. The three groups entered exclusive talks about the potential acquisition in December last year.

Stellantis has an active presence in the region: Earlier this year, Stellantis expressed interest in partnering with Nissan and Al Mansour Automotive to invest a total of USD 145 mn to assemble traditional and electric vehicles in Egypt over the next three years. In partnership with Renault, Stellantis operates EV assembly facilities in Morocco which produce 700k cars each year and is aiming to reach 1 mn in the next 2 to 3 years. Stellantis and Siemens announced a partnership last year to upscale EV last mile delivery infrastructure in MENA. It also began producing EVs at its Kenitra plant in Morocco which manufactures Opel’s Rockes-e.

Larger plans in play: Stellantis is the world’s third-largest carmaker by sales and launched hydrogen-powered mid-size vans late last year with the goal of expanding its hydrogen products to large vans in Europe next year and further afield in the US in 2025, the newswire said.

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Canada is eyeing renewable partnerships with South Korea: Canada is looking to partner with South Korea on “everything from critical minerals to high-tech innovation to clean energy solutions,” Canadian Prime Minister Justin Trudeau said in a speech to South Korea’s parliament, according to Reuters. Trudeau says green technology partnerships and agreements centered on the trade of EV minerals will be at the key topic during his meeting with South Korea’s President Yoon Suk Yeol today, the newswire noted.

OTHER STORIES WORTH KNOWING ABOUT THIS MORNING-

• The Indonesian Investment Authority, the country’s sovereign wealth fund, is set to boost spending as the country aims to make itself an attractive investment destination alternative to China in the green transition. The fund will deploy USD 3 bn by the end of this year alongside its partners. (Financial Times)
• Tesla CEO Elon Musk says the company will reverse its policy against using advertisements in a bid to increase its EV sales. (Reuters)