Egypt’s FRA issues carbon credit verification and certification standards

Good morning, friends. It’s a busy Wednesday morning with regional updates across the board as we inch closer to the weekend. Let’s jump right in.

THE BIG CLIMATE STORY- Egypt’s Financial Regulatory Authority has established carbon credit verification and certification standards for issuing voluntary carbon certificates as it takes an important regulatory step in setting up Africa’s first voluntary carbon market.

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

THE BIG CLIMATE STORY OUTSIDE THE REGION- The US’s first offshore wind auction in Gulf of Mexico is here: The US kicked off its first ever offshore wind energy auction for the Gulf of Mexico yesterday as part of the Biden administration’s commitment to deploy 30 GW of offshore wind energy by 2030. The US Interior Department has auctioned off a lease area of 102.4k acres off the coast of Louisiana’s Lake Charles and two areas totalling 200k acres off the shore of Galveston in Texas. RWE won the Lake Charles lease area, which has the capacity to generate c. 1.24 GW of offshore wind capacity and power c. 435.5k homes with clean energy. The two lease areas in Galveston did not receive bids

The auction is getting ink in international press: Reuters | Bloomberg | The Guardian

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WATCH THIS SPACE – Saudi Arabia’s Acwa Power aims to capture a 50% share of Egypt’s renewables market by 2026, CEO Marco Arcelli told Daily News Egypt. Arcelli explained that a planned USD 10 bn green investments allocated for Egypt will be disbursed within three years. The company has so far invested a total of USD 2.5 bn in Egypt on five projects with a combined capacity of 1.85 GW. Three of the projects are megascale in size and are scheduled for operation in 2026.

A closer look at the megaprojects: Acwa Power is developing a 1.1 GW wind farm in the Gulf of Suez. The farm has an investment cost of USD 1.5 bn and is set to be one of the largest onshore wind farms in the world and the largest in the Middle East. Acwa Power is also building a 10 GW wind farm in Sohag governorate, for which it signed a land allocation agreement last month. Acwa also owns the 200 MW Kom Ombo solar power plant, which last April got USD 114 mn in backing from a consortium of international lenders led by the European Bank for Reconstruction and Development. The company has minority stakes in three plants in Egypt’s 1.8 GW Benban solar complex (pdf).

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DATA POINT- 2022 was the year for cost competitiveness: New renewable energy capacity added since 2000 has helped slash the electricity sector’s fuel bill in 2022 by at least USD 520 bn, according to a report by the International Renewable Energy Agency (Irena). It said the saving of new capacity additions last year will help lower costs by up to USD 580 bn in non-OECD nations. Renewable energy’s competitiveness benefitted from the fossil fuel price crisis last year, with around 86% — or 187 GW — of all newly commissioned capacity having lower costs than fossil fuel-fired electricity, the report notes. The world still needs to add 1k GW of renewable power annually on average until 2030 to keep the global warming threshold within reach, triple those of 2022 levels, Irena’s Director-General Francesco La Camera said.

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THE DANGER ZONE- Energy-related CO2 emissions will likely double the target set out by the UN in its 2 °C scenario by 2050, Bloomberg reports, citing Exxon Mobil’s annual Energy Outlook report. Global emissions are predicted to reach 25 bn metric tons by 2050, more than double the target of 11 bn set by the 2016 Paris Agreement. While this is 25% less than the 34 bn ton peak expected this decade, it remains a long way from what’s required to meet the goals of the 2016 Paris Agreement, Bloomberg writes. The difficulty in controlling emissions will be the result of a predicted rise in population and consumer purchasing power by 2050, which will drive more manufacturing, commercial transportation, and other industrial activities.

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NON-CLIMATE REGIONAL HEADLINES:

• Egypt: Egyptian President Abdel Fattah El Sisi discussed with Sudanese military ruler General Abdel Fattah Al Burhan meditation efforts for the Sudanese crisis during the Sudanese leader’s first foreign trip since the outbreak of war in April. (Al Ahram)
• KSA: PIF’s AviLease will purchase Standard Chartered’s global aviation finance leasing business in a transaction valued at USD 3.6 bn. (Al Riyadh)

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CIRCLE YOUR CALENDAR-

Saudi Arabia will host the Sustainable Maritime Industry Conference from Monday, 4 September to Wednesday, 6 September in Jeddah. Organized by KSA’s Transport and Logistic Services Ministry, the event will feature over 50 speakers to spotlight sustainability, new technologies, and digitization efforts in the maritime industry. Speakers will include International Maritime Organization Secretary General Kitack Lim and World Ocean Council CEO Paul Holthus.

Kenya will host the Africa Climate Summit from Monday, 4 September to Wednesday, 6 September in Nairobi. The event will bring together government leaders and investors to share pathways to increasing Africa’s climate resilience and serve as a platform to inform and frame commitments, pledges, and outcomes, ultimately leading to the development of the Nairobi Declaration on Climatic Change.

India will host the G20 Heads of State and Government Summit from Saturday, 9 September to Sunday, 10 September in New Delhi. A G20 Leaders’ Declaration will be adopted at the conclusion of the summit, stating commitment towards priorities discussed and agreed upon during previous ministerial and working group meetings through the year, the organizers note. The last meeting of G20 energy ministers in July failed to reach consensus on a fossil fuel phasedown as several major producing nations, led by Saudi Arabia, blocked the move. Among other expected announcements, the Global Biofuels Alliance is scheduled to be launched at the summit.

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

Egypt issues criteria for registering carbon removal certification entities: Egypt’s Financial Regulatory Authority (FRA) has established carbon credit verification and certification standards for issuing voluntary carbon certificates, according to a statement.

The details: The decision stipulates that the certification body must provide the regulatory authority with the objective of the project, the technologies used, and the estimated volume of emission reduction — all of which the certification body is responsible for confirming. Two accreditation certificates and proof of professional competence are also required, the statement outlined. According to the regulation, unregistered entities are not permitted to carry out any verification or approval for carbon removal projects and cannot list or trade carbon certificates on the Egyptian stock exchange.

Foreign carbon removal certification bodies can also set up shop in Egypt: Registration is also open for foreign entities under the condition that they are internationally recognized in accordance with the UN regulations, have at least three projects previously registered in international voluntary carbon registers, and the team carrying out the verification work must include at least one Egyptian specialized in the sector. The regulator is also drawing up a list of local and foreign organizations capable of verifying and approving carbon credits.

Certificates registered abroad can be traded in Egypt: Organizations with carbon reduction certificates issued abroad would have to notify the authority of the certifications in the event they wish to trade these certificates inside Egypt. The organization would also have to be recognized by the UN.

In case of violations: In the event that the certifying body does not adhere to the regulator’s criteria, the FRA will first issue a warning and will specify a time period for reversing course. If the violation continues, the authority can temporarily suspend registration for a maximum of six months or remove the body entirely with the possibility of re-registering after at least one year.

Who’s behind the new regulations? The new rules were prepared under a proposal submitted by the Carbon Emissions Reductions Supervisory and Monitoring Committee, whose membership includes representatives of Egypt’s environment ministry, the Egyptian Stock Exchange, and other experts.

Background: The EGX announced it would set up Africa’s first voluntary carbon market last year. The market will allow companies in Egypt and Africa working on emissions-reducing projects to sell certified carbon credits, which can then be bought by other companies wanting to offset their emissions. The bourse is partnering with the Agricultural Bank of Egypt and Enara Group’s Libra Capital to establish Libra Carbon, an Egyptian company that will develop, manage, and issue carbon certificates.

REMEMBER- The FRA formed a committee to supervise and regulate the country’s soon-to-be launched voluntary carbon market last April. The new regulator's mandate includes establishing a rulebook outlining the requirements for issuing carbon credits, mapping out the greenhouse gas disclosure schemes companies would have to follow to verify their carbon output, and setting out the criteria for selecting verified carbon crediting bodies. The committee is headed by FRA chief Mohamed Farid and includes representatives from the country’s Environment Ministry, the Egyptian Stock Exchange (EGX), and the FRA.

Indorama has a plan or two for Egypt: Singapore-based chemical company Indorama has submitted a proposal to Egypt to establish two separate facilities to produce phosphate fertilizers and silicon necessary to manufacture solar panels, according to a statement.

Details are still scant: Egyptian Planning Minister Hala El Said said Indorama plans to pour USD 700 mn in investments in the two facilities, the statement notes. The plants’ output will be directed to exports, she said, adding that Indorama has expressed readiness to enter into partnerships with existing projects in the country. Raw materials and plots necessary for the two projects’ establishment are available, Oil Minister Tarek El Molla said.

We have been expecting this: The Singaporian chemicals outfit signed an MoU with the Sovereign Fund of Egypt last month to explore options in several sectors, including fertilizer production, phosphate extraction, renewable energy, and medical fibers.

FRV lands major solar power agreement: Australia’s leading solar developer and renewable energy platform Fotowatio Renewable Ventures (FRV) — a part of Saudi Arabia’s Abdul Latif Jameel Energy and Canadian asset management company OMERS — has secured three new solar sites in New Zealand under a JV with the country’s electricity generation company Genesis Energy, according to a statement.

What we know: The solar farms — developed in New Zealand’s Manawatu, Waikato, and Hawke’s Bay — will have a capacity of 200 MW, 100 MW, and 100 MW respectively. Their capacity will be sufficient to power c. 85k homes annually, about the size of the country's capital Wellington. They will also remove c. 500k tons annually of greenhouse gas emitted from fossil fuel generation.

It’s been an eventful year: FRV Australia and Genesis agreed to acquire the 52 MW Lauriston solar farm earlier this year. It is expected to start generating electricity in 2024.

The JV is moving in the right direction: The latest agreement brings the combined generation of the four sites secured this year to 452 MW, bringing the JV closer to achieving targets set in 2021 of securing up to 500 MW of solar projects in New Zealand within five years.

ADCB gauges appetite for new green bond issuance: The Abu Dhabi Commercial Bank (ADCB) — the UAE’s third largest bank — plans to issue a long five-year USD-denominated green bond following investor meetings set to begin today, Reuters reports, citing fixed income news service IFR. The planned issuance would still depend on market conditions, according to IFR.

Advisors: ADCB has hired Barclays, Deutsche Bank, Emirates NBD Capital, JP Morgan, Mizuho itself as joint bookrunners to schedule the investor meetings. Barclays has also been hired as sole ESG coordinator.

Not its first: ADCB raised USD 500 mn with its inaugural green bonds last year after luring in over USD 1.8 bn in orders for the issuance.

Tunisia’s CPG aims big for phosphate: Tunisia's state-run mining company Gafsa Phosphates (CPG) is set to receive the first batch of equipment and machinery procured under a government-approved DT 236 mn (c. USD 76.3 mn) investment program set forth last May to boost phosphate production, Tunis Africa Press Agency (TAP) reported this week. The purchase of the equipment comes under a move to boost the extraction of raw phosphate and production of commercial phosphate.

What we know: The first batch of the equipment includes 18 60-ton trucks, six hydraulic machines, three rotary machines and six 4.5 cubic meter wheel loads and others aimed to raise the company’s capacity to deliver raw phosphate and extract commercial phosphate, CPG’s Director of Information and Communication Ali Al Hoshati told TAP. The company is also planning a tender in September to procure a new batch of machinery and equipment, including trucks, rotary, hydraulic excavators, and others. The machinery will be used to improve CPG’s capacity to extract raw phosphate from open-cast mines in Oum Larayes, Metlaoui, Mdhilla and Redeyef, Al Hoshati said.

And there’s more: CPG is seeking to rehabilitate 30% of its fleet of mining equipment under the ambitious investment program which runs until next year, Al Hoshati said. A boost in CPG’s extraction capacity would allow commercial phosphate production units to operate “smoothing and sustainably” with raw phosphate, he added.

REMEMBER- Tunisia was one of the world’s top producers of phosphate minerals— a key ingredient in agricultural fertilizers — but its market share collapsed on the back of turmoil that followed the country’s 2011 uprising. CPG was among those that took hits, with protests and strikes leading to production cuts and bns of USD in losses.

And Tunisia wants to make its top revenue-making industry eco-friendly: Tunisia has been working with DFIs to make its phosphates industry climate friendly, seeking loans and grants to support governance in lowering pollution. In 2018, the French Development Agency (AFD) provided a grant to the Tunisian Chemical Group (CGT), which produces phosphates and derivatives, to help lower pollution in a bid to address environmental woes by the local population. It also signed a EUR 45 mn loan agreement to fund CGT’s upgrading program for its phosphate facilities to help in lowering pollution from its operations.

Saudi Arabia and Turkey have signed an MoU to boost cooperation in the mining sector, according to a statement by the spokesperson of Saudi Arabia’s Industry and Minerals Ministry. The agreement identified the key areas of cooperation, including mining exploration and development and clean mining technologies.

Paving the way for something big? The agreement paves the way for increased investments and cooperation on the minerals needed to boost technology in solar industry and EV manufacturing, Anadolu Agency reports.

REMEMBER- The Saudis are going big with energy transition metals: Saudi Arabia aims to become a global hub for green metals critical for the energy transition under efforts to diversify its economy away from oil. This includes significant amounts of uranium and titanium discovered in the country, according to officials. KSA says it has untapped metals and minerals — including copper, zinc, phosphate, and gold — collectively worth USD 1.3 tn. KSA’s Manara — a recently established JV between Saudi Arabia’s sovereign wealth fund and state-owned mining company Ma’aden — sealed an agreement in late July with Brazilian miner Vale to grab a 10% slice of its base metals unit as it eyes a pivotal role in the global energy transition supply chains.

And they’re keen on other Turkish renewables: Bayraktar said the kingdom is looking to establish renewable energy projects in Turkey that would yield 4-5 GW last month. He did not provide details on the projects in terms of the type of renewable energies to be employed or how much capital either country would contribute to the projects.

Google sees potential as demand for renewables grows: Google plans to license new sets of mapping data to several companies as they tap into products focused on renewable energy, CNBC reports, citing materials it has seen. The plan — which Google hopes will net USD 100 mn in revenues in its first year — will see the company selling access to new application programming interfaces (APIs) with data on solar, energy and air quality. The new offerings include a Solar API taken from a consumer-focused plot called Project Sunroof, which is a solar savings calculator that was launched in 2015. The pilot gives users access information related to estimated solar costs and the size of solar installations needed depending on their location. It also provides 3D modeling of buildings’ roofs and surrounding trees based on data from Google Maps. Google says it has data for over 350 mn buildings, according to the documents, and Google’s solar APIs have the potential to generate revenues between USD 90 mn and USD 100 mn within a year of operations.

The UAE and Jordan kick off solar projects: The Emirates and Jordan have both made strides in the solar section this week. UAE renewables developer Amea Power signed a power purchase agreement with Djibouti’s national utility company Electricité de Djibouti to develop a 25 MW solar and battery project located south of the country’s capital, according to a statement. The will supply 55 GWh of clean energy annually and the Sovereign Fund of Djibouti will be a minority shareholder in the project. Under the agreement, Amea will commit to supplying electricity from the solar farm to Electricité de Djibouti for 25 years.

AMEA Power has been looking to Africa for investments: Amea Power will build a USD 120 mn, 120 MW solar energy plant in South Africa, a 560 MW solar plant and 505 MW wind farm in Egypt, and a new 50 MW solar power plant in Ivory Coast. Amea Power 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.

Over in MENA, Jordan launched operations for a 24 MW solar farm which will power the capital’s Disi Water Conveyance Project in Amman, Al Mamlakah reports. The solar farm — developed by China’s Sepco under a USD EUR 30 mn loan by the European Bank for Reconstruction and Development — marks the first solar-powered water pumping project in the kingdom. The plant is expected to produce up to 79 MWh of clean energy in the first year of operations and pump 100 mn cubic meters of water annually from the Disi aquifer beneath the desert in southern Jordan and northwestern Saudi Arabia.

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Oman welcomes new tyre recycling plant: Oman’s International Recycling Company inaugurated a new tyre recycling facility worth OMR 1.3 mn (c. USD 3.4) in Al Batinah North Governorate, Oman News Agency reports. The facility will have a production capacity of processing 6k metric tons of discarded tyres annually, according to company officials. The factory has been equipped with the latest technologies to minimize waste, preserve resources and limit tyres’ negative environmental impact.

Some are seeing potential in tyres recycling in Oman: India’s top tyre recycling Tinna Rubber recently announced it is acquiring a majority stake in an Oman based tyre recycling operation. The new Oman subsidiary— which will operate as Global Recycle— would see a pilot project capacity of 10k metric tons of tyres annually. Separately, a pact was signed last year between Sur Industrial City and Al Fairouz Projects and Investments, to set up a project turning used automotive tyres into rubber power for biofuel production and others.

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China and MENA partner to combat desertification: China and the Arab League across MENA signed an agreement to establish a research center with the purpose of tackling drought and desertification across MENA, Chinese news outlet Global Times reports. The China-Arab International Research Centre for Drought, Desertification, and Land Degradation will leverage Chinese tech and know-how to greenify GCC countries and launch reforestation programmes to support the kingdom’s target to plant 10 bn trees under its Saudi Green Initiative. China — which has 25% of its landmass covered in desert — has launched major reforestation campaigns over the past 40 years, and plans to plant and conserve 70 bn trees by 2030.

OTHER STORIES WORTH KNOWING ABOUT THIS MORNING-

• Skytower is building a zero carbon industrial park in KSA: Saudi Arabia’s King Abdullah Economic City (KAEC) signed a strategic partnership agreement with Skytower to develop a Zero Carbon Industrial Park. KAEC plans to host an EV production plant for local EV manufacturer Ceer.
• A boost for Jordanian green mobility: The government of Jordan has approved 3k requests to install residential EV chargers for households across the country. (Al Mamlakah)

LG plans to raise USD 1 bn through new green bond issuances: South Korean multinational LG’s battery manufacturing arm LG Energy Solutions is reportedly planning to pull the trigger on USD 1 bn worth of green bond issuances, Reuters reports, citing a term sheet it has seen and sources with knowledge of the matter. The bonds could be issued in two USD-denominated green notes under three and five-year tenors, according to the term sheet, and investor meetings are scheduled for today. Bank of America, Citigroup, Morgan Stanley, Standard Chartered, and the Korea Development Bank are reportedly the joint lead managers on the transaction.

OTHER STORIES WORTH KNOWING ABOUT THIS MORNING-

• US firm extends carbon capture contract with Exxon: US-based FuelCell Energy extended its carbon capture joint development agreement with ExxonMobil for the fourth time. The US company develops carbonate fuel cells that can capture CO2 while generating energy in the process. The agreement increases the oil giant’s research costs from USD 60 mn to USD 67 mn and will end on March 31 2024. (Reuters)
• Vanguard cuts down on ESG support: The world’s largest issuer of mutual funds, Vanguard Group, has cut down support for shareholder resolutions on environment and social issues by 10 percentage points y-o-y, dropping to 2% from 12% in 2022. (Reuters)