Egypt’s SCZone is on track to secure financing to build up green hydrogen infrastructure

Good morning, friends. We have another spate of updates from around the region and beyond this morning, but first…

A quick programming note: Enterprise Climate will be taking a publication holiday tomorrow and be back in your inboxes at our regularly scheduled time on Thursday morning.

IT’S DAY TWO- The Enterprise Finance Forum continues today at the St. Regis Hotel on the Nile Corniche. This flagship forum is the latest in our must-attend series of invitation-only events, where CEOs, bankers, investors, founders, and corporate leaders will meet to discuss the trends shaping the future of banking, finance, NBFIs, and fintech — and of their clients.

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OUR TOP STORIES- Egypt’s Suez Canal Economic Zone (SCZone) is on course to receive a EGP 30 bn loan with a 15-year maturity date from a coalition of local banks to finance the infrastructure for a number of green hydrogen projects, a source at the Finance Ministry told Enterprise. Further afield, Belgian utilities company Fluxys is acquiring a 4.9% stake in state-owned transmission system operator OQ Gas Network (OQGN) and has signed an MoU to explore partnerships in Oman’s hydrogen and CO2 infrastructure.

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

HAPPENING TODAY: The World Power-to-X Summit is kicking off today and running through to Thursday in Marrakech, Morocco. The event brings together policymakers, industry leaders, and innovators in green hydrogen to showcase success stories in the carbonfree industry. It will also explore scaling-up projects throughout the Power-to-X value chain and hold discussions on harmonizing roadmaps of contiguous countries and adjacent regions.

THE BIG CLIMATE STORY OUTSIDE THE REGION- Climate protesters take to the streets of New York: Tens of thousands of protestors marched on New York on Sunday ahead of the United Nations General Assembly meeting today to call for an end to fossil fuel extraction and for world leaders to ramp up climate action targets to safeguard future generations. Led by New York Congresswoman Alexandria Ocasio-Cortez, the demonstrators aim to mobilize a movement that is “too big and too radical to ignore” in a bid to hold governments and big oil accountable for the damages fossil fuels have on the economy and communities across the world. Between 50-75k demonstrators filled the streets of Manhattan marking the largest climate protest the country has seen in the past five years.

The story grabbed headlines in the international press yesterday: Reuters | AP News | New York Times | Bloomberg | Financial Times | The Guardian | Washington Post | The Wall Street Journal | CNBC | France 24

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OVER IN COPLAND- UN high-level champions release two new papers on financing for emerging economies: The UN Climate Change High-Level Champions launched two papers outlining recommendations on how to break financing barriers for the climate transition in emerging economies, according to a statement. The papers are designed to help to secure the USD 1 tn in annual finance that developing countries need by 2030 to take effective climate action and restore nature, as backed up by the Sharm-El-Sheikh Adaptation Agenda (pdf) and the 2030 Breakthroughs.

The details: The climate champions put forth five key suggestions for addressing the climate and nature finance gap: provide developing countries with a 1% interest rate loan with a 10-year grace period and a 20-year repayment period through multilateral banks; introduce credit-guarantee schemes to attract private sector involvement such as co-financing, risk sharing, and sustainability-linked sovereign debt instruments; suspend, cancel, or convert debt to repurpose payment into climate projects; establish a fund that helps mitigate foreign exchange risks for climate investments by providing cost-effective currency and country hedges for climate investment; and form a facility that works to accelerate projects and programs that preserve nature and help countries adapt to extreme weather.

Nature-positive business models have been valued at USD 10 tn: The reforms outlined by the climate champions are “especially critical for the mobilization of private capital for nature-positive solutions, such as reforestation, landscape restoration and coastal protection, which are pivotal – but currently underestimated, climate approaches,” the statement says. These nature-based solutions can deliver 37% of the global climate change mitigation required by 2030, and are a “low-risk, no regret” action to build climate resilience in nature and communities.

Who’s working on what: A working group for sustainability-linked sovereign financing of nature and climate was recently formed by the Sustainability-Linked Sovereign Debt Hub and the Nature Conservancy, supported by the UN climate champions and the COP28 UAE presidency. The working group aims to pool the capacities of international financial institutions to issue credit support instruments such as partial risk guarantees and political risk insurance, the statement explains.

ALSO- COP28 launches the Energy Transition Changemakers initiative: The COP28 presidency is inviting companies and organizations in the renewables, energy efficiency, low-carbon hydrogen, or heavy industry sectors to submit projects that have overcome challenges in the energy transition using innovative, replicable, and scalable approaches, according to a statement. The companies and organizations selected as Energy Transition Changemakers will present their work at COP28 in separate sessions dedicated to each of the four sectors, and will receive an award recognizing their efforts in the global energy transition. The projects can be anywhere in the world, and can be in either the development or operation stage. The deadline for submitting projects to the portal is on 9 October.

AND- The UAE urges countries to support food systems, agriculture, and climate at COP: Heads of state and ministers of agriculture and climate change have been urged to review and sign the declaration on food systems, agriculture, and climate prepared by the UAE president, UAE Climate Change and Environment Minister Mariam Almheiri said.

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WATCH THIS SPACE #1- The EU may get ‘hooked’ on Chinese rare earths as it looks to source EV components, Reuters reports, citing a document set to be presented at an EU Commission meeting in Spain next month. The document cautions against substituting the EU’s previous dependency on Russian fuel imports for a reliance on Chinese lithium-ion batteries as the world transitions away from combustion engine vehicles. The EU — which has set out a target to phase out fossil fuel-powered vehicles by 2035 — should instead look to Africa and Latin America to source minerals critical to EV production, the paper notes. The bloc’s planned renewables and green fuels projects in coming years will need to be supplemented with adequate battery storage systems as well as electrolyzer tech to meet net-zero targets, with expectations the EU will have to 30x its supplies of lithium-ion batteries, fuel cells, and electrolysers.

REMEMBER- China controls about 28% of the world’s lithium supplies, and the US and the EU began talks on a transatlantic bargain on minerals earlier in March in a bid to counter Chinese dominance in the mining sector. Africa is home to an estimated 5% of the world’s total lithium supplies and mining expansions are expected to bring up the continent's capacity from the current 40k ton annual production rate to 497k tons by 2030. Over in Latin America, the Lithium Triangle which overlaps parts of Chile, Bolivia and Argentina, and Peru holds an estimated 67% of the world’s proven lithium reserves and produces half of the global supply of the EV-critical mineral.

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WATCH THIS SPACE #2- Oman planning a mega hydrogen pipeline: Oman’s state-owned hydrogen company Hydrom is looking to establish a cross-country pipeline spanning 2k kilometers to transmit green fuels, TAP quoted Hydrom Planning Manager Hafsa Al Subhi as saying at the London Green Hydrogen Summit on Saturday. The first phase of the project will see the construction of a hydrogen transport system across the sultanate’s southern regions of Duqm, Al Jazir, and Salalah by 2030, with plans to connect all three transmission lines by 2040. By 2050, the hydrogen connection is expected to extend to the country’s capital. The country also has plans to extend its green hydrogen interconnector beyond its borders to the UAE, but this would be contingent on future market demands, Subhi said.

REMEMBER- Oman plans to produce 1 mn tons of green hydrogen annually by 2030, and has set out a target to up its green fuels generation capacity to some 8 mn tons by 2050. Oman’s state-owned green hydrogen company Hydrom signed six binding term sheet agreements last March worth a combined USD 20 bn for the production of green hydrogen. The projects will span an estimated area of 1.5k sq km in Al Wusta and Dhofar. Up to 40 times more land has been identified for potential production in the long term, according to Offshore Energy.

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DATA POINT- MENA has doubled its renewables production volume in the last year: Countries across the Middle East and North Africa have expanded their renewables generation capacity by 57% between 1H 2022 and 1H 2023 to 19 GW, according to a report by the Global Energy Monitor (GEM). MENA is projected to again boost its renewables generation by another half from current volumes by 2024, GEM notes, citing projects the region has in the pipeline. The “incremental increase,” although a step in the right direction, is worrying given that MENA will need to more than 20x its renewable energy portfolio — from wind and solar power — to an estimated 500 GW to curb reliance on its 343 GW fossil fuel power mix. Countries with notable achievements in the clean energy front from our neck of the woods include the UAE, which saw renewables additions of 3 GW since mid-2022; Oman, which added 1.2 GW; Qatar, which added 0.8 GW; Libya, which added 0.5 GW; and Saudi Arabia, which added 0.4 GW.

An anticipated hike in renewables production from 2022 estimates: GEM notes that 21 countries across MENA have upped their renewables production targets, with eight states committing to tripling clean energy goals over the past year, cumulatively bringing up the region’s prospective renewables portfolio to an estimated 361 GW, up from 292 GW in 2022. Of the announced 361 GW, 171 GW are in the pre-construction stage — having either bagged land allocation agreements, achieved financial close, or secured PPAs and offtake agreements, and the remaining 46% have only been announced.

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CIRCLE YOUR CALENDAR-

Saudi Arabia will host the MENA Climate Week from Sunday, 8 October to Thursday, 12 October in Riyadh. The four-day summit will discuss climate solutions ahead of COP28. It aims to provide a platform for policymakers, businesses, and others to exchange climate solutions as well as discuss obstacles and avenues in different regions. It considers four major systems-based tracks: energy systems and industry, cities, urban and rural settlements, infrastructure and transport, land, ocean, food and water, societies, health, livelihoods, and economies. You can register here.

The UAE will host the UNCTAD World Investment Forum from Monday, 16 October to Friday, 20 October in Abu Dhabi. This year’s theme focuses on sustainable investments, with a diverse range of climate financing sessions on promoting investments in the blue economy, agrifood systems, sustainable infrastructure, carbon markets, the circular economy, strategic minerals for decarbonization, and sustainable tourism. Some sessions will tackle reform of financial institutions needed to reach net zero, such as a session on integrating nature-related risk into capital markets and financing an equitable nature economy. Public sector investments and stock exchange action on climate disclosures will also be discussed.

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

Egypt’s SCZone to receive EGP 30 bn in financing for green hydrogen projects: Egypt’s Suez Canal Economic Zone (SCZone) is on course to receive a EGP 30 bn loan with a 15-year maturity date from a coalition of local banks to finance the infrastructure for a number of green hydrogen projects, a source at the Finance Ministry told Enterprise. The authority has secured the Finance Ministry’s guarantee on the loan. While most of the loan will be denominated in EGP, part of it will be paid in USD to finance imported components. The news was first picked up by Asharq Business.

Who’s said to be extending the loan? Led by the National Bank of Egypt, the coalition includes Banque Misr, Suez Canal Bank, Commercial International Bank, Banque du Caire, and Arab African International Bank.

Fertiglobe partners with AD Ports for green ammonia storage: OCI and Adnoc joint venture Fertiglobe has signed an MoU with trade and logistics firm AD Ports Group to explore partnerships in storing and shipping urea and ammonia at ports in Egypt and the UAE, according to a statement.

More details: The MoU marks a first step towards the company’s plans to expand its shipping and storing of green ammonia and optimize its logistics’ cost structure with a target to save USD 50 mn by the end of 2024 by leveraging AD Ports Group’s advanced expertise in cargo handling and storage infrastructure, the statement notes.

What they said: “We will identify compelling opportunities across our logistics and supply chain management requirements, enabling us to bolster our ability to store and ship urea and ammonia from Egypt and further optimize our logistics’ cost structure … to expand our partnership beyond Egypt and the UAE, as well as to the shipping and storage of green ammonia, in line with our commitment to deliver more sustainable products to the world,” Fertiglobe CEO Ahmed El Hoshy said in the statement.

Fertiglobe is well established in the region: The company began in November commissioning of their 100 MW green hydrogen plant in Egypt’s Ain Sokhna — funded by the European Bank of Reconstruction and Development — which will generate feedstock for green ammonia production once operational in 2024. Engie signed an agreement with Fertiglobe in 2022 to study co-developing a “globally cost-competitive” 200 MW green hydrogen facility in the UAE to back the production of green ammonia, which El Hoshy suggested would be a 100-200 MW green hydrogen project in Abu Dhabi. Fertiglobe said it is expected to begin the front end engineering design (FEED) process for its green hydrogen to ammonia projects in the UAE and Egypt during the second half of 2023.

With eyes on Europe and bunkering: “Fertiglobe, is investing in green ammonia, including in partnership with Adnoc in Abu Dhabi and with Masdar. These are all fuels that could be used not only to export the final product to Europe or Asia, but can also be provided at ports that can become major bunkering hubs and suppliers of low carbon fuels in the future. Methanol has the advantage today because there are already methanol engines,” El Hoshy told Enterprise Climate in an interview earlier this month.

Blue ammonia is also on deck: In January, Japan-based Mitsui & Co signed a shareholder agreement with Fertiglobe, GS Energy, and Adnoc-ADQ joint venture Ta’ziz to construct a facility to produce some 1 mn tons of blue ammonia per year. The company is still awaiting a final investment decision on the project, its most recent earnings release said.

Belgium investing in Oman’s hydrogen network to prepare for export: Belgian utilities company Fluxys is acquiring a 4.9% stake in state-owned transmission system operator OQ Gas Network (OQGN) and has signed an MoU to explore partnerships in Oman’s hydrogen and CO2 infrastructure, according to a statement. Fluxy’s announcement comes in response to an invitation by OQGN to become an anchor investor in the coming IPO process on the Muscat stock exchange. The acquisition is part of Fluxys’ strategy to develop low-carbon hydrogen and CO2 routes to import into Belgium and Europe, the statement added.

OQGN is working with other players to build hydrogen infrastructure: OQGN is working with Oman’s hydrogen development entity Hydrom on a common-use infrastructure scheme to accelerate the development of the necessary infrastructure for previously signed hydrogen projects, Hydrom Managing Director Abdulaziz Al Shidhani told The Energy Year in an interview in July. Nama Group for Electricity and Water and other utility companies are also working on the common infrastructure scheme. The infrastructure plan is being fast-tracked for the five projects it has already signed in Al Wusta and for another five to six projects targeted for signing for the Dhofar region, Al Shidhani said at the time. He estimated a timeline of six to seven years to construct the common infrastructure.

Countries with an established gas network could have an advantage in hydrogen production and transport: “Hydrogen could be blended into existing natural gas networks, with the highest potential in multifamily and commercial buildings,” according to the International Energy Agency (IEA). Current research shows that hydrogen can be safely injected into the gas grid up to 5-10% volume, and is expected to reach 20% by the end of the decade with continued investment in research and development. However, regulations on hydrogen blending today are based on natural gas specifications or the tolerance of the most sensitive piece of equipment on the grid, therefore only allowing no more than 2% hydrogen blending in most countries, according to the IEA. A gas supply that includes low-carbon hydrogen would lower CO2 emissions and help scale up production of hydrogen.

Hydrogen-electric aircraft developer ZeroAvia has closed a funding round co-led by Airbus, Barclays Sustainable Impact Capital, and Neom, according to a statement. Returning investors include Breakthrough Energy Ventures, Horizons Ventures, Alaska Airlines, Ecosystem Integrity Fund, Summa Equity, AP Ventures, and Amazon Climate Pledge Fund. No financial details about the funding round were disclosed in the statement.

Where's the money going? The funds will allow ZeroAvia to expedite the certification of its first engine — the ZA600 — and advance work on its larger 2-5.4 MW modular powertrain engine program the ZA2000 which is designed to support larger commercial aircraft applications, the statement notes. Airbus and ZeroAvia will also collaborate on certification approaches for hydrogen power systems, working on some critical technical areas including liquid hydrogen fuel storage, flight and ground testing of fuel cell propulsion systems, and the development of hydrogen refueling infrastructure and operations.

Why is this important? ZeroAvia is pursuing hydrogen-electric propulsion systems as the most economical and eco-friendly solution to the impact of aviation fuel on climate change, the statement notes. Their hydrogen-electric engines use hydrogen in fuel cells to generate electricity, which is then used to power electric motors to turn the aircraft’s propellers, with water being the only byproduct during flight. Airbus is doing the same with its fuel cell systems which are an important part of its ZEROe aircraft concepts program, designed to deliver low-emission airframes of different sizes.

Big aviation backing: ZeroAvia drummed up USD 21.4 mn from investors like Shell and Amazon in a 2020 funding round and later secured USD 24.3 mn from British Airways, Shell Ventures, and Systemiq in April 2021. The company raised USD 115 mn in funding by the end of 2021, and secured a total of USD 150 mn in its Series B round in August 2022 from investors including American Airlines and United.

ZeroAvia also has regional links: The company signed an agreement with Masdar to explore hydrogen production and supply projects for aircrafts and paved the way for refueling its zero-emission aircrafts at commercial airports by 2030, with plans for the first hydrogen-fueled commercial flight by 2025. While the agreement initially targets North America and Europe for clean flight operations, they plan to later expand their operations in the UAE.

One step closer for Bahrain solar plant: Turkish-based Goksin Construction has been tapped to develop a USD 31.8 mn 100 MW solar power project in Bahrain‘s Askar landfill, Bahrain News Agency reported earlier this week.

The details: The project will be built on a 2 sq km landfill site and will include a landfill gas extraction and treatment system and a drainage system to prepare the site for the solar project's construction and operation. A previous tender for the same project was issued by Bahrain's Electricity and Water Authority in October 2022, and five companies submitted proposals at the time: Al Nosaif Contracting and Excavation, Goksin Construction Limited Company, SEPCOIII International, Alpha Energy Generations, and Al Hafeera Contracting Company.

REMEMBER– Bahrain recently said it plans to increase its renewable energy share to 5% of total electricity generation by 2025. As part of its National Energy Transition Plan, it aims to raise this target to 20% by 2035. The kingdom has pledged to reduce emissions by 30% by 2035 through decarbonization and doubling renewables targets.

Emirates Water and Electricity Company (Ewec) invites developers to submit expressions of interest for the development of 1.5 GW Khazna solar farm, according to a statement. Developers would have to express their interest in constructing, financing, operating, maintaining and owning the solar plant before 2 October 2023. Ewec would be the sole offtaker of solar power generated under a long-term PPA. The company also plans to commission at least two other 1.5 GW solar projects to achieve the company’s target to add an average of 1 GW of solar capacity per year in the next decade, CEO Othman Al Ali says in the statement.

About the solar farm: The Khazna Solar Photovoltaic Power Project is a greenfield solar power project with a generation capacity of 1.5 GW expected to be similar in scale and production capacity to Al-Dhafra Solar PV and Al-Ajban Solar PV. Once fully operational the project is expected to reduce CO2 emissions by over 2.4 mn tonnes per year –this is equivalent to removing about 470,000 cars from the road.

REMEMBER- Ewec received four bids from Saudi renewables giant Acwa Power, France’s EDF Renewables, Japan’s Marubeni Corporation, and a consortium comprising Jinko Power and Jera for the development of its third solar power project last July boosting the company’s total solar power capacity up to 4 GW.

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Qatar plans to upscale its EV capacity with help from Germany’s EcoTransit: Qatar’s Transport Minister Jassim Al-Sulaiti has signed three agreements with German sustainable mobility solutions firm EcoTransit to boost EV adoption across the country, according to a statement. The German firm also signed an agreement with Sia Eco to jointly establish EV charging points and signed another agreement with an unnamed developer in the Philippines to import 600 EV buses into Qatar, with plans to later increase import volumes to 50k EVs of the same model over the next 10 years. Qatar-based Al Hamad Automobiles also signed a partnership agreement with EcoTransit to become their authorized EV dealer. Earlier in June, the German-based company unveiled its first all-electric vehicle offering in the country, which is in part designed by Qataris.

OTHER STORIES WORTH KNOWING ABOUT THIS MORNING-

• Qatar has a plan for regulating autonomous vehicles: Qatar has announced a five-year strategy for regulating the use of self-driving vehicles as part of the state’s QNV 2030 plan, and says the country’s reliance on all-electric buses for public transport has increased to 70% compared to combustion engine alternatives in Q3 2023. (Zawya)
• Oman’s waste sector could bring in big money: Oman’s waste recycling sector has an economic potential worth RO 400 mn (some USD 1 bn), an assessment by Oman’s state-owned solid waste management firm Be’ah found. The country generates some 2.4 mn tons of recyclable waste per year. (Oman Observer)
• Oman cloud seeding increases rainfall by up to 18%: Oman’s efforts to stimulate and increase rainfall in the country via cloud seeding resulted in an estimated 15-18% increase in precipitation levels between 2013-2018. (Times of Oman)

Lithium industry will boost freshwater recycling: Lithium mining companies are looking to recycle more freshwater as they develop direct lithium extraction (DLE) technologies, Reuters reports. DLE is a rising industry that aims to revamp the lithium extraction process so it is in line with the green energy transition. Lithium production is also essential to the low-carbon economy, particularly for energy storage and EV batteries.

The industry has great potential: DLE uses less land and resources to process Lithium than standard methods of extraction. New DLE tech recovers 98.5% of the freshwater used during the production process and seeks to boost the recovery rates further, Executive Chairman of International Battery Metals John Burba told Reuters. Global lithium demand is projected to increase 40x by 2040 on the back of its heavy use in the green energy transition and the industry is expected to see annual revenues grow up to USD 10 bn over the next decade as DLE companies aim to supply lithium for EV batteries within hours or days, unlike the months it can take for the usual water-intensive evaporation and mining methods of production.

And the targets are clear: "Getting it down to maybe five or 10 or 15 mts of freshwater per ton of lithium is kind of where you want to be," EnergyX CEO Teague Egan told Reuters. The company — which counts General Motors as an investor — said it can currently recover up to 90% of its freshwater. Controlled Thermal Resources is developing a geothermal lithium project in California's Salton Sea to recycle a gallon of water at least 8x and produce water via steam from its geothermal power process, CEO Rod Colwell told Reuters.

But there are challenges: Some DLE tech require around 180 mt of water to produce a single mt of lithium, hindering the expansion of the method in arid areas, the newswire writes. "If we cannot do a good job of recycling that water and reducing our water footprint, we're going to get crushed," Burba said.