Mubadala issues a 9.1x oversubscribed USD 750 mn debut green bond issuance

Good morning, wonderful people. It’s a moderately busy start to the week and we have a compact issue for you with updates from around the region.

THE BIG CLIMATE STORIES- UAE sovereign fund Mubadala has issued a USD 750 mn green bond with an order book surpassing USD 6 bn leading to a whopping 9.1x subscription rate and Acwa Power has signed agreements worth USD 746 mn at Davos in the Desert — also known as the Future Investment Initiative — in a bid to pave the company’s expansion into Central Asia and help finance GCC projects.

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

THE BIG CLIMATE STORY OUTSIDE THE REGION- There was no single story dominating headlines over the weekend, but there was one story with some repercussions for our industry. Global carbon offsets firm South Pole has terminated its work in one of the world’s largest forest conservation and carbon credit schemes, Zimbabwe’s Kariba REDD+. South Pole said that the project — which aims to prevent deforestation around Lake Kariba — has failed to meet the standards it expected from its partners, citing concerns with the project’s management. Kariba REDD+ is owned and developed by Carbon Green Investments (CGI), which now bears the responsibility for the 36 mn credits sold since 2011.

South Pole’s withdrawal was a long time coming: In March, several outside experts and South Pole’s own analysis found that the firm — and therefore its clients who bought Kariba credits — ended up vastly overestimating the extent of the preservation by Kariba, Bloomberg reported at the time. South Pole said the credits were legitimate and would still benefit the climate despite the studies concluding that the project failed to generate enough real atmospheric benefit.

REMEMBER- Will the UAE’s Blue Carbon rethink its big plans in Zimbabwe? Dubai-based offsetting company Blue Carbon signed an MoU with Zimbabwe earlier this month worth USD 1.5 bn to finance forest protection and rehabilitation projects to generate tradable carbon credits. In the meantime, companies who are buying carbon credits, including Apple, are being questioned on whether their purchased offsets are actually effective in canceling out greenhouse gas emissions in the long run.

The news got coverage from Reuters and Bloomberg over the weekend.

---

OVER IN COPLAND- India likely to skip cooling pledge at COP28: India is not likely to sign the Global cooling pledge to reduce emissions during COP28, Reuters reported on Friday, citing two government officials with knowledge of the matter. The pledge — developed by the United Nations Environment Programme’s Cool Coalition and the UAE — requires cutting cooling-related CO2 emissions by 68% by 2050 and would require big investments to decarbonize the sector. India and China are considered key to the success of the pledge as two of the world’s major emitters with a combined population of over 2.9 bn. India’s official decision is still being considered, the officials added. COP28 President Designate Sultan Al Jaber called on nations to join the pledge in July to deliver more sustainable cooling solutions globally.

COP28 Presidency and AIIB collaborate to accelerate energy transition: The Asian Infrastructure Investment Bank (AIIB) and the COP28 Presidency will collaborate on mobilizing climate investment capital and accelerating clean energy investments in Asia, according to a statement released last week. The partnership will see the COP28 Presidency and AIIB establish financial structures to increase the mobilization of private and institutional capital, including a blended finance structure to drive capital into green projects. AIIB and the COP28 presidency had signed a letter of intent earlier this month to solidify COP’s commitment to scaling climate finance with the bank’s support.

---

WATCH THIS SPACE #1- Ford slows down EV manufacturing investments: US automobile giant Ford is postponing about USD 12 bn in earmarked investments on its new EV manufacturing capacity due to a slump in demand, CNBC reported on Thursday, citing a media briefing by Ford CFO John Lawler. Lawler explained that many customers in North America are no longer willing to pay a premium for an EV over an internal-combustion or hybrid alternative. While the industry’s sales of EVs are growing, they aren’t growing at the pace Ford had expected, the news outlet said. Lawler stressed, however, that the automaker isn’t stopping its EV production goals, but has rather revised the pace of its rollout.

The numbers behind the decision: Ford said on Thursday that its EV business unit, called Ford Model e, lost USD 1.3 bn on an operating basis in 3Q, roughly double its loss a year ago, despite a 26% increase in revenue, according to the CNBC article.

REMEMBER- Concern is growing over high interest rates derailing the ambitions of climate regulators and big auto to accelerate the shift to EVs, especially as demand is falling short of investors’ expectations. Honda and General Motors also said they were axing a USD 5 bn plan to develop lower-cost EVs together just one year after launching the effort.

---

WATCH THIS SPACE #2- KSA’s Ma’aden is working on aquatic lithium extraction: Saudi state-owned mining company Ma’aden is launching a pilot project to extract lithium from seawater in a bid to support KSA’s clean energy transition and green mobility ambitions, CEO Robert Wilt told Reuters in an interview last week. The investment ticket and a timeline for the project were not disclosed. Oceanic lithium extraction is a months-long process that involves the application of chemical reagents to absorb, desorb, and crystallize lithium found in brine.

Staying out of the West-China mining race: The company intends to stay above the fray critical mining race between the US and China and do “what’s best for the kingdom,” Wilt added. “We have de-risked our portfolio in terms of broadening exploration and working external to the kingdom to make sure we are resilient no matter what happens geopolitically,” he said. KSA plans to award over a dozen mining exploration licenses to international investors and attract some USD 32 bn in investment in its mining and mineral sector. In September, it awarded a license for the exploration of a mine with copper reserves worth an estimated USD 222 bn. Ultimately, the kingdom is looking to unlock an estimated USD 1.3 tn in mineral reserves.

Get Enterprise Climate

***

YOU’RE READING ENTERPRISE CLIMATE, the essential MENA publication for senior execs who care about the world’s most important industry. We’re out Monday through Thursday by 5am Cairo / 5am Riyadh / 6am UAE.

EXPLORE MORE OF ENTERPRISE ON THE WEB — tap or click here to read EnterpriseAM, EnterprisePM, and The Weekend Edition on our powerful new website packed with reader-friendly features.

Were you forwarded this email? Get your own subscription without charge here or reach out to us on climate@enterprisemea.com with comments, suggestions and story tips.
***

CIRCLE YOUR CALENDAR-

The United Kingdom will host The Financial Times’ Energy Transition Summit from 31 October to Thursday, 2 November in London. The summit will bring together senior leaders from the energy industry, as well as business and finance executives operating in carbon intensive sectors, to explore how to boost the energy transition while navigating today’s geopolitical, technological, and financial challenges. The summit will include panel discussions, keynote interviews and debates moderated by FT and industry experts.

The UAE will host the Forbes Middle East Sustainability Leaders Summit from Wednesday, 1 November to Friday, 3 November in Abu Dhabi. The summit will gather international leaders in sustainability, technology, finance, and policy to drive green strategies globally. The agenda includes sessions on climate-smart cities, green mobility, sustainable finance, and sustainable tourism. The summit is expected to set the tone for international and regional dialogue and decision-making, including COP28 which will kick off in late November.

Turkey will host the GCC-Türkiye Economic Forum from Saturday 11 November to Monday, 13 November in Istanbul. The forum aims to bring together key ministers and state officials from the Gulf countries and Turkey to explore areas of potential investments and commercial ties and to establish a network for joint projects in the energy, defense, banking, retail, and transportation sectors. The event is organized by the Gulf Research Center and Turkey’s International Cooperation Platform.

The UAE will host the MENA Solar Conference from Wednesday, 15 November to Saturday, 18 November in Dubai. The event will focus on all things photovoltaic, with a full programme on PV materials and devices, future technologies, PV reliability, and forecasting for performance assessment. The conference will also touch on how developments in system operations, concentrated solar power, and grid integration are necessary for the green transition. This will be the first scientific and technical conference specializing in solar energy systems in the region.

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

Mubadala pulls the trigger on first green bond issuance: UAE sovereign fund Mubadala has issued a USD 750 mn green bond with an order book surpassing USD 6 bn leading to a whopping 9.1x subscription rate, Wam reported on Friday. Mubadala offered the bonds with a tenor of 10.5 years at a 6.03% yield and coupon rate of 5.875%. The demand came from local, European, Asian, and US accounts, with the majority being first-time investors in Mubadala. The advising banks and companies were not disclosed.

Where’s the money going? The proceeds from the issuance will be funneled towards projects aligned with the Green Financing Network, Wam reports without clarifying the activities or goals of the network. Earlier this month, Mubadala hired banks to organize a series of investor meetings to present its newly established Green Finance Framework, Reuters reported at the time. Through its unit Mamoura Diversified Global Holding, Mubadala selected Abu Dhabi Commercial Bank, First Abu Dhabi Bank, HSBC, and ING to present the framework to investors.

We knew this was coming: Sources told Reuters in April that the UAE federal government, Abu Dhabi, and its sovereign wealth fund Mubadala were looking into issuing green bonds.

KSA renewables giant Acwa Power has signed agreements worth USD 746 mn at the Future Investment Initiative — also known as Davos in the Desert, according to a statement released on Thursday. The agreements will help the company’s expansion into Central Asia and help finance GCC projects.

A big financing injection from EIG: Acwa Power signed a USD 500 mn Heads of Term agreement with American investment firm EIG Partners to support its expansion plans in Uzbekistan as well as fund projects in the GCC region, the statement notes. The financing would be channeled toward green hydrogen, desalination, and power generation projects in both markets.

Acwa has big plans for Uzbekistan: The renewables giant signed three power purchase agreements totaling USD 2.5 bn in March with the National Electric Grid of Uzbekistan and the country’s Investment, Industry, and Trade Ministry for 1.4 GW worth of solar projects and three battery energy storage (BESS) units totalling a capacity of 1.5 GWh. Earlier in January, Acwa signed an agreement to build a green hydrogen plant and a green ammonia pilot project in the country

Acwa Power secures financing for Azerbaijan wind project: Acwa Power secured USD 246 mn in financing for its 240 MW wind project from the European Bank for Reconstruction and Development and the OPEC Fund for International Development, according to a statement on the Saudi Exchange Tadawul. OPEC will be providing USD 50 mn for the financing of the project. The project is estimated to cost a total of USD 347 mn, but no further details on financing or a timeline for operations has been disclosed. The Acwa Power Azerbaijan Renewable Energy — the special-purpose vehicle (SPV) wholly owned by Acwa Power that will carry out the project — is scheduled to sign the financial closure agreements.

More about the project: The project is expected to generate 1 mn MWh of electricity to offset 400k tons of CO2 emissions annually, according to Power Technology. The power generated from the project will be sold to AzerEnerji under a power purchase agreement. Envision Energy is the turbine supplier for the wind power project, while the First National Operation & Maintenance Company (Nomac) will manage the operations of the farm.

It's been in the works for some years: The project is being implemented under a 2019 presidential decree aimed at executing pilot projects using renewable energy sources, according to Acwa Power. The investment, power purchase, and transmission connection agreements were signed at the end of 2020 and cover a 20 year period.

Acwa Power is growing its green investments in the country: Acwa Power and the Ministry of Energy of Azerbaijan inked the roadmap agreement to develop a 200 MW onshore wind farm with battery storage facilities earlier this month. Last February, the company signed a cooperation agreement with Azerbaijan that will see the company set up a 1.5 GW offshore wind energy project as part of a plan to build wind farms with a combined capacity of 2.5 GW and develop the country’s first battery storage systems. Earlier in 2022, Acwa broke ground on another 240 MW in Azerbaijan with a reported investment ticket of USD 300 mn.

Masdar launches Azerbaijani solar project and lines up more: Masdar launched the operations of its Garadagh Solar Park in Azerbaijan — the largest in the region and the first independent solar project to receive foreign investment — and inked agreements for 1 GW of solar and onshore wind projects in the country, according to a statement released on Thursday. Azerbaijan aims to generate more than 30% of its overall energy capacity from renewables by 2030.

The details: The plant — Masdar’s first project in the country — will generate 500 mn kWh of clean energy a year powering 110k homes and reducing 200k of CO2. The project is co-financed by the Abu Dhabi Fund for Development, the Asian Development Bank, the European Bank for Reconstruction and Development, and Japan International Cooperation Agency. The renewables giant plans to repay financing through a debut green bond issuance next year.

More in the pipeline: Masdar signed agreements with Azerbaijan to develop solar and onshore wind projects with a total capacity of 1 GW in the country, the statement notes. This forms part of a broader agreement to install 10 GW of clean energy projects — including onshore and offshore wind farms, solar farms and green hydrogen — in the Central Asian country.

Masdar’s portfolio in the country is booming: The company signed an agreement with Azerbaijan’s state oil firm SOCAR to develop renewables projects with a combined capacity of 4 GW in January. These include the joint development of offshore wind energy and hydrogen projects with a capacity of 2 GW, solar photovoltaic energy projects with a capacity of 1 GW, and 1 GW of onshore wind energy.

AirCarbon launches its carbon market on ADGM: Singapore’s AirCarbon Exchange (ACX) has launched its carbon market on the Abu Dhabi Global Market (ADGM), according to a statement released last week. The inaugural carbon credits trade on the fully regulated exchange was undertaken by the UAE’s First Abu Dhabi Bank and EU-backed Helix Climate.

We knew this was in the works: The UAE said it intended to launch regulating carbon credit trading exchanges and clearing houses ahead of COP28 back in July. Earlier in June, the UAE Independent Climate Change Accelerators launched the UAE Carbon Alliance in partnership with ACX in a bid to establish a framework for carbon markets. The alliance was launched a year after the Abu Dhabi Global Market said it was working with ACX on launching the world’s first fully regulated carbon trading exchange.

ACX has already established a MENA foothold: The company already established its regional office in the UAE back in 2021 with backing from UAE VC Hub71, the statement notes. Hub71 is funded by state-owned investment firm Mubadala Investment Company, which acquired a stake in ACX last November.

Green construction in emerging markets needs USD 1.5 tn: Decarbonizing the construction sector in emerging markets needs USD 1.5 tn in investments, according to an International Finance Corporation (IFC) report released last week. Construction contributes around 40% of global CO2 emissions with an expected increase of another 13% by 2035, two-thirds of which come from emerging markets. These emissions can be reduced through energy-efficient designs for new buildings and improvements to old ones, the report highlights.

The tech needed is already out there, but policy changes and financing are needed: Methods of decarbonizing the construction industry are available but "the issue is getting them to be more widely used and that is a matter of financing, a matter of policy," IFC vice president for economics and private sector development Susan Lund told Bloomberg. A Senegalese subsidiary of French cement maker Vicat SA is exploring biomass fuels to cut emissions by around 300k tCO2/year. Governments are behind on green construction policies, as about 110 countries have no mandatory building energy codes, the report adds. Emerging markets also issued only around 10% of the USD 230 bn of the global private debt financing for green construction.

The IFC is trying to boost the sector: Establishing new markets for green buildings in emerging countries needs derisking, Lund added. As this can be done through tools like blended finance and performance-based incentives or first-loss guarantees, the IFC is establishing a new facility for private investors to increase financing for green construction in emerging markets, the report reads.

Egypt and China explore work on energy storage: Egypt’s Electricity and Renewable Energy Minister Mohamed Shaker signed an MoU with state-owned China Energy Engineering Corporation — also known as Energy China — to undertake a feasibility study on the establishment of a 2 GW pumping and energy storage facility in Egypt, according to a statement released on Thursday. The Chinese firm would build the plant under a build, own, operate (BOO) framework if the study proves the project viable, the statement notes. There are no further details on the nature of the project or its location.

Part of Energy China’s wider plans for Egypt and MENA: The company signed a framework agreement for its USD 6.75 bn green hydrogen plant that will span 500k square meters and generate 210k tons of green hydrogen annually. The green hydrogen will serve as feedstock to generate 1.2 mn tons of green ammonia per annum. Aside from Egypt, China Energy also inked an agreement with Morocco’s Gaia Energy and Saudi Arabia’s Ajlan & Bros to build a green hydrogen production facility in Morocco that would be powered by a 2 GW solar energy farm and a 4 GW wind power plant to produce 1.4 mn tons and 320k tons of green hydrogen annually.

AND- Germany agrees to expand cooperation on green energy: Egypt’s Trade Minister Ahmed Samir and Germany’s Federal Minister for Economic Affairs and Climate Action Anja Hajduk signed an agreement to expand cooperation on climate action and renewables, according to a statement released on Friday. Samir noted that Egypt wants to increase its production capacity from renewables and green hydrogen under targets to source 42% of its power from clean energy by 2035, and several companies participating in the Egyptian-German Economic Committee meeting last week said they are currently eying development projects in Egypt’s green hydrogen sector, according to a separate statement. Samir also expressed Egypt’s interest in attracting German automakers to the Egyptian market to help localize EV production. Germany and Egypt are currently undertaking studies on the establishment of a German industrial zone in Egypt’s Suez Canal Economic Zone, the statement notes.

KSA’s Neom Green Hydrogen Company has a new CEO: Neom Green Hydrogen Company (NGHC) — the joint venture managing the USD 8.4 bn Neom hydrogen plant — has named Wesam Y. Alghamdi (LinkedIn) as its new CEO, according to a statement. Alghamdi succeeds David Edmondson, who oversaw the financial close on the utility-scale project back in May. Prior to his appointment, Alghamdi served as the Vice President of Strategy and Business Development at KSA’s Ma’aden and has 25 years of senior leadership experience including in engineering, operations, and project management with companies including Sabic and Shell, the statement notes. Edmonson will remain in office till the end of the year then return to US-based AirProducts upon completion of his term.

ELECTRIC VEHICLES-

ABB EV charging stations coming to Bahrain soon: Bahraini power provider Kanoo Power Solutions (KPS) — subsidiary of automotive giant Ebrahim K. Kanoo — is partnering with Swiss electrical equipment manufacturer ABB to expand Bahrain’s EV charging infrastructure and accelerate EV adoption in the kingdom, according to a statement. No financial details, a timeline, or the number of charging stations expected to rolled out were disclosed.

Not ABB’s first regional foray in EV infrastructure: Qatar’s government’s public bus infrastructure program — which will eventually see some 1k electric buses in use across the country — is being rolled out by the Swiss after it agreed to design, supply, test and commission charging infrastructure in Qatar in 2021.

GREEN HYDROGEN-

CIEG inks agreements with Egypt’s Abu Qir and EGPC: Egypt’s North Abu Qir for Agricultural Nutrients and China International Energy Group (CIEG) signed an agreement to establish a green hydrogen plant at Abu Qir’s factory site, according to a statement released on Friday. The expected price tag of the project, targeted generation capacity, and an estimated timeline on completion were not disclosed. A second MoU was signed by the Egyptian General Petroleum Corporation (EGPC) and CIEG to explore avenues for renewable energy at Egyptian gas and oil sites, the statement notes.

ALSO- Egypt and EU mull green hydrogen partnership: Egypt’s Prime Minister Mostafa Madbouly and European Bank for Reconstruction and Development (EBRD) President Odell Reno Paso met in Brussels last week to discuss progress on a feasibility study being carried out for a green hydrogen project in Egypt, according to a statement released on Thursday. The estimated investment ticket and timeline were not disclosed.

The EBRD is a big backer in Egypt’s green energy sector: Earlier this month, the EBRD said it would review plans to extend a EUR 165 mn green loan to help enhance Egypt’s electricity distribution grid. The EBRD — which has financed 163 projects and committed to EUR 1.4 bn in investments for the country to date — extended USD 50 mn to finance the 500 MW Gulf of Suez wind farm in Ras Ghareb back in May. The bank has also committed to contributing USD 200-300 mn to the NWFE initiative to support the phase out of 5 GW of gas-fired power plants by 2025, and support the development of solar and wind energy projects yielding 10 GW by 2028. The energy pillar of NWFE is expected to mobilize USD 10 bn of private-sector investment and USD 500 mn of soft loans, grants, and assistance from donors and international financial institutions.

---

OQ signs MoU for hydrogen and CO2 projects: Oman’s OQ has signed an MoU with Belgian energy group Fluxys to explore establishing hydrogen and CO2 infrastructure projects in the sultanate, the energy company said last week. Fluxys was among the investors who bought in OQ's IPO earlier this month, acquiring a 4.9% stake in the company. It also conducted a feasibility study last year for a 500 MW green hydrogen plant on Egypt’s north coast.

OQ is one of the region's hydrogen stars: OQ is among the companies selected to establish three green hydrogen plants to power green steel production in Oman. It also signed an MoU with Hydrom to partner on green hydrogen pipelines.

DECARBONIZATION-

DP World and APM Terminals to accelerate port electrification: Dubai-based logistics firm DP World and operator of the Khalifa bin Salman Port APM Terminals is implementing a new initiative to expedite decarbonization efforts by electrifying container handling equipment (CHE), Wam reported on Thursday. The initiative is based on research (pdf) showing that CHE electrification can be reached within two to eight years.

APM's still boosting its green record: APM Terminals awarded Bhageria Industries the contract to build an 11.4 MW solar project in Bahrain earlier this month. It also plans to set up a USD 10 mn 18.5 GW solar power plant to help the port reach energy self-sufficiency by the end of the year.

CRITICAL MINERALS-

UAE’s IHC eyes Zambian copper mine: Abu Dhabi’s International Holding Company (IHC) is interested in acquiring the Zambian Mopani copper mines — Africa’s second largest producer, The Financial Times reported on Thursday, citing four people with knowledge of the matter. South African miner Sibanye-Stillwater has also expressed interest in the mine. The bid comes amid a global scramble to secure critical minerals used in transmission lines, EVs, and renewable energies.

Elcora and Mincape team up on manganese mining: Canadian firm Elcora Advanced Materials and Moroccan mining lab Mincape are partnering on identifying and developing new manganese deposits in Morocco and West Africa, according to a statement. The two companies aim to combine their technical know-how and resources to increase supplies of manganese for the growing EV battery market.

Elcora has a history in Morocco: Elcora's subsidiary Ermazon started manganese ore extraction and deliveries in the kingdom last August. Elcora also selected Lab 4 in April for the design and testing of Elcora’s planned vanadium pentoxide plant in Morocco.

OTHER STORIES WORTH KNOWING ABOUT THIS MORNING-

• Tadweer partners with Abu Dhabi Airports on waste management: Abu Dhabi Waste Management Company (Tadweer) and Abu Dhabi Airports have signed an MoU to explore waste management solutions at the emirate’s airports, increase waste diversion from landfills, and develop monitoring and reporting to achieve circularity in the airport ecosystem. (Statement)
• Amea Power will break ground on Tunisia’s largest solar plant: Amea Power and China's TBEA Xinjiang New Energy Company will break ground on their 120 MW solar power project by the end of the year. The companies were awarded the contract for the project back in 2019. (Zawya)
• Tunisia sets a date for Italian interconnector launch: The Tunisia-Italy 600 MW subsea interconnector will be operational by 2029, transporting 400-600 MW of clean power generated from hydroelectricity. The project is set to offset emissions by 525k tons of CO2 a year. (Le Maghreb)

Stellantis acquires 20% stake in Chinese EV maker Leapmotor: Global automaker Stellantis has inked an agreement to buy a 21.2% stake in Chinese EV maker Leapmotor for around USD 1.1 bn, Bloomberg reported last week. Leapmotor and Stellantis will set up a JV to sell Leapmotor cars outside of China.

REMEMBER- Stellantis is also expanding in our region: The global automaker said it will start manufacturing a new battery-powered Fiat 600 compact SUV in Morocco last July. It's also among the companies that expressed interest in investing USD 145 mn in Egypt's auto industry to produce 60k-70k EVs and combustion engine vehicles annually.

OTHER STORIES WORTH KNOWING ABOUT THIS MORNING-

• Tesla’s shares fall on news of downbeat outlook: Tesla saw its shares drop a further three percentage points on market close last Wednesday following a conference call in which its CEO Elon Musk said the company would face “an extremely difficult” uptick in production as high interest rates are expected to limit EV affordability. (Financial Times)
• Indonesia tests first SAF-fuelled commercial flight: Indonesian flagship carrier Garuda tested its first commercial flight using sustainable aviation fuel (SAF) mixing biofuels with jet fuel to reduce emissions. (Bloomberg)
• Adani wants to drum up green hydrogen funds: Adani Group is seeking a USD 4 bn investment to develop plants to produce low-cost green hydrogen. The group is planning to spend USD 20 bn on renewable energy projects over the next decade. (Bloomberg)