TODAY: MENA companies fall behind on disclosing sustainability data + GHG hit all-time high + Acwa gets EBRD funding, eyes expansion in Indonesia, Thailand
Good morning, wonderful people. It’s not a particularly busy news day for the MENA region, but EVs are taking center stage as a US-based EV manufacturer plans to bring the majority of its production to KSA before the end of the decade at the same time as Turkey makes its foray in EV manufacturing. We have more on both stories in Around the World, below.
THE BIG CLIMATE STORY- We have an agenda for COP27, which kicks off in less than a week from today. We have the highlight reel of what to expect below.
Oh, and before we move on: Happy Halloween, folks. What’s your favourite Halloween episode? The Office? Friends? The Simpsons?
UP FIRST- Egypt rolled out a series of reforms + announced a USD 3 bn IMF loan agreement could impact renewables projects — and unlock fresh climate funding: The Central Bank of Egypt (CBE) on Thursday floated the EGP, went for a 200 bps interest rate hike, and announced that letters of credit (L/Cs) system will be phased out by the end of the year. The IMF immediately followed up with an announcement it signed off on a 46-month USD 3 bn extended fund facility (EFF), according to a statement (pdf).
The EGP lost just over 22% of its value against the USD In the two business days that followed the float, closing yesterday at 24.13.
What does this mean for companies in green industries doing business in Egypt or eyeing the Arab world’s most populous market?
#1- Egypt is in line for an additional USD 1 bn coming from the IMF could support the country’s climate goals, IMF Mission Chief for Egypt Ivanna Vladkova Hollar said in Thursday’s statement. The funding could come from the fund’s resilience and sustainability trust, which was set up to provide general fiscal resilience but will include provisions for climate, too. The financing will be discussed in the coming months.
#2- The phasing out of measures that have effectively blocked non-food imports for months will be very good news for folks trying to get goods in for projects. Importers have struggled to get anything that isn’t edible into the country since the former governor of the central bank imposed restrictions earlier this year. Those restrictions, which required the use of letters of credit to finance imports, will be phased out over the next two months, EnterpriseAM reports, suggesting the logjam will ease.
The restrictions had hit the solar industry particularly hard, Solar Energy Development Association (SEDA) board member Hatem Tawfik told Enterprise Climate in August, calling at the time for “urgent action” in easing import restrictions to keep solar projects operational.
#3- Rising costs in EGP terms, accompanied by higher borrowing costs, will mean some companies need to revisit plans as investment and maintenance costs rise, regardless of how you finance them. We don’t expect the hit to be as sharp as it was last year when soaring global commodities prices drove up solar energy prices, forcing Egypt’s major solar players to increase their prices, delay projects, or accept squeezed margins — but there will be a period of adjustment.
#4- Exporting energy (and other goods and services — like, say, EVs and consulting on the green economy) from Egypt just got more interesting for players that can bias their cost structure toward local-currency inputs — something that will get easier as Egypt looks to give businesses more incentives to make production inputs there. Egypt is on an aggressive drive to position itself as the Eastern Med’s premier energy hub, including building transmission lines to Greece, Saudi Arabia and Sudan, among others.
#5- Thursday’s reforms underscores that the Sisi administration aims the reposition Egypt as an attractive destination for long-term capital — particularly as the announcement came the same week as the government promised to reveal soon policy on how to put the private sector in the driver’s seat when it comes to the economy. Restoring liquidity to the Egyptian market, implementing broad fiscal reforms and undertaking structural reforms to boost private sector participation will all encourage investors to commit capital to the country, EnterprisePM noted on Thursday.
Cue GCC investment in renewables? The devaluation may unlock money from the GCC in particular. While we don’t know if climate-focused investments are on the horizon, it’s reasonable to expect that the GCC could be eyeing climate investment in Egypt, given its recent major uptick in overseas climate investment.
HAPPENING TODAY-
In Abu Dhabi, UAE: Adipec runs today through Thursday, 3 November, gathering some 40 ministers from around the world including the UAE, Kuwait, Bahrain, and Egypt. Discussions will partly focus on the transition toward carbon neutrality. Hosted by Adnoc, Adipec bills itself as “the world's most influential gathering for energy industry professionals.” Tap or click here to register.
In Amman, Jordan: Its day two of the International Investment Forum for Renewable Energy and Energy Efficiency in MENA is taking place, the Jordan’s state news agency Petra reports. The three-day event is organized by the Arab Renewable Energy Commission and tackles renewable energy, energy efficiency, smart cities and grids, green hydrogen and sustainability. Participants include folks from Saudi Arabia, Egypt, Morocco, the US, the UK, Germany, Italy, Greece, and Turkey.
COUNTDOWN TO COP (6 days to go)-
As COP27 is less than a week away, here are some highlights to look out for:
- World leaders’ summit: 7-8 November (more details here)
- Finance day: 9 November
- Decarbonization day: 11 November
- Adaptation and agriculture day: 12 November
- Water day: 14 November
- Energy day: 15 November
A more detailed schedule is available for download as a pdf here and the COP27 phone app is available for download from the App Store and the Google Play Store.
Egypt will announce a new initiative to counter climate change at COP27, Foreign Minister Sameh Shoukry told Al Arabiya (watch, runtime: 27:48). The COP27 President Designate did not share details, but did say that Egypt will revise its national plan to reduce carbon emissions.
Hassan Allam Holding is now a provider sponsor at COP27, the company said in a statement (pdf).
US President Joe Biden is heading to Egypt next week to attend COP27 on Friday, 11 November, White House spokesperson Karine Jean-Pierre confirmed.
…but, British Prime Minister Rishi Sunak and King Charles will not be attending COP27, citing “other pressing domestic commitments,” Reuters reports.
Beijing turns up the Rhetoric-o-Meter: “Empty slogans” won’t solve the climate crisis, China tells the west: China, the world’s largest carbon emitter, says Western nations must contribute more than “empty slogans” in the climate-action fight, Reuters reports. Li Gao, head of the climate change office at China’s Ecology and Environment Ministry, said “real ambition” is needed ahead of COP27 to bankroll the USD 100 bn pledged by “rich nations” in 2009. China has been facing criticism for its continued reliance on coal consumption, which represented 56% of its energy consumption in 2021, according to Carbon Brief.
THE BIG CLIMATE STORY OUTSIDE THE REGION-
France’s largest state investment bank Caisse des Dépôts hopes to drum up EUR 60 bn by 2024 for an energy transition, according to a press statement. The investment bank also released its Adaptation Action Plan (pdf) centered on safeguarding infrastructure, real estate, and vulnerable territories against climate-related threats.
MEANWHILE- Greenhouse gases (GHG) in our atmosphere have hit an all-time high and “time is running out,” the UN’s World Meteorological Organization (WMO) said last week. Carbon dioxide, methane, and nitrous oxide — the three biggest contributors to climate change — are reaching record levels, the WMO reports in its Greenhouse Gas Bulletin (pdf), a document aiming to propel negotiations forward at COP27. Other findings show that GHG levels rose by approximately 50% between 1990 and 2021. More ominous still: Global methane concentrations increased at the fastest y-o-y pace in 2021, rising 18 parts per billion from 2020.
If transformational change does not take place, “the world is headed for 2.8°C of global heating” by 2100, UN Secretary General António Guterres stated in a video commenting on the findings of the UN Environment Programme’s Emissions Gap Report (pdf).
WATCH THIS SPACE #1- Nearly 90% of MENA-based public companies don’t disclose any quantitative data on sustainability, making us a “laggard” in reporting, according to a press release by sustainability tech platform Clarity AI. Globally, only 30% of public companies disclose at least one quantitative sustainability metric. The platform recently reviewed 40k global public companies for insights into businesses’ environmental and social impact and financial performance, it says.
“Significant” regional variation on reporting: Within MENA, only 11% of public companies report anything on sustainability, compared to 44% in North America and 40% in Europe. Only 5% of public companies in MENA report scope 1 and scope 2 greenhouse gas (GHG) emissions — defined by the GHG Protocol Corporate Standard (pdf) as “direct emissions from owned or controlled sources” and “indirect emissions from the generation of purchased energy” — compared to 30% of public companies in Europe.
WATCH THIS SPACE #2- Tadawul-listed Acwa Power is entering new markets including Indonesia and Thailand while expanding its presence in existing markets, CEO Paddy Padmanathan told Arab News at last week’s Future Investment Initiative. The KSA-based company recently signed agreements to finance and build two new floating solar plants in Indonesia — with three similar projects in the pipeline — and is eyeing an unspecified project in Thailand. Acwa is also mulling new projects in existing markets like Uzbekistan, Azerbaijan, South Africa, Morocco, Senegal, and Egypt. Meanwhile, its 700 MW solar power plant in Dubai is set to come “fully online” in 2023.
ALSO- Acwa is getting EBRD funding for sustainable infrastructure: Acwa Power and the European Bank for Reconstruction and Development have signed an agreement to finance sustainable infrastructure projects over the coming five years, the Saudi developer said in a press release. The financing will cover green hydrogen, renewable energy, and green desalination projects in Uzbekistan, Azerbaijan and Egypt. No details on the financing, including the size or type of funding, have been disclosed yet.
WORTH READING-
Digital public infrastructure could contribute to lower carbon emissions globally, the World Economic Forum (WEF) said on Wednesday. A digital platform would offer better measurement, reporting, and verification (what the nerds are calling MRVs) of Nationally Determined Contributions (NDCs) commitments made in the 2015 Paris Agreement. Seeing as there are no standardized measures against which NDCs can be evaluated, the WEF argues an open source, interoperable — “between reporting mechanisms and various climate finance platforms across countries” — platform will enable the collection and aggregation of data, monitor carbon markets, and contribute to implementing carbon capture. A climate DPI-MRV can be implemented by emulating digital payments platforms.
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CIRCLE YOUR CALENDAR-
The Egypt Energy Conference kicked off yesterday and is running until tomorrow in Cairo. The three-day event will include three smaller conferences on power generation, transmission, and distribution; sustainability and clean energy; and PPP, foreign investment, and energy funding. Some 120 startups and global exhibiting companies will attend the conference, according to the organizers. You can register for the event here.
The Arab Renewable Energy Commission’s international investment forum for renewable energy and energy efficiency in MENA also kicked off yesterday and wraps this Wednesday, 2 November in Amman, Jordan. The event will explore the Arab world’s renewable energy legislations, focus on renewable energy project prospects in the region, and spotlight how technological advances in the agricultural sector can ensure the region’s food security.
Check out our full calendar on the web for a comprehensive listing of upcoming news events, national holidays and news triggers.