TODAY: EU backs new Euro 7 vehicle emissions proposal + Asian Infrastructure Investment Bank annual meetings kick off in Egypt
Good morning, wonderful people. We have a reasonably busy issue to kick off a new week, giving us a little bit of everything. Let’s jump in.
THE BIG CLIMATE STORY- UAE-based Masari-Atlantis and South Korea’s CEVO Mobility signed an investment contract to invest EUR 100 mn in a new electric vehicle factory in Dubai next year, with plans to produce 20k vehicles per year.
HAPPENING TODAY- Egypt will host the annual meetings of the Asian Infrastructure Investment Bank today in Sharm El Sheikh. The meetings, AIIB’s first in Africa, aim to showcase potential investments in Egypt and attract financing for green initiatives in renewables, sustainable transportation, communication, internet infrastructure, and water resources.
THE BIG CLIMATE STORY OUTSIDE THE REGION- The EU is backing Spain’s new Euro 7 vehicle emissions proposal: EU countries largely showed support for new regulations on non-carbon tailpipe emissions — particulate matter from brakes and tires — proposed by the Spanish government, backing a watered down version of the bloc’s initial Euro 7 draft, which was put forward by the EU Commission earlier in November and followed the EU’s initial Euro 1 set of regulations published in 1992. The new Spanish draft, which bloc members were due to make a final decision on yesterday during a ministerial meeting, will be later debated with the EU Commission and Parliament before final approval. The new proposal would extend the Euro 7’s initial implementation date of 1 July 2025 for cars and vans to 30 months from the initial two-year deadline. Eight EU countries — including France, the Czech Republic, and Italy — voiced concern back in May against strict limits on non CO2-tailpipe emissions, citing concerns that strong restrictions on combustion engine vehicles would divert investments away from EVs.
REMEMBER- The EU plans to ban the sale of fossil fuel-powered cars entirely by 2035: In November last year, the EU announced plans to slash car emissions by 55% compared with 2021 levels by 2030, before ultimately banning the sale of petrol and diesel engines by 2035, but final approval for the target has been delayed several times. Back in March the bloc began talks with Europe’s largest automaking country Germany on legislation allowing the sale and manufacture of combustion engine vehicles beyond the bloc’s previously agreed termination date provided they run on e-fuels, after the country postponed an EU vote to phase them out in February. Germany — which generates some EUR 411 bn per annum from auto sales — is lobbying for a flexible approach that would not see an outright prohibition of fuel-powered cars. On Saturday, German e-fuels maker Lühmann Gruppe announced plans to take the EU to court for its planned combustion engine phase out by 2035, noting the bloc’s plan is unrealistic and “driven by ideology, not facts.”
The story grabbed headlines in the international press over the weekend: Bloomberg | Reuters | Deutsche Welle
OVER IN COPLAND- Decarbonization of heavy industries is getting some backing at COP: A cross-sectoral initiative to support the decarbonization of heavy-emitting industries such as steel, iron, and cement will be launched during COP28 in the UAE later this year, Director General of the UN climate summit Majid Al Suwaidi said during the UN General Assembly (UNGA) meetings in New York last week, according to a statement. The initiative will facilitate the rollout of key enablers to develop the decarbonization industry, including financing, policymaking, technology, and collaboration, Al Suwaidi added.
And so are our favorite tree friends, the mangroves: A high-level Mangroves Ministerial will be held during COP, bringing together mangrove-hosting countries to build partnerships and plan for scaling up mangrove conservation and restoration, the presidency said in a statement on X, citing comments by UAE’s Climate Change and Environment Minister Mariam Al Mheiri at the UNGA. The ministerial will “focus on accelerating finance, policy and technology to meet the Mangrove Breakthrough global target of restoring and protecting 15 mn hectares of mangroves by 2030,” Al Mheiri added.
COP28 President Delegate Sultan Al Jaber made an appearance at UNGA’s Climate Ambition Summit: “Climate change won't be solved through agreement alone. It can only truly be addressed through action,” Al Jaber said in opening statements at the UNGA’s Climate Ambition Summit in New York. Referring to the latest data from the Global Stocktake, Al Jaber said that “the numbers are straightforward: 22 gigatons. That's the amount of greenhouse gas emissions we need to cut in the next seven years to keep 1.5°C within reach.”
And later urged countries to agree on loss and damage fund: Al Jaber urged nations to agree on how to operate a loss and damage climate fund to compensate developing countries for the damage caused by climate change, The National reports. Al Jaber made the remarks in his opening remarks during a consultation on funding arrangements held at the UN on Friday. Developing countries have proposed that the fund would have USD 100 bn by 2030, but the leaders could not agree on which states would pay and how the money would be disbursed. The details were left to be worked out in the highly anticipated COP28. A transitional committee set up during COP27 has already met three times to discuss the details of the loss and damage fund. It is scheduled to convene again next month in Aswan, Egypt.
Reactions and recommendations: Some EU countries are concerned that the fund could be misused as a “global ATM facility” accessed by countries that do not need it. The fund should target countries that are particularly vulnerable to the adverse effects of climate change, executive vice president of the UN Green Deal Maros Sefcovic recommended, according to the National. It should also hold the “countries that are historically responsible for GHG emissions” accountable, a representative from Tunisia said during the discussion. Organizers are hoping to reach an agreement before COP28, sources at the French Energy Ministry told the National.
WATCH THIS SPACE #1- Egypt to ship renewable power to the UK: The UK is set to be one of the beneficiaries of planned electricity interconnections between Europe and Egypt, which will export power generated from wind and solar plants, The Telegram reported on Friday. Egypt is expected to generate about 10 GW of power from wind farms near the Suez Canal, which will be transmitted via a 966 km subsea cable in the Mediterranean to Greece, the news outlet added. “About a third of the power will be used in Greece and the rest will be exported to the rest of Europe,” director of renewables and power at Norway-based energy consultancy Rystad Carlos Diaz told The Telegram.
BACKGROUND- Egypt and Greece have been working on a plan to add 9.5 GW of renewable power generation capacity in Egypt for export to Greece for which Infinity Power is exploring supplying renewables. It is unclear how the 9.5 GW plan will fit in the 3 GW Greece-Egypt Interconnector announced prior, raising the prospect that additional infrastructure will need to be built. Additionally, Norway’s Scatec signed an MoU to study an Egypt-Europe electricity interconnection project in July, and Belgian company Jan De Nul discussed potential collaborations in the electricity interconnection projects between Egypt and Europe in May.
WATCH THIS SPACE #2- We have a figure for Masdar’s next green bond issuance: Renewables giant Masdar is planning to issue USD 750 mn-1 bn in green bonds within six to nine months after closing its USD 750 mn debut bond sale earlier this year, CFO Niall Hannigan tells Bloomberg. The planned issuance is part of Masdar’s USD 3 bn push to grow its global portfolio to 100 GW of capacity by 2030, the output from which will be directed towards “the greenest projects” including solar, wind, and renewable power transmission.
WATCH THIS SPACE #3- Total will invest USD 300 mn in a JV with Adani Green: French oil giant TotalEnergies will invest USD 300 mn to form a joint venture with Adani Green on a renewable energy project, according to a statement. The project will have the capacity of around 1 GW of electricity from solar and wind power in India. Adani Green will contribute assets to the venture. “This will help deliver our vision to have 45 GW renewable energy capacity by 2030,” Adani Group Chairman Gautam Adani said in the statement.
TotalEnergies has a history with Adani: TotalEnergies is the second largest shareholder of Adani Green with a 20% stake since 2021. It also acquired a 50% interest in some of Adani Green’s solar farms in a USD 2.5 bn transaction that was among the largest foreign investments in India. This is also the two companies' first deal since fraud allegations were made against Adani earlier this year, battering investor confidence.
REMEMBER- The Qatar Investment Authority reportedly also bought shares worth USD 500 mn in Adani Green Energy last month, representing some 3% of Adani’s green energy arm, providing a lifeline for the company after facing fraud allegations earlier this year.
WATCH THIS SPACE #4- Hyundai likely to solidify plans for KSA-based EV assembly plant next month: In an upcoming October visit headed by the company’s chairman, Hyundai Motor Company is planning to ink a formal agreement with Saudi Arabia to set up an EV assembly plant in the kingdom, Korea Economic Daily reported. According to a preliminary agreement signed earlier this year, the project will send semi-finished electric vehicles and parts to Saudi Arabia for assembly and sale in the local market, the outlet added.
REMEMBER- In January, Saudi Arabia signed an MoU with Hyundai Motor Company for the construction of an EV and internal combustion engine manufacturing plant. Automaker Hyundai Kefico — a subsidiary of Hyundai — signed a KRW 250 bn (c. USD 196 mn) agreement in July to supply spare parts to Saudi Arabia’s first EV manufacturing company Ceer.
China’s Jinko Power secures BOO contract for 400 MW PV farm in KSA’s Al Jowf: A consortium led by Chinese renewables developer Jinko Power has nabbed a USD 315 mn build-own-operate (BOO) contract for a 400 MW solar energy plant in KSA’s northern Al Jowf province after submitting the most competitive Levelized Cost of Energy bid to the Saudi government, YICAI reports, citing a company statement. The plant would have a 450 MW peak power capacity, generating up to 1.2 bn KWh (1.2 mn MWh) of clean energy annually. The company did not reveal when it would break ground on the project, but said construction would be completed in 21 months, the solar payback period — the time it takes developers to make back initial solar investment — will be around 14 years, and that it will retain operating rights for the plant for 30 years.
The financing: The company said it plans to raise some USD 137 mn from senior unsecured CNY-denominated green bonds with less tenors below three years to finance its overseas projects and repay existing debts, but did not specify if its upcoming KSA project would be funded through the note issuance.
A strong MENA renewables portfolio: Jinko Power’s regional renewables assets include the UAE’s 2 GW Al Dhafra solar park, Oman’s 500 MW Manah 2 PV plant, and KSA’s 300 MW Saad solar energy project. The company has also been shortlisted to develop the 1.1 GW Al Henakiyah and 400 MW Tabrajal solar parks in KSA, and submitted bids to The Emirates Water and Electricity Company (Ewec) to develop the UAE’s 1.5 GW Al Ajban solar IPP project. Earlier this month, a JV between the company and Singapore’s Sembcorp Utilities secured approval for its share capital to be listed on the Third Market of the Muscat Stock Exchange.
Banque Misr launching green investment fund: State-owned Egyptian bank Banque Misr reportedly plans to establish a green investment fund in 1Q 2024, Daily News Egypt reports, citing sources it says have knowledge of the matter. The fund will focus on investing in companies that adhere to environmental, social, and governance (ESG) standards, particularly those listed on the EGX. The bank is awaiting approval from the Central Bank of Egypt and is set to align its investment strategy with S&P global’s sustainability index. The size of the fund is yet to be announced.
What’s a green investment fund? Green investment funds are mutual funds that finance companies that show a commitment to incorporating ESG into their operational fabric — a standard that is increasingly demanded by investors and consumers around the world.
REMEMBER– Just last week, Banque Misr was among a coalition of local lenders extending EGP 30 bn in financing for green hydrogen projects to Egypt’s SCZone. The bank is increasingly bolstering its green lending portfolio.
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