TODAY: Sipchem gets feedstock allocation approval + Lucid Group opens the doors to its first overseas facility in KSA
Good morning, friends. We have a tight but interesting issue to close out the week, with hydrogen and ammonia getting a lot of traction in our region and beyond.
THE BIG CLIMATE STORIES- Sahara International Company (Sipchem) — a petrochemical company jointly owned by private sector investors — said it has received approval from Saudi Arabia Energy Ministry to allocate feedstock to build a blue ammonia plant in Jubail Industrial City. Also, EV maker Lucid Group — which is backed by Saudi Arabia’s Public Investment Fund — inaugurated its first overseas production facility in Jeddah.
THE BIG CLIMATE STORY OUTSIDE THE REGION- Britain greenlights delayed Rosebank oil field in spite of climate concerns: The UK government has signed off on the country’s largest untapped oil drilling project off Shetland, the USD 9.4 bn Big North Sea Oil field, after UK Prime Minister Rishi Sunak watered down the country’s original 2050 net-zero target last week. Development rights of the Rosebank in the North Sea oil field — which is expected to have a 500k barrel volume over its lifecycle — were granted to Norway’s Equinor and British firm Ithaca Energy. The project would generate CO2 emissions equivalent to 56 coal-fired power stations for a year, sparking concern from environmental groups and the country’s Green Party.
The story grabbed headlines in the foreign press yesterday: Reuters | The Guardian | The New York Times | CNN | Washington Post | Bloomberg | Financial Times | France 24 | The Wall Street Journal
OVER IN COPLAND-
Al Jaber is making the rounds with pre-COP diplomacy and lobbying: COP President-Designate Sultan Al Jaber called for a “robust response” to the Global Stocktake Report announced earlier this month during a visit to China this week, where he attended talks on climate action, Wam reports. Al Jaber also put out feelers in Tokyo, signing a joint declaration of intent (JDI) with the Japanese Industry Ministry to up bilateral cooperation on the energy transition the same week.
ALSO- Al Jaber discussed with Chinese top steel firm Baowu’s Vice President Hou Angui the climate summit’s priorities on the decarbonization of heavy-emitting sectors and the company’s decarbonization efforts. (Tweet)
A shared green hydrogen strategy between the UAE + the Netherlands? Early stage plans to solidify a green hydrogen supply chain from Abu Dhabi to Europe are on the cards, after a visit by the Dutch Prime Minister Mark Rutte to Abu Dhabi, Wam reports. This would build on the Masdar-Netherlands partnership made back in January to boost the green fuel export — and the more recent India-Middle East-Europe trade corridor proposed at the G20 summit this month.
Going Dutch: Rutte and UAE President Sheikh Mohamed bin Zayed Al Nahyan also discussed co-operation in industries such as space, AI, agri-tech and smart mobility, and signed an agreement on water management, though it was unclear what this would entail.
SOUNDBITE OF THE WEEK– Morocco is hitting a “sweet spot” for Chinese battery makers looking to serve markets in the US and Europe, Chinese battery giant CNGR Europe Chief Executive Thorsten Lahrs told the Financial Times on Wednesday. He said battery plants would be built at a quicker phase in Morocco than in target countries that had lengthy processes for permits. Lahrs also said that Rabat is a less risky investment potential given that Chinese producers can move towards exporting to other countries if the US or Europe put in place new protectionist policies. Obtaining environmental permits in Europe would take “several years,” while in Morocco “we may have ground breaking already next month,” he said. His statements come a week after Morocco-based pan-African investment fund Al Mada said it is partnering up with Chinese battery giant CNGR Advanced Material Company to build a MAD 20 bn (USD 2 bn) industrial base for battery parts production and recycling in the North African country.
DATA POINT- The IFC has been spending more on MENA renewable projects: The International Finance Corporation (IFC) announced it has invested USD 1 bn in the Middle East in its 2022-23 fiscal year, including USD 185 mn in climate-related projects, in a statement. The climate investments “have made a great leap compared to the previous fiscal year,” the lender said. IFC invested in Jordan's first green bond, which will be issued by Jordan Kuwait Bank. IFC also facilitated investments in the UAE’s Masdar to build Uzbekistan's first wind farm. In Egypt, IFC and other international partners invested USD 1.1 bn in AMEA Power to construct solar and wind farms.
WATCH THIS SPACE #1- EU adding mining minerals needed for energy transition to its green taxonomy: The EU will include the mining of critical raw materials needed for green tech manufacturing to its green investment rulebook — called the EU Taxonomy of Sustainable Activities — as a “priority” activity, Bloomberg reported, citing statements by the bloc’s financial services commissioner Mairead McGuinness during a media roundtable in Brussels. The move comes as the bloc aims to secure domestic mining of critical raw materials to cover at least 10% of its needs by the end of the decade. McGuinness did not disclose when the commission will submit the proposal for incorporating mining in the rulebook, or mention details on what kind of criteria would be used. The EU taxonomy is a rulebook for investors aimed at channeling EUR bns toward investments in renewable energy and green tech assets.
Controversy expected: Climate experts and activists have warned that the demand for critical minerals needed for the energy transition such as lithium — predicted to to rise over 40 times by 2040 — is not sustainable and will cause “needless water shortages, Indigenous land grabs, and ecosystem destruction,” The Guardian reported earlier this year, citing a US study. Bloomberg expects that the addition of the mining industry onto the list of economic activities that contribute toward the bloc’s goal of climate neutrality will spark controversy among climate activists who have previously rejected the inclusion of heavily polluting industries such as gas, nuclear power, and aviation. Last year, Austria filed a suit to reverse the EU Commission’s decision to label gas and nuclear energy as green energy sources, and was followed by Greenpeace and a coalition of NGOs and campaign groups including the World Wildlife Fund and ClientEarth a few months later.
What’s the solution? Ambitious policies investing in mass transit, walkable towns and cities, and robust battery recycling in the US would slash the amount of extra lithium required in 2050 by more than 90%, the US-based study cited by the Guardian found.
WATCH THIS SPACE #2- Did Egypt finish drafting its national hydrogen strategy? Egypt has completed drafting its national hydrogen strategy, which is currently under review by the country’s Supreme Council of Energy, Electricity and Renewable Energy Minister Mohamed Shaker said at the International Energy Interconnection Conference held in Beijing, according to the State Information Service. The strategy is expected to include a governance structure in line with the best global practices to help lure in more investments in Egypt’s green hydrogen sector. Egypt is targeting 8% of the global hydrogen market by 2040 and it allocated 26.5k sq km of land to renewable projects with a capacity of 128 GW from solar and wind.
WATCH THIS SPACE #3- Morocco unveils a new land allocation strategy for its green hydrogen plans: The Moroccan government is reportedly looking to allocate some 1.5 mn acres of land (6k sq km) for the development of green hydrogen under plans to become a green fuels export hub, Barron writes. Morocco wants to position itself as an export hub for renewable energy and green hydrogen to Europe: Back in February, Spain extended a EUR 800 mn credit line to the kingdom and signed 19 MoUs including a renewable energy development agreement with the country.
Other nations have also been showing interest in the country’s potential, with Germany signing with Morocco a partnership agreement in 2020 to build a 100 MW hydrogen plant in the country. Morocco and Portugal also signed an agreement to also develop green hydrogen plants in the country with plans to export the green fuels to the EU. Moroccan state-owned fertilizer and phosphate giant OCP Group announced plans back in June to invest USD 7 bn in an ammonia plant derived from renewables-powered green hydrogen that will initially have an annual capacity of 200k tons of ammonia, with plans to later up the capacity fivefold to reach 1 mn tons by 2027, and increase that even further to reach 3 mn tons over the next decade.
WATCH THIS SPACE #4- Saudi Arabia's Asir region is sitting atop SAR 281 bn (USD 64 bn) in mineral resources which are expected to contribute USD 75 bn to its GDP, reports Arabian Business. The minerals in Asir, spreading over an area of 81k sq km, contain 34 kinds of minerals, with an estimated value of USD 21 bn in zinc, USD 20 bn in gold, USD 16.2 bn, and USD 6 bn in silver. Metals and the mining sector are essential in Saudi’s 2030 vision to achieve sustainability as the sector is expected to become the kingdom's 3rd pillar of industry.
KUDOS-
Dubai Islamic Bank (DIB) launched its One Tree for Everyone initiative through which it will plant one tree for every new customer who opens a DIB account. The initiative comes as part of the bank's plan to play a leading role in the environmental, social, and corporate governance (ESG) space and foster a community of environmentally-conscious individuals.
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CIRCLE YOUR CALENDAR-
Egypt, Ethiopia, and Sudan will meet in Cairo for a third round of talks on the Grand Ethiopian Renaissance Dam (GERD) in the second half of October, Egypt’s Irrigation Ministry spokesperson said earlier this week (watch, runtime: 3:10). This comes after the latest round of talks between the three countries failed to break the deadlock over ending the years-long dispute.
Check out our full calendar on the web for a comprehensive listing of upcoming news events, national holidays and news triggers.