TODAY: MENA Climate Week rolls on in Riyadh + IMF / World Bank Annual Meetings kick off in Marrakesh
Good morning, ladies and gentlemen. We have a brisk but interesting issue this morning, bringing us a little bit of everything to kick off a fresh week.
THE BIG CLIMATE STORY- The Saudi Electricity Company (SEC) — which is majority owned by the kingdom’s sovereign Public Investment Fund (PIF), has acquired a 25% stake in Electric Vehicle Infrastructure Company in a transaction valued at SAR 254 mn.
HAPPENING TODAY- It’s the second day of MENA Climate Week in Riyadh: The second day of MENA Climate Week 2023 is kicking off today in Riyadh with a focus on challenges and solutions for the MENA region, which is the world’s most vulnerable to the effects of climate change. The week-long climate event, which runs until Thursday, opened yesterday with keynote speeches by UNFCCC Executive Secretary Simon Stiell and COP27 President and Egyptian Foreign Minister Sameh Shoukry.
IMF + WB annual meeting kicks off in Morocco today and will continue until Sunday: The Annual Meetings of the World Bank and the International Monetary Fund (IMF) are kicking off in Marrakesh today, in one of the largest economic events of the year with over 14k participants. The meetings bring together central bankers, ministers of finance and development, private sector executives, civil society, media, and academics to discuss issues of global concern, including climate change. Some of the climate related sessions outlined in the schedule include Energizing Change — Firm Resilience and the Green Transition during the Recent Energy Crisis, Climate Challenges in Fragile and Conflict-Affected States, Capacity Development Talk on Environmental and Climate Change Statistics: Building Statistical Capacity to Support Climate Resilience Policy, and Financing a Just Transition for Africa. This is the first time the annual meetings are held outside the US in four years.
REMEMBER- Multilateral banks hold the key to ramping up green funding: The need for multilateral banks to reform their strategy and facilitate more green financing to developing countries has been a major discussion point in recent climate talks, and is expected to be a central theme in the upcoming COP28 in the UAE. COP28 President Designate Sultan Al Jaber expressed his support for the Bridgetown Initiative, a push by developing countries to have the West reform multilateral institutions to reduce excessive risk and unlock crucial green funds. The UN Climate Change High-Level Champions launched two papers last month outlining recommendations on how to break financing barriers for the climate transition in emerging economies, with the provision of a 1% interest rate loan with a 10-year grace period and a 20-year repayment period through multilateral banks being one of the main suggestions in the paper.
THE BIG CLIMATE STORY OUTSIDE THE REGION- There’s no single climate story grabbing headlines this morning, but a flash flooding in India’s north-eastern state of Sikkim has killed at least 44 people, Reuters reports. Over 140 people continue to be missing due to the heavy rainfall as rescue teams struggle to reach the flood-hit areas. “We are waiting for weather conditions to improve as only then air force and other rescue teams could venture into the flood-hit areas,” V.B. Pathak, the state’s chief secretary, said. The flash flooding is one of the worst disasters in the region in over 50 years, and the latest of weather calamities which scientists have associated with climate change.
The flash flooding also got ink over the weekend from: Bloomberg | The Associated Press | The New York Times | CNN | The Guardian | BBC
OVER IN COPLAND- Al Jaber hints at slow fossil fuel phase-out goals once again: “We cannot unplug the energy system of today before we build the new system of tomorrow,” COP28 President-Designate Sultan Al Jaber said yesterday during his keynote speech at the MENA Climate Week in Riyadh, Al Arabiya reported. “It is simply not practical or possible. We must meet the energy demands of our growing populations while providing access to the 8.3 bn people that don't have access to energy today. And we must rapidly build the system of the future while we decarbonize the system of today,” Al Jaber added.
And oil-rich KSA was quick to jump on Al Jaber’s bandwagon: “There is a good reason for us to continue producing oil and gas, and also, as we said, even though the share of oil and gas in the energy mix may decrease, but that is within the framework of an integrated energy system up to the year 2050,” Saudi Energy Minister Abdulaziz bin Salman said in a dialogue session at Climate Week, according to Asharq Business.
But experts have warned that today’s energy system needs to transform at a faster pace than current projections: While Al Jaber called for separating “facts from fiction” and “reality from fantasies” during his speech, the most recent UNFCCC report published last week (pdf) said that possible elements of the global stocktake outcome could include a call to parties on “phase-out of fossil fuels, support global commitment to accelerate the phase-out of unabated fossil fuels, and efforts to phase out inefficient fuel subsidies by 2025, supported by enabling environments and upscaling investments in renewable energy.” The International Energy Agency said in September that global demand for oil, natural gas and coal is likely to peak by 2030, which Saudi Aramco pushed back against, claiming that demand for both oil, gas, and coal remain strong while calling for more investments into the carbon-intensive sources. The IEA said that even the prediction that fossil fuel demand will peak by 2030 is “not nearly enough” to limit the rise in global average temperatures to 1.5°C.
WATCH THIS SPACE #1- Saudi Arabia will begin trials for the Middle East’s first hydrogen train next week, Energy Minister Prince Abdulaziz bin Salman said during MENA Climate Week in Riyadh, according to Reuters. “It will be on trial for next week, hopefully for the next few months. We will have the first hydrogen train in the Middle East,” he said. Saudi Arabia will launch a “credible, transparent and adaptable domestic market mechanism” today, the minister said, without providing further details. His statements come hours after state-owned Saudi Arabia Railways (SAR) said it signed an agreement with French train manufacturer Alstom to carry out hydrogen train trials this month. The trials will be the first of their kind in Saudi Arabia and the wider MENA region, SAR said.
We already knew something of the sort was happening: Alstom said that it is looking to bring its hydrogen-powered Coradia iLint train to Saudi Arabia before the end of 2023, the company’s Managing Director for the GCC Tamer Salama told Zawya in May. The increase in hydrogen projects in the region could also see the company deploy more of its hydrogen trains in neighboring countries, Salama added.
WATCH THIS SPACE #2- A global initiative for decarbonization by the UAE ahead of COP28: The UAE’s Climate Change and Environment Ministry (MOCCAE) has signed an MoU with Abu Dhabi Waste Management Company (Tadweer) to launch a global initiative to mobilize and accelerate waste decarbonization and set up a circular economy platform, Wam reported on Saturday. The “Waste to Zero” initiative will focus on the challenges faced by the waste management sector and promote solutions for the decarbonization of waste management globally.
WATCH THIS SPACE #3- Masdar going big on Malaysia’s renewables potential: The UAE’s state-owned clean energy producer Masdar has signed an agreement with Malaysia’s Investment and Development Authority (MIDA) to develop 10 GW of renewable energy projects in the country by 2035, Masdar said on Saturday. It did not provide further details on the projects; however, Malaysian PM Anwar Ibrahim said in a Facebook post that the projects will cost USD 8 bn.
WATCH THIS SPACE #4- Tunisia-Italy interconnector is getting some funds from the EBRD: The EBRD is set to sign off in December on a sovereign-backed senior loan of up to EUR 45 mn to Tunisia’s state electricity company STEG for the planned Elmed electrical interconnection project with Italy, according to the EBRD website. The 200-km 600 MW high-voltage direct current (HVCD) submarine transmission cable connecting the two countries will be operated and jointly owned by STEF and Italian transmission system operator Terna.
Others are helping: The EU’s Connecting Europe Facility (CEF) is contributing a grant of EUR 307.6 mn for the project. Other lenders include the EIB, KfW, and the World Bank.
WATCH THIS SPACE #5- Hy24 to establish fund for hydrogen investments, and MENA is a top destination: Paris-based hydrogen fund manager Hy24 hopes to raise EUR hundreds of mns to invest in hydrogen equipment and technology companies, including in the MENA region, CEO Pierre-Etienne Franc told The National on Thursday. “We will support any initiatives that those [MENA] countries push for the development of hydrogen … because this is a place where you can get a lot of investment appetite,” Franc said, adding that the fund’s strategy is to build a multi local manufacturing strategy for electrolyzers, rather than a centralized one.
REMEMBER- Together with Singapore’s sovereign fund GIC, Hy24 raised USD 115 mn in equity last week to help Hong Kong-based InterContinental Energy’s finance its green hydrogen expansion plans in the Middle East and Australia.
WATCH THIS SPACE #6- Developing countries are getting USD 9.3 bn in green investments from rich nations: Twenty-five developed countries have pledged USD 9.3 bn to help poor nations tackle climate change through the UN-backed Green Climate Fund (GCF) between 2024 and 2027, according to a statement released on Thursday on the sidelines of a conference in Bonn, Germany. “It [the GCF] will be able to invest in climate-friendly agriculture, coastal protection, reforestation and the energy transition in Asia, Africa, Eastern Europe, Latin America and the islands of the Caribbean and Pacific,” a German minister said, according to the statement. Among those donating are Japan, which said it would contribute up to USD 1.1 bn over the next four years, and Norway, which offered some USD 300 mn, Reuters reported. The German government alone pledged EUR 2 bn (USD 2.1 bn).
But the Fund fell short of the targeted USD 10 bn as some wealthy nations failed to pay up: The US and China — the most polluting nations in the world — failed to to make new funding pledges, with the former stating it is not “in a position to pledge due to uncertainty in its domestic budget process, but was working on an announcement,” while the latter has yet to agree to provide climate finance through the UN path, the newswire said. Australia, Italy, and Sweden also declined to make pledges on Thursday, stating that their contribution is still in progress. The Green Climate Fund is aiming to exceed the USD 10 bn in contributions it raised in its last three-year round, which is likely to be comfortably surpassed once the countries that promised funds announce their pledges, the fund’s facilitator Mahmoud Mohieldin told Reuters.
Still peanuts compared to funds needed for effective and just energy transition: The current goal represents just a fraction of the USD 200 bn to USD 250 bn that developing countries will need every year by 2030 to adapt to climate change, Reuters said, citing an estimate from a report published last week by the UN Framework Convention on Climate Change (UNFCCC).
THE DANGER ZONE- Higher temperatures deemed culprit behind deadly floods globally: Record heatwaves this year were behind deadly flooding across five continents, Bloomberg reports, citing climate scientists. Cities around the world saw record rainfall 139 times this year, including a flood disaster in Libya last month that killed thousands. Over 100 people were killed across Asia in July during a severe monsoon season, while New York was hit with crippling torrential rain last week.
The physics behind it: Higher temperatures allow the atmosphere to hold more moisture, causing heavier downpours and therefore floods. “We are now seeing record-smashing ocean temperatures, record-smashing global temperatures and record-smashing floods,” Jennifer Francis, a climate scientist at the Woodwell Climate Research Center. “It’s all connected,” she said.
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