TODAY: Maersk and Egypt reach a preliminary agreement on Zafarana wind farm stake sale + Morocco buys EUR 200 mn of sustainable bonds from World Bank
Good morning, wonderful people. We have a light and brisk issue for you this morning as we inch closer to the weekend.
THE BIG CLIMATE STORY- Danish shipping giant Maersk has reached a preliminary agreement with Egypt on the acquisition of a 51% stake in the 545 MW Zafarana wind farm, a government source told Enterprise Climate.
^^ We have the details on this story and more in the news well, below.
THE BIG CLIMATE STORY OUTSIDE THE REGION- Change of mindset still needed by the World Bank: US Treasury Secretary Janet Yellen said the World Bank has made improvements in reforms related to its operations to better tackle climate change and other challenges yet still needs “cultural change” to deploy private sector capital, Reuters reported on Tuesday. Yellen said the Washington-based lender has begun working on principles to utilize concessional funding for projects that address global challenges. It also began utilizing improved analytical and diagnostic tools, including country climate and development reports. However, more needs to be done to allow the bank’s staff to deliver desired outcomes, Yellen said. "This will require internal process improvements that increase agility and speed up decision-making without sacrificing quality, as well as cultural change to accelerate private sector mobilization and responsible risk-taking,” she added.
WATCH THIS SPACE #1- France pushes for methane emission limits on fossil fuel imports: France is trying to rally support from EU countries to adopt a policy that would see the bloc gradually impose methane emission limits on fossil fuel imports starting in 2026, according to a document — dated October 6 — seen by Reuters. The policy proposes importers must prove that 70% of their fossil fuel imports comply with the EU methane rules, with the share increasing each year until 100% are covered in 2029. “Imposing methane leakage criteria on European hydrocarbon imports is a climate imperative, does not raise measurement difficulties, and is part of a global dynamic,” France said in the document. The non-profit Clean Air Task Force has estimated that such regulations could cut global methane emissions in the oil and gas sector by up to 30%.
Who’s on board? While some EU officials said it was not yet clear how many countries backed the proposal, Europe's biggest gas buyer, Germany, as well as Poland, previously said they would be willing to extend the EU rules to cover fossil fuel imports. Hungary and Romania have previously sought weaker rules, while some countries have questioned whether it is feasible to enforce the EU's standard abroad.
Regional oil + gas exporters will be impacted if the regulations go through: Qatar and Algeria are the third and fourth biggest suppliers of natural gas to the EU, coming behind the US and Russia. 10.9% of the EU’s natural gas imports come from Qatar and 9.9% come from Algeria, according to data collected by Eurostat for 2Q 2023. Saudi Arabia and Libya came in fifth and sixth place in the share of EU oil imports, with the former representing 9% of oil imports, and the latter accounting for 8.1% of EU petroleum oil imports, according to EU data.
WATCH THIS SPACE #2- No end in sight for oil: OPEC raised its forecasts for world oil demand through the middle of the century, its 2023 World Outlook report (pdf) showed, despite an increased deployment of renewable energy to avert climate change impacts. It sees oil demand rising by c. 16% to reach 116 mn barrels a day (mb/d) by 2045, around 6 mn/d higher than forecasts in its report last year with “the potential to be even higher.” It said the projected increase in demand by the middle of the century would require c. USD 610 bn on average annually.
What they said: “Calls to stop investments in new oil projects are misguided and could lead to energy and economic chaos. History is replete with numerous examples of turmoil that should serve as a warning for what occurs when policymakers fail to acknowledge energy’s interwoven complexities,” OPEC Secretary General Haitham Al Ghais said, according to the report. He also acknowledged the necessity to lower emissions through technologies including clean hydrogen, carbon capture utilization and storage, and direct air capture.
ALSO- OPEC will be given a stage during COP28: OPEC will have a pavilion for the first time during COP28, Bloomberg reports, citing statements by OPEC’s Secretary General Al Ghais. “The oil industry will be there at COP and we will be there,” Al Ghais said during a forum in UAE’s Fujairah. “I hope all voices will be at the table at COP28,” he added. The participation is expected to further fuel concerns of an increased presence by the oil industry during the Dubai-hosted climate summit.
DATA POINT- Natgas is on a downward path through to 2026: Global natural gas demand is expected to dip in the coming years on the back of lower consumption in mature markets, according to a report released by the International Energy Agency (IEA). It sees global gas demand growing by an average of 1.6% annually between 2022 and 2026, down from an average of 2.5% a year between 2017 and 2021. The report forecasts overall gas demand from mature markets in North America, Europe, and some nations in Asia Pacific to fall by 1% annually through 2026 after a peak in 2021. It attributes the decline to an “accelerated rollout of renewables and improved energy efficiency” in those markets.
What this could mean for the region: A fall in demand in mature markets globally — which represent around half of global gas consumption — means that any growth will be mainly concentrated in some gas-rich economies in MENA and fast-growing Asian markets, the report notes. China alone is forecasted to account for almost half of the total growth in global gas demand between 2022 and 2026 “to serve its industrial production, power sector and urban areas,” it adds.
THE DANGER ZONE- Biodegradable plastic releases more toxins into the environment when broken down compared to conventional alternatives, according to a study (pdf) in the Journal of Hazardous Materials. The researchers measured toxicity levels that biodegradable plastic (BP) photodegradation and composting has on PLHC-1 cells — labgrown cells derived from Poeciliopsis, a species of small freshwater fish. They found that after a 24 hour sunlight exposure period, BPs decreased cell viability by up to 70% compared to single-use and recycled plastics due to an excessive amount of chemical releases when the bio-based materials broke down.
SOUND SMART- Photodegradation refers to the process through which materials decompose from sunlight exposure and photon absorption, whether it be from infrared radiation, visible light, or ultraviolet light. “Bio-based and biodegradable plastics still require additives to improve their properties such as elasticity, color, electrostatic behavior, strength and toughness,” the study notes, cautioning that these additions render the materials more likely to release a significant amount of the chemicals “which are not covalently bound to the polymer” into ecosystems, posing health hazards to both humans and wildlife.
A “scientifically questionable" study: The study — which has drawn criticism from the EU’s leading organic plastics association European Bioplastics — involved researchers extracting chemicals from the various types of BPs from methanol before sampling them on PLHC-1 cells, unlike the true nature of plastic degradation in the real world. Critics say the use of ethanol could have altered the chemical composition of the sampled BPs.
REMEMBER- The UN has set out a plan to slash 80% of global plastic waste by 2040: The United Nations Environment Programme laid out a strategy back in May for reducing the world’s plastic waste levels by nearly 80% in less than two decades using pre-existing technologies. The replacement of single-use plastics with biodegradable materials could contribute another 17% to the target, according to UNEP projections. UNEP’s roadmap would reduce an estimated 187 mn tons of plastic waste and prevent damages to the tune of USD 3 tn over the next 20 years, but would need c. USD 65 bn in annual investments to be realized. The world produces some 400 mn tons of plastic waste annually.
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CIRCLE YOUR CALENDAR-
The UAE will host the UNCTAD World Investment Forum from Monday, 16 October to Friday, 20 October in Abu Dhabi. This year’s theme focuses on sustainable investments, with a diverse range of climate financing sessions on promoting investments in the blue economy, agrifood systems, sustainable infrastructure, carbon markets, the circular economy, strategic minerals for decarbonization, and sustainable tourism. Some sessions will tackle reform of financial institutions needed to reach net zero, such as a session on integrating nature-related risk into capital markets and financing an equitable nature economy. Public sector investments and stock exchange action on climate disclosures will also be discussed.
Oman will host the Duqm Economic Forum from Monday, 16 October to Tuesday, 17 October in Duqm. The two-day event — organized by the Public Authority for Special Economic Zones and Free Zones — will showcase green investment windows and possible partnerships at the Special Economic Zone at Duqm.
Egypt will host the fourth meeting of the COP27 Transitional Committee from Tuesday, 17 October to Friday, 20 October in Aswan. The meeting aims to establish institutional arrangements, modalities, governance structures, and terms of reference for the landmark Loss and Damage Fund while expanding sources for climate funding under the program.
Check out our full calendar on the web for a comprehensive listing of upcoming news events, national holidays and news triggers.