Good morning, ladies and gents. The news cycle shows no sign of slowing down as the week comes to a close, with updates flowing in from various subsectors of the industry. First, let’s check in on the China-US-EU green trade spat…

THE BIG CLIMATE STORY OUTSIDE THE REGION- China might impose its own tariffs as trade war continues: China is considering its own tariffs of up to 25% on imported cars with large engines from the US and Europe, inside sources have told The China Chamber of Commerce to the EU (CCCEU). China’s escalation comes as a deadline for an EU probe draws near and days after the US bumped tariffs on Chinese solar cells, EVs, and lithium-ion EV batteries to curb imports. European and US car manufacturers sold 32% of all imported vehicles in China in 2023, and markets responded to the rumors with Mercedes-Benz and BMW shares both dropping over 2% in early trading. The story grabbed ink in Reuters and Bloomberg.
ALSO- We have a date for the US tariff hike: US tariff increases slapped onto EVs and batteries will come into effect on 1 August, Reuters reports, citing a US Trade Representative office statement.

REMEMBER- About EU’s probe into Chinese EVs: The EU launched an investigation into Chinese subsidies for EVs to ward off a flood of cheap imports last year which put the bloc’s industrial core at risk of losing its share to faster Chinese companies. The investigation marked the first attempt to slow down competing state support for green technologies, after more than a year of ever-larger subsidies in the US, China, the UK and Europe.

WATCH THIS SPACE-

#1- Alpha Dhabi u-turns on Metito acquisition: Investment holding company Alpha Dhabi has called off its plan to acquire a majority stake in Dubai-based utility Metito Holdings, after terminating talks without citing the reason, the firm said in a disclosure (pdf).

Background: Alpha Dhabi Holding planned to acquire a majority stake in water management solutions provider Metito last September. The transaction — which was pending regulatory approvals at the time — aimed to help Metito finance its plans to expand its smart water solutions across MENA.

#2- The UAE wants to introduce incentives for green industrial practices: The UAE’s Federal National Council (FNC) has proposed establishing new regulatory packages, including incentives and exemptions for green economic and industrial activities, with an eye to supporting economic growth and sustainability, Wam reports. The recommendations also include a proposal to improve the legislative framework to support the industrial sector, which contributed AED 197 bn to the economy in 2023.

What’s next? The FNC’s recommendations will be reviewed by the Financial, Economic, and Industrial Affairs Committee ahead of being resubmitted for approval and forwarded to the government.

#3- It’s official: Qatar has raised USD 2.5 bn from its debut USD-denominated green bonds, Bloomberg reports. Qatar sold USD 1 bn green bonds with a maturity of five years at 30 basis points with a yield of 4.74% and USD 1.5 bn of 10-year green debt at 40 basis points over US treasuries with a 4.82% yield.

WORTH READING-

Europe is taking a big risk with its green hydrogen bet: Europe is still planning to heavily invest in green hydrogen despite only 4% of proposed global green hydrogen projects reaching financial close in 2023, Bloomberg writes. A review of 54 studies has found that hydrogen will play a very weak role in decarbonizing buildings because it’s less efficient and more expensive than heat pumps, district heating and better insulation, Bloomberg writes. At the same time, the industry is facing capital cost increases of 40% to 50%. “The math still doesn't add up,” said head of EU lending and advisory operations at the European Investment Bank Jean-Christophe Laloux said.

A focus on renewables could be the best option: Critics argue that the focus on hydrogen may divert attention and resources from more immediate and cost-effective solutions, such as directly using renewable electricity, according to Bloomberg. “Green hydrogen will probably only be useful towards the end of the energy transition, once primary electricity demand is being comfortably met by renewables,” Belgium’s top central banker Pierre Wunsch told Bloomberg.

THE SCORECARD-

#1- The energy transition will cost 19% — some USD 34 tn — more than expected between now and 2050, according to BloombergNEF’s (BNEF) New Energy Outlook 2024(pdf). To meet net-zero by 2050, the world will need to spend an estimated USD 24.1 tn to double its power grid size to 111 mn km. Around 50% of the investments will be needed for home and business distribution networks, while USD 9.6 tn should go to high-voltage transmission, and the rest for EVs, the outlook found. Renewables will need USD 22.7 tn of investments by mid-century, with wind and solar energy alone requiring a nine fold increase in capacity. Major investments in electric vehicles, nuclear energy, carbon capture, and clean hydrogen will also be needed to meet the goals.

Global hydrogen demand is falling: BNEF’s new estimates of global hydrogen demand in the net-zero by 2050 scenario is 25% less than its initial prediction disclosed in last year’s outlook report, US news outlet Semafor reports. BNEF reduced its forecast on the back of reassessing and disqualifying hydrogen from decarbonization roles it will likely never be the optimal option for — such as residential and commercial buildings — and cutting expectations of demand for power and other sectors as other technologies get cheaper, Semafor explains.

Big Oil majorly missed the mark too: The main hydrogen lobbying group Hydrogen Council — of which Big Oil firms are members — are also overestimating the world’s hydrogen needs, predicting a figure that is 50% higher than BNEF’s 2024 outlook, Semafor writes. The companies have been lobbying for the US government to ease eligibility criteria for hydrogen tax credits on the grounds of preparation for massive incoming global demand, effectively securing “more near-term money in oil companies’ pockets,” Semafor explains, adding that less predicted hydrogen demand would therefore hurt their profits and justify stricter tax credit guidelines.

#2- Record carbon pricing revenues: Carbon pricing revenues soared to an unprecedented USD 104 bn in 2023, according to a report (pdf) by the World Bank. The majority of this revenue was generated through emissions trading schemes, with over half being allocated to climate and nature initiatives. The report highlights the expansion of carbon pricing instruments, now totalling 75 globally, and their increasing application in sectors beyond the traditional, including aviation, shipping, and waste management.

There’s still more to go: The report highlights the inadequacy of current global carbon price coverage and levels to meet the Paris Agreement's objectives despite the financial success. With less than 1% of greenhouse emissions priced at levels aligned with the recommended threshold to keep temperature rise under 2ºC, the report calls for heightened political commitment to bridge the gap between climate pledges and actual policies.

#3- New clean tech investment record: Global investment in clean energy technology manufacturing reached USD 200 bn in 2023, marking a 70% increase from the previous year and contributing approximately 4% of the worldwide GDP, according to a report (pdf) by the International Energy Agency (IEA). Solar PV and battery manufacturing have seen remarkable growth, with solar PV capacity already meeting the demands for 2030 and battery capacity nearing completion.

A lot is about to change: The report states that while clean energy manufacturing is currently concentrated in certain regions, with China leading in solar PV module production, the landscape is set to become more diverse. Announced projects suggest that by 2030 Europe and the US could each hold about 15% of the global battery cell manufacturing capacity. It also highlights the dynamic nature of production costs, which are largely influenced by operational expenses such as energy, labour, and materials. This indicates that the current cost disparities in manufacturing across different countries could be mitigated through strategic policies, the report concludes.

DANGER ZONE-

Tunisia’s honey is drying up: Climate-induced heat waves, parasites, and invasive diseases have affected around 75% of Tunisian beekeepers who saw their honey production drop to around 4 kg per hive, Tap reports. Changing temperatures also resulted in flowers producing less nectar and reducing honey production. Production levels dropped from an average of 20 kg per hive in the early 1910s to just around 8 kg today.

Tunisian beekeepers are not alone: Bee farmers who used to operate in central Iraq started heading to the mountains of Kurdistan last year to escape extreme heat and an ongoing drought. Drought and extreme heat drove down production to just 5 kg. Egypt’s honey production has also been under threat due to climate change.

Drought slows down Amazon rainforest rejuvenation: Over one third of the Amazon rainforest — the biggest terrestrial carbon sink in the world — is struggling to recover from a drought, The Guardian reported, citing a paper (pdf) published in Proceedings of the National Academy of Sciences. With 37% of mature vegetation found to be slowing down, the rainforest’s resilience has deteriorated past the point of return after four rare dry spells have hit in less than 20 years, the research finds. The study only referenced images of the rainforest’s canopy, and, “if we are already seeing a tipping point getting closer at this macro forest level, then it must be getting worse at a micro level,” lead author Johanna Van Passel told the news outlet.

And degradation is hitting over half the world’s pastures: Around half of the world's natural pastures — of which one-sixth of the world’s food comes from — are now degraded due to overuse and climate change, including in the Middle East and North Africa regions, according to a new report (pdf) by the UN Convention to Combat Desertification. The report attributes the degradation to factors like population growth, urbanization, and the intensification of agriculture, which have led to soil fertility loss and exacerbated drought conditions.

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CIRCLE YOUR CALENDAR-

Egypt will host the Energy & Storage Live MENA conference, from Wednesday, 29 May to Thursday, 30 May in Cairo. The event will gather industry stakeholders in utilities, independent power producers, financiers, government bodies, regulators, distributors, contractors, and more to shape the future of the region’s energy sector.

The UAE will host the Bonds, Loans & Sukuk Middle East event from Tuesday, 4 June to Wednesday, 5 June in Dubai. Billed as the Middle East's largest corporate and investment banking event, it serves as a key meeting point for those active in the region's capital markets. Over 1.4k governments, corporates, investors, banks, law firms, regulators and service providers as well as more than 75 expert speakers will be in attendance.

Turkey will host the International Conference on European Energy Market, from Monday, 10 June to Wednesday, 12 June in Istanbul. The three-day event will gather experts from scientific, industry, and policy sectors for discussions on various energy market-related topics. The conference covers themes including energy modeling, market design, regulatory policies, and climate change.

Morocco will host the Morocco Energy Week Summit, from Tuesday, 11 June to Thursday, 12 June in Marrakech. The event will gather Morocco's leading energy players, companies and developers alongside financiers and implementation experts to discuss the country’s green transition.

Spain will host the Connecting Green Hydrogen Europe conference, from Tuesday, 25 June to Thursday, 27 June in Madrid. The event will see around 5k attendees including industry leaders, energy ministers, and executives to explore solutions, new technologies, and transformative advancements to advance the hydrogen industry.

Check out our full calendar on the web for a comprehensive listing of upcoming news events, national holidays and news triggers.

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