Good morning, friends. It’s a fairly meaty issue to kick off the week, with a basket of updates from around the region and beyond. Before we get to it, some disappointing news on the climate conference front from Saudi….

THE BIG CLIMATE STORY OUTSIDE THE REGION- Riyadh’s COP16 drought talks concluded yesterday without a binding agreement as negotiators from 196 countries and the European Union were unable to reach an agreement on how to respond to drought on a global scale. The 12-day UN Convention to Combat Desertification was held in Riyadh. Meanwhile, more than USD 12 bn were pledged to tackle desertification, land degradation, and drought. The story got ink in.

Despite the lack of a final agreement, progress was made in setting the foundation for a global drought framework, with plans to complete it at COP17 in Mongolia in 2026. "Parties need more time to agree on what's the best way forward to address the critical issue of drought," UNCCD chief Ibrahim Thiaw said.

Sign of the times: The failure of COP16 to reach an agreement is the latest in a string of failed global talks on preserving the planet, including talks on biodiversity in Colombia and plastic pollution in South Korea.

The story grabbed some ink in AP, the Financial Times,France24, and CBS.

HAPPENING THIS WEEK-

The Saudi Arabia Smart Grid Conference kicked off yesterday and will run through to Wednesday in Riyadh. The event will gather government officials, scientists, and business leaders covering renewable energy integration, AI, blockchain, cybersecurity, and resilience.

WATCH THIS SPACE-

#1- OQBI shares fall 10% on public debut: Shares of Oman OQ’s methanol unit OQ Base Industries (OQBI) fell 10% yesterday before trimming losses to 3.6% in its trading debut after its IPO initially raised USD 489 mn, Bloomberg reports. The IPO — which saw OQ sell 49% of its stake in the company — valued OQBI at USD 1 bn at the top end of the price range OMR 0.111 (c.USD 0.29).

REMEMBER- The IPO follows OQ’s recent IPO of its exploration and production arm that raised around USD 2 bn, making it Oman’s largest-ever IPO despite initially falling on the debut.

#2- We have more details on Abu Qir's green hydrogen plans: Egypt’s Abu Qir Fertilizers signed three agreements with two international companies to help the company achieve the natural gas partial replacement and energy optimization targets it disclosed last week.

What we know: The first agreement with the US-based MPS will see the latter provide Abu Qir with the needed green hydrogen to displace some of the natural gas consumption in the company’s ammonia plants, according to a statement released on Saturday. The agreement will also help increase Abu Qir 1 ammonia plant capacity while preparing the company’s exports for the EU’s Carbon Border Adjustment Mechanism (CBAM). The second agreement was signed with the Swedish-Swiss multinational ABB Group to install a smart control system to optimize natural gas consumption in Abu Qir 1 ammonia plant’s boiler, with plans to explore extending the system to Abu Qir 2 and 3 plants.

REMEMBER- The company said last week it wants to deploy 50 tons of green hydrogen daily to displace an unidentified amount of natural gas in the Abu Qir 2 and 3 ammonia plants while increasing the production capacity of the Abu Qir 1 plant from 1.1k tons to 1.2k tons. The project is expected to be completed within 12 months.

This has been in the works: Abu Qir signed MoUs with ABB Group, MPS, and Egypt’s state-owned construction firm Petrojet back in January to supply green hydrogen and renewable electricity to produce green ammonia.

#3- PIF-backed Lucid is shopping for potential partnerships with traditional automakers in a bid to expand its market reach, CEO Peter Rawlinson told Bloomberg on Thursday. The company hopes to secure a cooperation in which it shares costs and intellectual property with a traditional car company to help with decarbonization in exchange of benefitting from economies of scale of established players, Rawlinson added.

There’s much room to grow: The US-based EV maker currently makes two models. The Lucid Air and Lucid Gravity SUV, whose production began last month. The company is banking on the new SUV model for a boost in sales volume to help it narrow its recent losses.

Other EV players are pursuing this type of partnership: Abdul Latif Jameel-backed Rivian recently partnered with Volkswagen (VW) in a 50/50 joint venture to pool tech, with VW pumping up to USD 5 bn in investments in exchange for immediate access to Rivian’s EV software.

REMEMBER- Lucid has already secured a partnership: In July 2023, Lucid inked a USD 450 mn partnership agreement with Aston Martin to make the British ultra-luxury car maker’s future electric vehicles. The agreement paves the way for Lucid to grab a 3.7% stake in Aston Martin in return for its access to “high-performance” EV tech.

#4- Oman’s Hydrom is launching the third round of public lands bidding for green hydrogen projects in Oman in 1Q of 2025, ONA reported last week. The new bidding round will be available for both international and local investors and will prioritize projects that boost in-country value and infrastructure readiness, with winning projects expected to be announced in 4Q of 2025 and 1Q of 2026.

What’s different in this round? Unlike previous auctions that targeted mega-developments, this round will include options for smaller-scale projects, Hydrom’s managing director Abdulaziz Al Shidhani told The National. The goal is that this new approach would lead to quicker and lengthier offtake agreements, he added.

ICYMI- Hydrom signed agreements in April with two separate consortiums to develop green hydrogen projects for some USD 11 bn in Dhofar after completing their second round of auctions. The projects will bring Oman’s total planned hydrogen production to 1.38 mn tons per year by 2030.

IN OTHER HYDROM NEWS: Hydrom and Thyssenkrupp Nucera have signed an MoU to explore the localization of assembly and service hubs for water electrolyzers, according to a press release published last week. The MoU is one of the latest in a string of agreements to scale up the country’s green hydrogen infrastructure and manufacturing capabilities with different global players.

#5- The answer is no: The European Commission is sticking with its policies to limit CO2 emissions from cars despite major pushback from the bloc’s industry groups and its biggest political group the European People’s Party (EPP), Reuters reported on Thursday. EU climate chief Wopke Hoekstra will not budge on the deadline, firmly telling Reuters, “No. The answer is no.”

Background: EPP launched a campaign to loosen the rules before their 2025 enforcement date, suggesting that the Commission allow carmakers to miss next year's deadline by using a three-year average, which would give companies time to catch up in 2026 and 2027.

The fines are staggering: Many carmakers are expected to miss the 2025 targets and the industry could potentially lose up to EUR 15 bn in fines, European automaker association ACEA said. Fines would eat into essential investments into EV components and battery plants, they argue. Stellantis, however, is one automaker that is confident it will be compliant with the EU’s targets, Reuters reported on Thursday.

[#6- Investments in geothermal energy could hit USD 1 tn by 2035 and USD 2.5 tn by 2050 if significant cost reductions for the geothermal sector materialize, an International Energy Agency (IEA) report (pdf) released this month found. The investment could reach an annual peak of USD 140 bn, outpacing current onshore wind investments, the report added.

Why geothermal energy? Geothermal energy is continuous, allowing plants to operate at full capacity around the clock, irrelevant to weather changes, unlike solar and wind. It currently boasts an average utilization rate of 75% in 2023 compared to less than 30% and 15% for wind and solar PV, respectively. The full technical potential of next-generation geothermal systems could meet 140 times the global electricity demand, which the report says is the first potential analysis for this type of energy. The energy source is also 80% compatible with oil and gas capacity and skills, which makes it a transferable industry.

Who is interested? The power source is receiving interest from the energy sector and technology companies looking to support their energy-intensive data centers.

But cost reduction is necessary: The costs of next-generation geothermal energy are currently high compared to other low-emission alternatives but with sufficient support from policymakers and the oil and gas industry, costs could fall by 80% by 2035, the IEA estimates. If costs are reduced, new geothermal projects could supply energy at around USD 50 per MWh to make it one of the cheapest forms of dispatchable low-emissions electricity, making it a competitive alternative to wind, solar PV, hydro, and nuclear when paired with battery storage.

What would policy support look like? Policy support is lacking for geothermal, with only 30 countries implementing policies to support it. To reach its full potential, governments will have to move it up to its clean energy policy agenda, setting specific roadmaps and strategies while also investing in tech and research. The report also recommends the adoption of policies that reduce regulatory uncertainty, mitigate risks, increase revenue certainty for developers, and invest in human skills.

WORTH WATCHING-

AI designed a new efficient wind turbine: The University of Birmingham has unveiled the Birmingham Blade, the world's first urban wind turbine designed by AI and fully tailored to Birmingham's unique wind conditions, Reuters reported last week (watch, runtime 1:59). AI design specialists at the University’s AI prototyping venture EvoPhase created a turbine they claim is up to seven times more efficient than existing designs in the area, thanks to the AI-driven design process that generated and tested over 2k designs in about a week before picking the most optimal design for the area. The Birmingham Blade is compact and lightweight, making it ideal for rooftop installations, and is expected to be available by late 2025.

DANGER ZONE-

[wwtt4]Drylands now account for 40% of non-Antarctican land: 40% of land on Earth, excluding Antarctica, has turned into dryland over the past three decades representing an increase of 4.3 mn sq km, according to a study (pdf) by the UN Science Policy Interface (UN SPI). About three-quarters of the world has experienced drier conditions over that period that is likely irreversible.

Why it matters: Unlike droughts, aridity represents a “permanent, unrelenting transformation,” the UNCCD’s executive secretary Ibrahim Thiaw said to the Guardian. This transformation is set to impact huge swaths of land, undermining food security and the livelihood of people in areas already vulnerable to poverty. As of 2020, around 2.3 bn people — almost 30% of the world’s population — have lived in drylands over the last three decades, and this number is set to double by 2100, the UN SPI found.

GDP losses could also be big for Africa: Increased aridity between 1990 and 2015 has caused Africa to lose about 12% of its GDP, and the continent is projected to lose about 16% over the next five decades. Asia is set to lose almost 7% during the same period.

ON THE OTHER END OF THE SPECTRUM- High temperatures are releasing carbon from thawing tundra: The Arctic is now releasing more CO2 than it stores in a worrying trend shift, according to an annual report (pdf) by the National Oceanic and Atmospheric Administration. As the Arctic warms at rates that fast exceed any other areas on Earth, the report warns of a positive feedback loop intensifying the effects of climate change.

A categorical shift: There are eight key indicators, or “vital signs,” of the Arctic Circle’s health, including shrinking sea ice, warmer water, higher precipitation, and greening tundra, which all have seen extreme changes compared to a decade or two ago. The new data suggests that the Arctic is shifting to a new baseline or a “new regime” for its vital signs and projections for the next several decades make it clear that “change will continue.”

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CIRCLE YOUR CALENDAR-

The UAE will host the World Energy Summit from Tuesday, 14 January to Thursday, 16 January in Abu Dhabi. The summit will host over 350 speakers including energy industry leaders and policymakers with discussions ranging from eco-waste to sustainable cities. An exhibition will also be held for showcasing green products.

Saudi Arabia will host the Future Minerals Forum from Tuesday, 14 January to Thursday, 16 January in Riyadh. The forum will gather stakeholders from over 170 countries to discuss mineral technology and exploration. Speakers will include senior government officials and CEOs from renowned mining companies Vale, Rio Tinto, and Manara.

Bahrain will host the Sustainability Forum Middle East from Tuesday, 28 January to Wednesday, 29 January in Manama. Climate experts and decision-makers will convene to discuss a number of issues ranging from decarbonization to supporting SMEs on their path to net zero. Speakers will include GCC government officials and industry leaders from the banking and industrial sectors.

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