Good morning, friends. We have a big dose of debt watch and investment stories from around the region this morning, but first, a significant update from the world of tech…

THE BIG CLIMATE STORY OUTSIDE THE REGION- Google’s emissions surge nearly 50% in five years due to AI energy demand: Tech giant Google’s greenhouse gas emissions have risen 48% within the past five years, spurred by the massive energy consumption needed for its data centers and greater supply chain emissions as it integrates AI into more products, according to the company’s annual environmental report (pdf). Google reported total GHG emissions of 14.3 mn tons of CO2 equivalent in 2023, marking a 13% increase from the previous year and a 48% rise since the 2019 base year.

Can Google continue to expand while getting a hold on its emissions? The company acknowledged “the challenge of reducing emissions”' while expanding large language models and related infrastructure, noting the unpredictable future environmental impact of AI. “We do still expect our emissions to continue to rise before dropping towards our goal,” Chief Sustainability Officer Kate Brandt said.

Google is not the first company to run into problems with AI: US tech company Microsoft also reported a 30% increase in carbon emissions since 2020, driven by its AI investments.

The story made headlines in the international press: AP | Bloomberg | The Financial Times | CNN | CNBC | The Guardian | BBC

WATCH THIS SPACE-

#1- Morocco is shaping up to be the latest hotspot for Chinese EV makers looking to bypass new US tariffs aimed at curbing China’s EV dominance, AP reports. The kingdom has seen a surge in Chinese investments in EV part factories hoping to capitalize on the country’s freetrade agreements with the US. Recent ventures, including battery giant CNGR’s USD 2 bn battery plant, aim to qualify for the tax credits by complying with US regulations that restrict sourcing from entities linked to foreign adversaries.

The bigger picture: The shift towards Morocco is part of a broader strategy to invest in countries with freetrade agreements with the US including South Korea and Mexico which has raised alarm in the US about Chinese firms accessing US subsidies, AP adds. The US Energy and Treasury departments are aiming to reduce reliance on Chinese manufacturers while still ensuring that enough vehicles qualify for the credits.

#2- Amazon is working closely with UAE authorities to expedite its rollout of electric vehicles for deliveries, the National reports. They are also addressing challenges, such as the impact of extreme heat on battery performance with partners to ensure the successful implementation of their goal to use 100k EVs for last-mile deliveries globally by 2030. “In this region, because of the extreme heat, there is not yet a scalable, fully-proven commercial electric vehicle model. Right now that is a challenge because of the temperature and the batteries,” Prashant Saran, director of operations at Amazon Turkey and MENA told the National.

The initiative has kicked off with pilot testing, though a launch timeline has not been set. “We are already working with delivery service partners who are using electric scooters to deliver in some of the dense areas,” Amazon MENAT Operations Director Prashant Saran told the National.

#3- IHC unit withdraws from Zambian copper bid: International Holding Company’s (IHC) mining investment arm, International Resources Holding (IRH), withdrew its USD 1 bn bid for Mumbai-based Vedanta 's stake in Zambia's Konkola Copper Mines, Reuters reports. Vedanta was reportedly only willing to sell a minority stake for nearly double the amount IRH offered for a larger shareholding, unnamed sources told the news outlet.

#4- Azerbaijan to revise emission target ahead of COP29: COP29 host Azerbaijan is planning to revise its national emissions reduction target before the climate summit in November Reuters reports. The new target — which comes in efforts to encourage other nations to strengthen their climate commitments — will be in line to limit global warming to 1.5 °C and reflect the agreements made at the previous COP28 summit, including the decision to transition away from fossil fuels. The new target will encompass all sectors of the economy and include all greenhouse gases including CO2 and methane, but no specific targets were disclosed yet.

#5- SBTi CEO to step down amid controversy over carbon offset guidelines: CEO of the biggest verifier of corporate climate targets Science Based Targets initiative (SBTi) Luiz Amaral will step down at the end of July, Bloomberg reports. The decision — announced without consulting staff or advisory groups — comes after he received backlash over loosening the guidelines on carbon offsets, including allowing companies to use carbon credits across their entire supply chains. Members of the SBTi first called for their CEO to resign back in May.

A replacement has already been chosen: Amaral will step down for “personal reasons” and Chief Legal Officer Susan Jenny Ehr will serve as interim CEO with board support, according to a company statement.

The company will clarify its stance on carbon offsets in July: SBTi, which verifies corporate emissions for over 5k companies, plans to clarify its position on carbon offsets and release research on their effectiveness this month, Bloomberg reports. The organization has traditionally emphasized emission reductions over offsets, a stance criticized by some corporate and climate figures.

THE SCORECARD-

KSA + UAE + Qatar lead sovereign investments with push for sustainable assets: Saudi Arabia, the UAE, and Qatar’s sovereign funds have taken the lead in sovereign investments during 1H 2024 as they focus on gaining more green assets, according to a report (pdf) by Global SWF. The aforementioned funds — which include the Public Investment Fund, Mubadala Investment Company, Abu Dhabi Investment Authority, ADQ, and the Qatar Investment Authority — allocated USD 9.7 bn towards sustainable investments — 30% more than the USD 7.2 bn spent on conventional energy sources and hydrocarbon agreements. The sustainable investments by the state-owned funds represent around a quarter of their aggregate investments of USD 38.2 bn.

WORTH READING-

The carbon removal industry is facing a new challenge as the number of startups — 800 worldwide — in the sector outpaces demand for their services, Bloomberg reports. The recent closure of Running Tide — a startup that aimed to sequester carbon by sinking macroalgae in the ocean — revealed the difficulties faced by these ventures in securing funding and proving the viability and scalability of their technologies. This comes as a result of a slowed down market on the back of dwindling political and monetary support for the sector.

Behind the influx of rising startups: Financial services firm Stripe has been crucial in the growth of the carbon removal industry as it began purchasing carbon removal credits in 2019 at any cost to drive the creation of a high-quality market, despite knowing that some companies might fail to deliver. The initiative led to the establishment of Frontier, a fund with over USD 900 mn from companies like Alphabet and Meta Platforms, which makes advanced-purchase commitments to startups that deliver verifiable carbon removal.

So what can be done? Companies like Stripe are addressing this by creating a fellowship program to find new buyers and encouraging government purchases of removal services, Bloomberg adds. Reducing the cost of carbon removal to USD 100 a ton could see it being used as feedstock for products like synthetic gasoline, adding only 85 cents a gallon to the cost of gasoline, Breakthrough Energy's chief technology officer Eric Toone suggested. This price point could spur further demand, although it may also lead to more failures among startups that cannot lower their costs.

A multi-bn sector could be unlocked: The carbon removal market is expected to require between 50 and 100 mn tons of CO2 removal annually by 2030, creating a potential USD 20 bn market at USD 200 per ton. The world will need to quadruple carbon capture to reach 7-9 bn tons by mid-century.

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CIRCLE YOUR CALENDAR-

Saudi Arabia will host the Global EV & Mobility Tech Forum from Wednesday, 10 July to Thursday, 11 July in Riyadh. The forum will bring together international policymakers, institutions, NGOs, corporations, and companies to explore the future of green urban mobility, market trends, and the regulatory issues faced by the sector.

Egypt will host the Egypt Mining Forum from Tuesday, 16 July to Wednesday, 17 July in Cairo. The event will convene decision-makers from government, industry experts, new exploration firms, financiers, and investors to explore the challenges and advantages to establish Egypt as a leading global mining hub by 2040.

The UAE will host the World ESG Summit from Tuesday, 20 August to Wednesday, 21 August in Dubai. The summit will gather experts and industry leaders to explore new ways to integrate Environmental, Social, and Governance (ESG) principles into business practices.

Turkey will host the International Conference on Clean and Green Energy Engineering from Saturday, 24 August to Monday, 26 August in Izmir. The event will gather researchers and professionals to share advances in clean energy. It will also offer a platform to discuss the latest research, practices, and applications in clean and green energy engineering.

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