Good morning, folks. After a lengthy (and necessary) Eid break, we’re back with a packed issue rounding up all the climate industry updates from around the region and beyond — with a heavy dose of M&A and green finance. First, a quick check on what’s afoot on the EU-China front…

THE BIG CLIMATE STORY OUTSIDE THE REGION- China + EU initiate talks on EV tariffs: China and the EU have agreed to start talks on the planned imposition of tariffs on Chinese-made EVs entering the European market, as confirmed by EU Commissioner Valdis Dombrovskis to Germany’s Economy Minister Robert Habeck. The EU passed a decision this month to push tariffs on imports of Chinese EVs to up to 48% on some vehicles. The move follows an anti subsidy investigation initiated by the supranational political union last year against Chinese EVs.

The tariffs are not a “punishment”: Habeck reassured Chinese officials that proposed EU tariffs on Chinese-made EVs are not punitive but are intended to level the playing field. The EU claims not to implement punitive tariffs the way that the US, Brazil and Turkey have. “Common, equal standards for market access should be achieved,” Habeck said.

Are the tariffs already hitting trade volumes? German exports to China dropped 14% y-o-y last month, FT reports. Although tensions could be rising between Beijing and Berlin over the EV tariffs, analysts and economists suggest the export decline is likely attributable to other factors, including weaker auto sales in China or “a lagged impact of the Red Sea blockage.” It doesn’t look like this reading is the start of a new downtrend,” Oxford Economics economist Oliver Rakau said.

As one door opens, another door closes: The Canadian government is also mulling passing its own set of fresh tariffs on Chinese-made EVs, in a bid to match actions by the US and EU, Bloomberg reports, citing people familiar with the matter. The decision is still pending, with public consultations about the matter expected to kick off soon, the business information service cites officials as saying.

The story grabbed headlines worldwide in Reuters, The Financial Times, Bloomberg, The New York Times, CNBC, and BBC.

HAPPENING THIS WEEK-

Egypt and the European Union will host the Egypt-EU Investment Conference in Cairo from Saturday, 29 June to Sunday, 30 June. The two-day conference will present and discuss potential areas of investment and cooperation in the green economy, renewable energy, and food and water security, in efforts to boost the green transition and climate resilience.

WATCH THIS SPACE-

#1- One step closer to a Saudi-US nuclear agreement? Members of the US Congress have been briefed on a proposed Saudi-US nuclear agreement that is part of what officials hope will be a landmark series of agreements between Riyadh and Washington, Bloomberg reports. Sen. Jeff Merkley (Democrat, Oregon) told Bloomberg that the Senate Foreign Relations Committee received a classified briefing on the agreement.

A shift of tactics? The Senate Foreign Relations Committee Chairman Senator Ben Cardin (Democrat, Maryland) said he has ordered staff to revisit limits that were enforced on arms sales to the Kingdom, signaling warming ties between the two countries, Bloomberg reported separately.

Background: The nuclear pact is part of a series of agreements that Saudi and US officials hope will open a new chapter in relations. It would also include a defense pact and a third agreement that will see Saudi give preference to US and Western advanced and AI technologies over Chinese rivals.

IN OTHER SAUDI NEWS- Saudi Industry and Mineral Resources Minister Bandar Alkhorayef is set to touch down in Chile — the world’s second-largest lithium producer — next month, Reuters reports, citing a Chilean government source. Alkhorayef is looking into the possibility of sourcing lithium, a key component for EV and battery storage production. No date for the meeting has yet been set.

Why it matters: Lithium is a critical component of both modern consumer electronics and the green transition, factoring into everything from rechargeable batteries for phones and computers to electric vehicles and grid storage.

There’s much more in the pipeline for South America: The Public Investment Fund (PIF) plans to invest USD 15 bn in Brazil, the country’s energy minister said at the FII Institute summit in Rio de Janeiro earlier this month, Reuters reports. The sovereign wealth fund will reportedly invest the money into green hydrogen, renewable energy, and infrastructure, the minister said. No further details on the investments or the timeline were provided.

#2- The Qatar Stock Exchange is exploring the possibility of launching a sustainability fund soon, the Exchange’s CEO Abdulaziz Al-Emadi told Zawya (watch, runtime 05:46) on the sidelines of the annual conference of the Federation of Arab Capital Markets. No timeline of investment value was disclosed for the fund. Qatar’s debut blockbuster USD 2.5 green bond issuance pulled in USD 14 bn in orders racking up a 5.6x oversubscription rate last month.

#3- Citizens from the world’s largest fossil fuel producers have voiced a strong desire for a swift transition to clean energy, according to a new UN poll (pdf). The survey — which included 75k participants from 77 nations — revealed that a majority in countries like Saudi Arabia, China, India, and the US are concerned over the climate crisis and its impact on their lives. An overwhelming 80% of Chinese and 76% of Indian respondents support rapid green initiatives, while 54% of Americans and 75% of Saudis echo the sentiment.

A global consensus on the urgency of climate action: The findings show that 80% of the surveyed people want their nations to enhance their climate commitments, with only 5% suggesting a reduction in climate action. 86% advocated for international cooperation on climate while setting aside geopolitical differences to tackle the crisis. 79% of respondents believe wealthier nations should increase support to less developed countries.

#4- EU approves financing for Germany’s Hydrogen Core Network: The European Commission has approved approximately EUR 3 bn in German state aid for the construction of the Hydrogen Core Network (HCN) — a system of hydrogen pipelines to facilitate Europe’s transition to green energy, according to a statement published on Friday. Germany will offer financial backing to companies building the pipeline to help them secure better loans and manage initial costs during the network's launch phase in 2025. The network will connect wind power parks in the north to industrial centers in the south and is expected to be completed by 2037.

This has been in the works: Germany presented its plan for a core network for hydrogen fuel which will cost EUR 20 bn (USD 21 bn) and span over 9.7k km last November. The European Commission also revealed plans to invest EUR 3 bn to develop the green hydrogen market from a new hydrogen bank in 2022.

IN OTHER EU NEWS- The European Commission has proposed initially exempting long-haul flights from new rules requiring airlines to monitor their non-CO2 emissions, Reuters reports, citing documents it had seen. The draft plans would require airlines to report climate impacts from soot, nitrogen oxides, and water vapor starting next January, but only for flights within Europe until 2027. While international carriers are seeking exemptions, low-cost European airlines are advocating for all flights to be included, Reuters writes.

ALSO- The block has approved its nature restoration policy aiming to restore damaged ecosystems across a fifth of EU land and sea by 2030, Reuters reported. The legislation has previously been met with resistance amid concerns over its impact on agriculture and other industries which led the bloc to soften numerous policies within the legislature to satisfy the farmers.

#5- G7 members have committed to accelerated energy transition plans to achieve net-zero by 2050 but climate activists say the plans have no added value, Reuters reports, citing a draft statement it has seen. The draft documents mention phasing out coal power during the first half of the 2030s — which was already agreed upon in May — but provide an alternative flexible pathway for the phaseout to happen “in a timeline consistent with keeping a limit of a 1.5°C temperature rise within reach, in line with countries' net-zero pathways.” The document also commits to reducing methane emissions from fossil fuels by 75% by 2030, however dilutes this pledge by confirming the possibility of public investments in natural gas.

Climate activists were not impressed: Climate activists criticized the statements for having “added no value” beyond pledges already made at previous lower-level meetings, and for not making any concrete commitments, Reuters wrote. Activists were also unimpressed by approving the use of the gas sector as a “temporary response” to phasing out dependency on Russian energy as they hoped for more explicit energy transition language ahead of COP29.

COP WATCH-

Dispute over global climate funding goals continue ahead of COP29: While key negotiations for COP29 will focus on channeling USD tns from developed nations to emerging markets, disagreement persists over financial responsibilities after no consensus was reached at the pre-COP29 meetings in Bonn earlier this month, Reuters reports. Nations will agree on a new target to replace the previous USD 100 bn, which was achieved two years later than planned. There are doubts that countries will agree to the USD 2.4 tn goal set forth by UN climate chief Simon Stiell in February, although they agreed that USD 100 bn is too low.

China + KSA pressured to contribute to green funds: New tariffs affecting China from the US and EU have left the nation’s position on climate funding unclear, Bloomberg added. However, China’s massive economy requires it to contribute to climate funding, alongside Saudi Arabia, which is responsible for major fossil fuels production, an anonymous European negotiator told Bloomberg.

IN OTHER COP NEWS- The World Bank's board has approved a plan to serve as the interim host for the climate Loss and Damage Fund, aimed at supporting developing countries affected by climate change, Reuters reports. While some countries worry about donor influence, the fund will maintain an independent board and governance structure.

REMEMBER- Not everyone is happy with the WB’s position as fund host: While developed countries see the World Bank as well-placed for the role given its global outreach, its increased commitment to funding green projects, and its experience with similar financial bodies (such as the Green Climate Fund), developing countries wanted to create a standalone facility under the remit of the UN. The Loss and Damage Corporation also mentioned concerns over the Bank’s heavy emphasis on loans and debt in its approach, as well as the control that the US and other developed countries have on its decision making.

THE SCORECARD-

#1- Energy emissions break new records in 2023: Global fossil fuel consumption and carbon emissions reached record highs in 2023, despite a slight decrease in fossil fuels' share of the global energy mix, with emissions surpassing 40 gigatonnes of CO2, according to a recent report (pdf) by the Statistical Review of World Energy. The top 10 CO2 emitters from energy production released a record-breaking 24.5 bn metric tons in 2023, surpassing the previous year's emissions by 582 mn tons, despite reductions by half of the top emitters. The overall energy demand reached an all-time high of 620 exajoules.

The culprits: China, the US, and India were the largest contributors, with China alone accounting for an 11.2 bn ton output, marking its highest increase since 2011, the report adds. While some countries like the US, Germany, Japan, South Korea, and Indonesia have successfully reduced their energy emissions, others, including Russia, Saudi Arabia, and Iran, have seen their emissions rise.

#2- Green, social, sustainable and sustainability-linked bonds reached a record USD 273 bn in 1Q 2024, The Financial Times reports, citing data from The Climate Bonds Initiative. Green bond issuances increased 43% compared to the previous quarter with a total of USD 195.9 bn raised. The growth is attributed to investors seeking to secure attractive yields while showing their environmental commitment, despite the narrowing of the “ greenium ”—a borrowing cost discount for green bond issuers.

Key players in the trend: Green bond issuance has rebounded after a slow 2023 in the US, with USD 27.6 bn issued in 1Q. Emerging markets are also participating, with Ivory Coast issuing a USD 1.1 bn sustainable bond, its first USD-denominated bond in seven years.

#3- Global hydropower needs USD 130 bn annually to meet net zero goals: Global hydropower investment needs to reach USD 130 bn annually by 2050 to double capacity and meet climate goals, according to a new report by the International Hydropower Association. The current growth rate of hydropower — which saw an increase of 13.5 GW to 1.412 TW in 2023 — must accelerate from 20 GW to 50 GW annually to successfully reach this goal.

REMEMBER- Egypt and Morocco are ahead of the game: Egypt and Morocco were included in the ten African countries that added the most hydropower in 2023. Egypt installed an additional 2.876 GW of hydropower capacity, while Morocco added 1.77 GW.

DANGER ZONE-

Africa’s Great Green Wall off track for 2030 completion: Africa’s Great Green Wall — a project adopted by the African Union in 2007 to combat desertification in the Sahel region — is unlikely to be completed in 2030 as planned due to a lack of funds, Reuters reported, citing comments made by president of the 2022 UN summit on desertification Alain Richard Donwahi. The project — which aims to restore an 8k km corridor from the Atlantic to the Red Sea and benefit the economies of some of the poorest countries in the world — is only 30% complete at this stage.

There’s still a ways to go: The Great Green Wall needs at least USD 33 bn more in funding. International donors had pledged around USD 19 bn, but as of last year only USD 2.5 bn has been allocated, with the rest due by the end of next year. However, some of the pledges are directed to multiple international development projects, not just the Green Wall, making it unclear whether the the funding needed will be successfully achieved.

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CIRCLE YOUR CALENDAR-

Turkey will host the Nuclear Power Plants Summit & Expo from Tuesday, 2 July to Wednesday, 3 July in Istanbul. The event will gather utility companies, independent power producers, government officials, and industry leaders to explore nuclear power projects, plans, products and tech solutions.

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.

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