Good morning, folks. As is typical for Mondays, we have a packed issue with news on mining agreements in the region and abroad, and more on stumbling biodiversity talks in Colombia. Also: It’s not a good day for green hydrogen enthusiasts.

THE BIG CLIMATE STORY OUTSIDE THE REGION- US makes first moves on lithium mining: The Biden administration approved its first lithium mine — the Rhyolite Ridge lithium-boron project in Nevada — as part of efforts to reduce reliance on China for critical minerals. Ioneer, the company behind the project, plans to begin construction in 2025 and aims to start production by 2028. The project has received significant government support, including a conditional commitment of up to USD 700 mn from the Department of Energy. The mine is expected to supply Ford and other EV producers with lithium for approximately 370k EVs annually.

Not everyone is a fan: Environmental protection groups are threatening legal action against the project, arguing that the mine will endanger Tiehm’s buckwheat, a rare wildflower “integral” to the area. Despite changes to the mine’s footprint to protect the flower, conservationists claim the project violates US laws protecting endangered species.

The story made headlines in the international press: Reuters | AP | Bloomberg | The Financial Times | The Guardian | The Wallstreet Journal.| Washington Post

HAPPENING THIS WEEK-

Saudi Arabia will host the Future Investment Initiative Conference from tomorrow until this Thursday, 31 October in Riyadh. The conference will gather entrepreneurs, political leaders, and decision-makers to explore investment options in AI, sustainability, energy, and more.

COP WATCH-

COP16 talks may be stumbling: The COP16 summit in Colombia could end up being a “COP of encouragement” rather than one of action, the executive secretary of the UN Convention on Biological Diversity Astrid Schomaker said, according to Bloomberg. EU lead negotiator Hugo Schally says there is a long way to go before reaching a consensus due to “fundamental” differences in opinion between parties, divided mainly along the lines of developed and developing nations. Here are COP16’s main updates:

#1- As expected, financing is a contentious issue: Differences on how to close the USD multi bn biodiversity finance gap remain. Developing countries are lobbying for a focus on grants, citing their already high debt levels, while developed countries are pushing for financial sources including private capital and loans. How to allocate funds is also contentious, with developing nations calling for a new fund under the UN. In contrast, the developed countries bloc calls for adhering to the current World Bank-linked Global Environment Facility’s Global Biodiversity Framework Fund.

REMEMBER- It is estimated that up to USD 824 bn would be needed annually to protect and restore nature by 2030, which is far above the current USD 143 bn annual spend of 2021, according to the UN’s Biodiversity Finance Initiative (Biofin).

#2- There’s not much to report on biopiracy: Little progress has been made on biopiracy as parties work on a mechanism for sharing proceeds and purchasing access to the data.

REMEMBER- Traditionally, scientists would pay the country of origin and export genetic samples, but technology has made exchanges easier, and now exporters can take a permanent “digital fingerprint” of the samples. Countries of origin want this to change.

#3- National plans are also still lacking, and private capital is not happy about it: Only 34 countries and the EU have submitted their national biodiversity plans (NBSAPs) — which outline how they plan to align with the 2022 Kunming-Montreal Global Biodiversity Framework. But Aviva Plcare’s nature strategy lead Thomas Viegas said that the private sector needs signals from governments. Declaring national biodiversity priorities could provide banks with a “roadmap into where it could be deploying capital,” argues Bank of America Climate Finance Managing Director Abyd Karmali.

#4- Biodiversity credits are gaining steam: The topic of biodiversity credits has had more side events than any other main topics. The market for the credits is just under USD 1 mn at present, Bloomberg reported.

ALSO- The US is notably absent: While the US has a technical delegation in Cali for COP16, the team does not have the power to formally negotiate outcomes, a senior State Department official told Vox. Only the US and the Vatican haven’t joined the 2022 Convention on Biological Diversity. Given the US is the world’s largest economy and has a lot of influence, some experts worry that that decision could undermine biodiversity protection across industries.

AND- Biodiversity is declining faster within protected areas than outside of them, according to a policy brief (pdf) by the Natural History Museum. Scientists call the findings a “wake-up call” for policymakers as COP16 takes place in Colombia. The study found that while more protected areas have an overall higher Biodiversity Intactness Index (BII) than non-protected ones, protected areas were still declining faster, with a 2.1% decline versus a 1.9% decline for non-protected regions.

How did this happen? Conservation efforts often lack “biodiversity intactness” as they target specific species rather than the whole ecosystem. It could also be that these areas are faring more poorly because they were already in a more deteriorated state. Corruption, political instability, and a lack of resources can also be factors.

How the index works: The BII collates and analyzes data from satellite imagery, data collected in the field, and algorithmic modeling to estimate the impact of human activity on biodiversity, with a database that covers over 58k species from 48k sites in over 100 countries. It uses a 0-100% scale to measure biodiversity intactness, with 0% meaning that “none of the species remaining in the location were naturally found there” and 100% meaning that the biodiversity is fully intact. One key advantage of the index is that it also analyzes how changes in biodiversity management policy could impact the index, providing businesses and policymakers with key insights on how to improve their response.

REMEMBER- The goal is 30x30: 196 countries signed the Kunming-Montreal Global Biodiversity Framework at COP15, which vows to protect 30% of the planet’s oceans and lands by 2030 under the tagline 30x30, but so far, only 17.5% of land and 8.4% of marine areas are protected.

Progress threatened by UN climate secretariat funding gap: The UN Framework Convention on Climate Change (UNFCCC) secretariat is experiencing a EUR 57 mn funding gap, almost half of the annual funding needed to run annual climate negotiations, a Reuters analysis found. UNFCCC member countries had signed off on a 2024-2025 budget of EUR 240 mn — half of which is to be allocated this year — but several countries, including major contributors the US and China, have not yet fully delivered on their contributions.

International climate dialogue is at risk: The UNFCCC secretariat facilitates international climate mitigation efforts between almost 200 countries and needs the money to hold summits for negotiations to take place. Earlier this year, the secretariat had to cut its conference hours at the UNFCCC headquarters in Bonn and cancel multiple regional climate events that had previously raised USD bns in investment pledges. Employment contracts and funds supporting the attendance of poorer countries’ representatives in climate talks were also impacted.

WATCH THIS SPACE-

#1- Acwa Power advances solar projects in Egypt + South Africa: Saudi’s Acwa Power has achieved full production capacity of its 200 MW Kom Ombo solar plant in Egypt, according to a statement. Meanwhile, the company's Redstone concentrating solar power plant in South Africa has reached 50 MW and will soon achieve its full 100 MW capacity. The plants will power around 200k households each.

This has been in the works: Egypt has planned to add 700 MW of solar energy to the national grid this year, including from Acwa’s 200 MW Kom Ombo solar plant. Acwa also started construction of its ZAR 11.6 bn (c. USD 622.7 mn) 100 MW concentrated solar power Redstone plant in South Africa in 2021.

#2- Egypt is developing a plan for CBAM: Egypt’s government is set to announce a plan to prepare Egyptian manufacturers for the EU’s Carbon Border Adjustment Mechanism (CBAM), according to a statement. The plan will identify key industries for carbon reduction and energy efficiency and offer financial support to green export-oriented companies and factories. It will also issue a set of incentives to encourage the use of renewable energy and establish a solar energy services platform.

Egypt has been working on this: Egypt’s government has been mulling a new tax on carbon emissions from petroleum products in response to the EU’s Carbon Border Adjustment Mechanism (CBAM), set to fully go into effect in 2026. The carbon border tax could considerably impact Egypt’s exports — particularly from its notoriously energy-intensive steel, aluminum, cement, and fertilizer industries.

#3- Alba appoints advisers for Ma'aden merger: Aluminium Bahrain (Alba) has appointed several advisors to oversee due diligence and guide the potential merger process with Saudi Arabian Mining Company (Ma'aden), according to a disclosure (pdf) to the Bahrain Bourse last week. The advisors include Moelis & Company as financial advisor, Hatch as technical advisor, McKinsey & Company as commercial advisor, PwC Bahrain for financial and tax advisory, and Freshfields Bruckhaus Deringer as counsel.

About the merger: Ma’aden and Alba signed a non-binding heads of terms agreement to explore the possibility of a merger last month. The agreement would involve Ma’aden swapping its full share capital of subsidiaries Ma’aden Aluminum and Ma’aden Bauxite and Alumina for new shares in Alba.

ICYMI- Alba is working on sustainable aluminum production: Alba and Japanese aluminum product manufacturer Daiki Aluminium partnered in August to establish a recycling facility in Bahrain to recover valuable aluminum metal and significantly reduce waste.

#4- Abu Dhabi copper trading hub soon? International Holding Company’s mining investment arm, International Resources Holding (IRH), plans to establish a copper trading hub in Abu Dhabi, Reuters reports, citing an IRH statement. IRH aims to trade over 500k tons of green copper annually starting in 2025, Reuters quotes IRH as saying.

ALSO- Lithium shipments are already on their way to the Emirati company: IRH struck an agreement with lithium producer Sigma Lithium to ship 22k tons of lithium concentrates to the Abu Dhabi-based firm, according to a press release. The company has already exported 9k tons of the lithium, with the remaining amount set for export sometime this quarter, according to the statement. The exact value of the transaction was not disclosed, but the company said the shipment was initially set at a floating price equivalent to 8.25% of battery-grade lithium carbonate quoted at the Guangzhou Futures Exchange.

REMEMBER- IRH is doubling down on securing critical minerals, with plans to invest USD 1 bn in mining acquisitions in 2024. It acquired a 51% stake in Zambia’s Mopani Copper Mines for USD 1.1 bn in April and inked joint venture agreements for iron mining in Angola, with advanced discussions held to mine nickel in Burundi, along with metals in Tanzania and Kenya. It is also eyeing a majority stake in Zambia’s Lubambe Copper Mine.

#5- Demand for controversial carbon offset credits may be waning, a Bloomberg analysis of 320k offset transactions in 2023 shows. Offsets linked to renewable energy — which experts increasingly write off as “junk” credits due to the renewables’ declining costs — saw the sharpest decline at 29%. Companies that initially led the mantra of carbon offsets like Delta Airlines, Google, and EasyJet, are now shifting focus to the more expensive strategy of decarbonization to bring down their emissions.

But not everyone is following the trend: Some other big companies have continued offset purchases and kept the market afloat, including Volkswagen, Telstra, Shell, Engie, and TotalEnergies. New carbon registries, such as the Doha-based Global Carbon Council, are also embracing renewables offsets, and some negotiators at COP29 are expected to double down on them.

The core issue: One market expert points to the lack of “accountability for false statements in the voluntary carbon markets,” saying that addressing this issue and enforcing legal consequences will be critical.

REMEMBER- Carbon offsets are often under scrutiny: Carbon credits certifier Verra came under fire last year after claims that the company approved mns in “worthless” credits. Some 236 mn carbon credits (32% of the market) failed to meet the Integrity Council for the Voluntary Carbon Markets (ICVCM) requirements to qualify for a Core Carbon Principles label in August. The Science-Based Targets initiative — the world’s leading arbitrator on corporate net-zero targets — also called carbon credits largely “ineffective.” In July, over 80 climate nonprofits came together to warn against the use of carbon credits as a tool to offset emissions.

#6- US + EU hydrogen markets slump amid low demand, regulatory hurdles: Share prices for US and European clean hydrogen companies have plummeted as more projects stall due to lower-than-expected demand and regulatory gray areas, the Financial Times reported. Hydrogen firms like Plug Power, Ballard Power Systems, and Green Hydrogen Systems have seen shares drop over 50% this year, marking historic lows. The drops saw post-2020 stock gains being wiped out, with the S&P Kensho Global Hydrogen Economy Index reverting to mid-2020 levels.

What’s behind this? Challenges for hydrogen companies include unclear US tax credit rules and rigid EU regulations, FT writes. Despite an increased focus on clean energy, only a small percentage of planned hydrogen projects in North America and Europe have reached a final investment decision, leading companies like Plug Power and Nel to halt projects.

IN OTHER RELATED NEWS- Hydrogen market woes reach Spain over energy tax plans: Mubadala-owned Spanish oil refiner Cepsa announced that it would delay EUR 3 bn in planned green hydrogen investments in southern Spain if the country’s temporary windfall tax on energy firms is made permanent, Reuters reported Friday. The company also said it is considering shifting its focus toward international projects if the tax becomes permanent, Bloomberg reported Friday. This follows rival Repsol’s decision to halt its green hydrogen investments in Spain due to regulatory challenges last week.

And Spain’s renewables sector is facing setbacks: Spain’s renewable energy sector faces potential investment shortfalls as renewable power supply outpaces electricity demand, Reuters reported Friday, citing renewables lobby APPA President Santiago Gomez. Adding renewable capacity without a corresponding demand increase has led to low, even negative, wholesale power prices, which could undermine the profitability of future renewable projects. APPA estimates around 10% of hours could see zero or negative prices by late 2024. This trend threatens Spain's climate and energy goals, which rely on an accelerated renewable rollout.

ICYMI- Germany too: The country’s hydrogen plans took two major hits earlier in October, with the Danish state-owned Energinet postponing the start date for its hydrogen pipeline connecting to Germany from 2028 to 2031. This news came around a week after Norway's Equinor scrapped plans for a pipeline to Germany and Denmark.

MEANWHILE- Iberdrola’s renewables pivot from hydrogen may be paying off: Iberdrola reported (pdf) a 50% y-o-y bottom line increase in 9M 2024, surpassing its targets for this year and 2025. The positive outlook comes in a year in which the company has shifted its focus from green hydrogen to grid infrastructure and offshore wind in the UK and the US. Iberdrola is also exploring new ventures like data centers to drive future growth. The company recently slashed its 2030 hydrogen production target by nearly two-thirds in March. (Reuters)

THE SCORECARD-

Global wind power set to break records in 2024: Global wind-powered electricity generation is poised to set a new record in 2024 as winter increases wind speeds, Reuters reported on Thursday, citing energy think tank Ember. Wind power could surpass 10% of global monthly electricity output for the first time in November and December. China, the US, and Germany, which together account for 64% of global wind capacity, are key contributors. Despite recent slowdowns in capacity growth, experts predict a rebound in installations, boosting wind power's share in the global energy market.

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CIRCLE YOUR CALENDAR-

Egypt will host the World Urban Forum from Monday, 4 November to Friday, 8 November, in Cairo. The forum, established by the UN and one of its largest non-legislative events, will center around the effect of rapid urbanization on communities, economies, climate change, and policies and will bring together government representatives, academics, business people, urban planners, and more.

South Africa will host the Critical Mineral Africa Summit from Wednesday, 6 November to Thursday, 7 November, in Cape Town. The summit aims to attract critical minerals investment to the continent and will be held alongside African Energy Week. The summit will be held in partnership with the Southern African-German Chamber of Commerce Partners representing Germany’s increasing investments in southern Africa.

Azerbaijan will host the United Nations Climate Change Conference or Conference of theParties (COP29) from Monday, 11 November to Friday, 22 November, in Baku. The annual conference brings together governments, world leaders, and other stakeholders to advance the Paris Agreement and negotiate ways to fight climate change. The United Nations Framework Convention on Climate Change’s objective is to “stabilize greenhouse gas concentrations in the atmosphere at a level that would prevent dangerous anthropogenic interference with the climate system”.

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