Good morning, nice people. It’s a fairly busy start to the week with updates to unpack from several subsectors of the regional climate industry. First, let’s check in on what’s afoot with the China-US-EU trade debacle…

THE BIG CLIMATE STORY OUTSIDE THE REGION- Is the G7 angling for a trade war with China? Finance ministers meeting in Italy yesterday warned that they are upset with the role China is playing in global business — and could move to take action. The move comes as both the US and EU look to apply more assertive policies regarding their trade with China, with Le Marire stressing that the group definitely seeks to “avoid any kind of trade war.”

In their words: “While reaffirming our interest in a balanced and reciprocal collaboration, we express concerns about China’s comprehensive use of non-market policies and practices that undermines our workers, industries, and economic resilience. We will continue to monitor the potential negative impacts of overcapacity and will consider taking steps to ensure a level playing field,” a joint statement read.

The story grabbed ink in the int’l press over the weekend: Reuters | AP | Bloomberg | The Financial Times | The New York Times | The Washington Post | Le Monde

ALSO- It’s a bad news morning for nervous flyers: The press is picking up on the idea that significant in-flight turbulence is becoming more common thanks to global warming after a dozen people were injured yesterday on a Qatar Airways flight that ran into turbulence over Turkey. The incident came just days after dozens were hurt in a similar Singapore Airlines incident. The story is on all the front pages this morning.

WATCH THIS SPACE-

#1- Algeria earmarks USD mns for energy startups: The Algerian Startups Fund will launch a new investment arm worth DZD 1 bn (USD 7.5 mn) for energy and mines startups, General Director Oqba Hachani told Asharq Business. The Energy Future Fund will be financed by national energy and mining companies, some of whom the fund is currently in talks with. The startups fund was initially launched in 2020 by six public banks.

#2- Aramco is reportedly eyeing a minority stake in Spanish oil company Repsol’s renewables arm, Reuters reported on Friday, citing sources with knowledge of the matter. Saudi Aramco is reportedly interested in the Spanish company’s renewable assets in the US.The potential sale aims to finance Repsol’s diversification into renewables. No details were provided on the timeline or size of the potential transaction. The news was first reported by Spanish news outlet Expansion.

REMEMBER- Oil giant Aramco is set to develop two SAF demonstration projects in Neom by 2025, one of which will be developed in partnership with Repsol.

#3- Egypt earmarks more land for green projects: Egypt's New and Renewable EnergyAuthority (NREA) started the process of allocating around 6 mn sqm of land for 7 renewable energy companies for solar and wind projects, Asharq Business reported on Thursday, citing a unnamed government official with knowledge of the matter. The projects will have a combined capacity of 27 GW, making up around 45% of Egypt's total current capacity, and with an investment ticket of USD 40 bn over the next ten years.

Egypt is hitting the gas pedal on its renewables plans: Egypt allocated 3 sqm of land near Gargoub to the Electricity and Renewable Energy Ministry for a green hydrogen and ammonia plant last month, along with a plot of land in Abu Rawash for a new waste-to-energy plant, nearly 10k square km in the New Valley governorate for a renewables project, and 46.7 square km next to the Benban solar energy site. It also approved rules regulating bilateral agreements between private sector players in the energy sector in efforts to increase private sector participation, investment, and competition in the renewables sector.

#4- PIF-backed EV maker Lucid is set to reduce its workforce by 6%, cutting 400 jobs before the end of 3Q as it looks to cut costs amid a slowdown in electric car sales, the company said in a disclosure on Thursday. The plan is expected to set the company back some USD 21-25 mn in the current quarter. Lucid reported a net loss of USD 685 mn in 1Q 2024.

REMEMBER-Lucid plans to ramp up its capex spending to about USD 1.5 bn as it launches production of the Gravity, invests in its Arizona facility, and builds out its plant in Saudi. The PIF committed USD 1 bn to Lucid in a follow-on investment back in March.

IN OTHER EV NEWS- Saudi is reportedly in talks with California-based electric flying car manufacturer Archer Aviation for potential partnerships in Riyadh and Jeddah, along with some of the mega projects across the Kingdom, Reuters reports, citing remarks by Archer CCO Nikhil Goel. The newswire didn’t name the Saudi company involved in the talks.

It’s the second mention of flying cars this month: US-based electric aircraft maker JobyAviation plans to expand into the local market after it signed a MoU with Aramco aviation subsidiary Mukamalah. Mukamalah, which operates the world’s largest fleet of corporate aircraft, plans to introduce Joby’s eVTOL to the Saudi market. "Since we made our first several announcements in the UAE that has piqued interest" across the region.

#5- UAE’s Ewec opens registration for 2Q 2024 CEC auction: Emirates Water and Electricity Company (Ewec) has begun the registration period for its 1Q 2024 clean energy certificates (CEC) auction in Abu Dhabi, according to a statement published on Thursday. The auction — which aims to help Abu Dhabi businesses and organizations lower their Scope 2 emissions — will come to a close on Thursday 14 June.

This is not the first time Ewec issues the certificates: The company had garnered the largest number of auction participants when it kicked off registration for its 4Q 2023 last November. It also held the auction for 1Q 2024 certificates in March, and in 4Q 2022 where it closed with over 9 mn units sold. Ewec made its biggest single sale of CECs to the UAE’s digital infrastructure developer Two Zero last year, selling 7k GWh of clean energy.

REFRESHER- CECs prove renewable energy production: In line with the International REC Standard (I-REC), CECs are tradable clean energy tracking digital certificates, each representing 1 MWh of clean energy delivered to the electricity grid from a renewable energy source, according to Ewec’swebsite. Unlike carbon credits that reduce greenhouse gas emissions, RECs offset non-renewable electricity use. In Abu Dhabi, CECs serve as the sole mechanism ensuring the utilization of clean energy.

#6- German aircraft maker Lilium is seeking financial support from France and Germany to aid in the certification and commercialization of its first eVTOL model, CEO Klaus Roewe told Bloomberg on Thursday. The company expects up to EUR 100 mn from Germany and as much as EUR 250 mn from France based on manufacturing investments committed.

Lilium is planning to sell its vehicles in our region: KSA’s national flag carrier Saudi agreed to purchase 100 electric jets from Lilium back in October 2022.

COP WATCH-

COP29 is at risk of being “co-opted” by the fossil fuel industry again, 26 US Democrats wrote in a letter to White House officials, The Financial Times reported on Saturday. The signatories did not ask for the removal of former oil and gas exec Mukhtar Babayev as president, but pushed for updated conflict of interest guidelines. COP28 faced similar controversy with over 100 US and EU officials calling for the removal of Sultan al-Jaber— head of the UAE’s oil company Adnoc — as president-designate. The letter also raised concerns over human rights issues after climate protests were shut down in the country last year and the country’s military invaded Armenia’s Nagorno-Karabakh region.

Small island nations to develop 10 year climate resilience strategy ahead of COP29: The Small Island Developing States (SIDS) — made up of 39 states and 18 associate members — are setting up a joint process to push for more debt relief, investment, and legal support for climate projects, Reuters reported on Friday, citing a draft document it has seen. The initiative — dubbed the Global SIDS Debt Sustainability Support Service — is expected to be launched next week during the states’ fourth decennial meeting in Antigua and Barbuda.

What we know so far: The Global SIDS Debt Sustainability Support Service will be a four step plan that will address debt relief — including sharing legal costs, and swapping or restructuring issuance insurance against future damage — diversifying financial income through capital markets such as with environmental bonds, and providing legal and commercial advice to the member states, Reuters explains. The initiative is being developed in collaboration with the International Institute for Environment and Development and representatives from SIDS members with support from a strategic advisory group composed of the World Bank, JP Morgan, Willis Towers Watson, and the Commonwealth Secretariat.

Why is this important? SIDS are especially vulnerable to climate change, making the predicted cost of adaptation around USD 10 bn, almost four times more than what is needed to help all developing countries combined adapt, the news outlet wrote, citing a report by the UN Development Program.

Funding for emerging economies will be a main talking point at COP, IEA says: Talks of making clean energy investments in poorer countries are ongoing and necessary after remaining “flat” over the past decade, International Energy Agency chief Faith Birol told Bloomberg last week, adding that they remained at a stagnant 15%. Birol also calls for COP29 to bring more transparency to the monitoring of pledges made to reduce methane emissions — which the IEA is working on with the UNFCCC — more renewable energy production, and more investments into energy efficiency. Similar to COP28, funding is expected to be a main point of contention due to disagreements over who should receive it, who should contribute, and with how much.

MARKET WATCH-

Copper prices are expected to jump to USD 40k a ton in the next few years — up from the USD 10.2k as of yesterday — on the back of increased demand prompted by the energy transition, French hedge fund manager Pierre Andurand told The Financial Times on Friday. “We are moving towards a doubling of demand growth for copper due to the electrification of the world, including electric vehicles, solar panels, wind farms, but also military usage and data centers,” he added to FT. Copper has already risen almost 20% this year, reaching a record USD 11k a ton last week. The rising price of copper was amongst the reasons that Andurand’s commodities investment fund was able to recover from a 55% loss last year. This comes after a period where copper prices dropped on the back of declining demand, causing some to divest from the metal.

US, China, Europe to dominate hydrogen supply by 2030: The US, Europe and China are expected to dominate the global supply of low-carbon hydrogen by 2030, driven by strong regulatory support, and ambitious growth targets, Bloomberg reported on Thursday, citing a study by BloombergNEF. These three markets will make up 80% of total global clean hydrogen output, which is projected to increase 30-fold to 16.4 mn tons annually. The US is projected to lead with 37% of production, followed by Europe at 24%, and China at 19%. The prediction comes despite only 4% of proposed global green hydrogen projects reaching financial close in 2023, and some criticisms surfacing about the effectiveness of the green fuel compared to renewables sources.

Demand is also on the rise: Global demand for hydrogen is expected to quadruple to 390 mn tons by 2050, driven by the iron and steel, aviation, and shipping industries, Bloomberg writes. By 2030, around 95 GW of electrolyzers could be operational, nearly ten times the current approved capacity, with most production in the Asia Pacific region expected to come from this method. However, blue hydrogen will dominate supply in larger producers like the US and UK.

Green bond issuances in emerging markets jump in 2023: Emerging markets saw their green bond issuances rise 34% y-o-y to USD 35 bn in 2023, according to a new report (pdf) by the IFC and European asset manager Amundi published last week. Sustainability and Sustainability-Linked (GSSS) bond issuance rose to more than USD 1 tn in 2023, raising its share in international capital markets to 2.5% of global fixed income issuances. The report forecasts a 7.5% y-o-y growth for green bonds and a 7.1% rise for GSSS through 2025.

UAE + Saudi led the regional charge: The majority of green bond issuances from the region came from UAE at USD 8.7 bn and Saudi Arabia at USD 6.7 bn. Sub-Saharan Africa’s issuances also saw a 125% bump from USD 600 mn to USD 1.4 bn in 2023.

DANGER ZONE-

Over half of the world’s Mangrove ecosystems are at risk of collapse by 2050, according to a global analysis by the International Union for Conservation of Nature (IUCN). 50% of assessed mangroves are currently vulnerable, endangered, or critically endangered, the analysis — which is the first-ever global evaluation using the IUCN’s Red List of Ecosystems — revealed. Nearly 20% are at high risk, facing severe threats from deforestation, development, pollution, and the impacts of climate change, including rising sea-levels and severe storms.

The spill-over effects on people and the economy will be major: Over 1.8 bn tons of carbon stored in mangroves — about 17% of current carbon storage — will be released if action is not taken by 2050, costing society USD 336 bn based on the social cost of carbon. Without significant changes, 2.1 mn people will lose their lives from coastal flooding costing USD 36 billion worth of property protection. Other losses include 17 mn fishing effort days per year.

What can be done? There is an urgent need for coordinated conservation efforts to protect and restore these vital ecosystems, which are crucial for coastal protection, carbon storage, and fisheries, according to the assessment. The findings aim to guide global efforts to reverse mangrove loss and safeguard biodiversity in line with the Kunming-Montreal Global Biodiversity Framework.

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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.