Good morning, folks. It’s a busy morning with lots to unpack over the weekend in nearly each subsector of the industry, but first, an update on some wild weather hitting the US coastline today…

THE BIG CLIMATE STORY OUTSIDE THE REGION- Record-breaking Hurricane Beryl is en route to hit Texas: After weakening to a tropical storm, Hurricane Beryl is intensifying back to a Category 1 hurricane, possibly reaching a Category 2 — as it approaches southern Texas through the Gulf of Mexico, and is expected to make landfall between Galveston and Corpus Christi today. The hurricane is bringing extreme winds of up to 58 mph, flooding up to 15 inches, and life-threatening storm surges with it. Beryl is also expected to produce several tornadoes as it hits land.

Damage has already been done: The hurricane already fuelled destruction across the south-eastern Caribbean — escalating to a Category 5 hurricane with winds exceeding 155 miles per hour — wreaking havoc across Grenada, St. Vincent, Jamaica, the Grenadines, Mexico, and Venezuela last week. The Alliance of Small Island States (AOSIS) — a coalition of about 40 low-lying island nations across the Caribbean, Pacific, Africa, Indian Ocean, and South China Sea — said the hurricane underscores their need for financing to tackle the impact of climate change.

Behind the storm: Coupled with the shift towards La Niña, this season’s increase in storm activity has been partially attributed to unprecedented ocean temperatures induced by climate change, the US National Oceanic and Atmospheric Administration (NOAA) warned last week. There is an 85% higher chance of an above-average hurricane season, with 17 to 25 named storms expected and four to seven expected to become major hurricanes.

The story made headlines in the international press: Reuters | | AP | The New York Times | CNN | The Washington Post | The Financial Times | CNBC | BBC | The Independent | The Guardian

WATCH THIS SPACE-

#1- The Philippines is seeking investments from Qatar in several sectors including renewable energy, the country’s Department of Trade and Industry’s secretary Alfredo Pascual told Gulf Times on Thursday. Other possible areas of investment include energy efficiency technologies, infrastructure, and AI.

The Southeast Asian country is going big on renewables: The country awarded around 1k renewable energy contracts as of 2023, 216 of which are completed, bringing the total installed capacity to 5.5 GW, Pascual added. It also has a potential capacity of around 80 GW of renewable energy, with 786 projects in the predevelopment and development stages.

#2- More details on EBRD’s loan for Acwa Power’s solar project in Uzbekistan: The European Bank for Reconstruction and Development (EBRD) is facilitating the lending of USD 229.4 mn out of the total USD 373.2 mn in financing to Saudi Arabia’s Acwa Power for its solar project in Uzbekistan, according to a statement published last week. EBRD is extending a USD 169.8 mn loan while another loan of USD 40.5 mn will be organized through commercial co-financiers. The lender will also mobilise concessional finance of up to USD 5.4 mn from Finland under its High Impact Partnership on Climate Action (HIPCA).

REMEMBER- Acwa Power just secured financing for the project last week: The SAR 1.4 bn (c. USD 373.2 mn) to be allocated to Acwa Power’s solar park was announced last Monday in a Tadawul disclosure. Other financiers contributing to the loan include Proparco, DEG, Islamic Development Bank, Standard Chartered Bank, and KfW-IPEX Bank.

About the project: Located in the Uzbek capital Tashkent, the Riverside Power Station is a SAR 2 bn greenfield independent power project that comprises a 200 MW solar PV and 500 MWh battery energy storage system. The 25-year contract for the project is under the build, own operate and transfer model.

#3- UAE's Alterra climate fund prepares next investment phase: The UAE’s USD 30 bn Abu Dhabi-based climate fund Alterra is gearing up for its next round of investments, CEO Majid Al Suwaidi told Bloomberg in an interview last week. Having secured USD 6.5 bn deals with BlackRock, TPG, and Brookfield Asset Management last year, Alterra is now planning further allocations. However, Al Suwaidi did not name any participants nor did he specify a date for future announcements.

About the fund: The USD 30 bn vehicle was launched last year to increase climate funding for the Global South. Alterra’s initial commitment — along with BlackRock, Brookfield, and TPG — was USD 6.5 bn to climate-dedicated funds. Alterra recently said it will direct an extra USD 200 bn to investments over the next six years, after saying it aims to mobilize USD 250 bn in green investments by 2030. The UAE-backed Catalytic Transition Fund was anchored by a USD 1 bn commitment from Alterra fund set up during COP28.

How it works: “The investment vehicle operates as a fund of funds, allocating cash to money managers whose investments support the green-energy transition,” Bloomberg explained, adding that “Alterra is designed to make it more appealing for private finance to add its own capital through the use of de-risking structures.” This would encourage investors to enter markets where perceived risk would have otherwise led them to require a level of returns that is beyond what borrowers can afford.

The fund already agreed to retain profits last year to add returns to investors: Alterra has agreed to retain a smaller portion of some profits generated by the venture in December as a method to attract more private finance, Bloomberg wrote. “The UAE’s decision to impose a ceiling on its own profits means outside investors stand to receive as much as 5% of additional returns,” a person familiar with the terms of the deal told Bloomberg at the time.

#4- China and Europe deliberate incoming EV tariffs: After several rounds of technical discussions between China and the EU, the European Commission officially imposed tariffs of 17.4% to 37.6% on Chinese electric vehicle imports on Friday, Reuters reported on Thursday. The individual duties applied were 17.4% on BYD, 19.9% on Geely, and 37.6% on SAIC, according to a press release. Tariffs are on provisional status for the next four months before becoming “definite” as the talks between both sides continue and the EU anti-subsidy investigation continues. EU members will hold an advisory vote in the coming weeks on the case.

REMEMBER- The EU announced the tariffs last month to protect its local automotive industry against China’s cheaper product and have been applied as planned with minimal adjustments. The new rules indicated that companies such as Tesla and BMW which produce vehicles in China, but were “cooperative” during the investigation, will be hit with a 20.8% tariff instead of 37.6% for “non-cooperating companies.” Despite the forewarning, China did not respond to requests for talks for months and only agreed to begin negotiations nine days ago, according to the EU’s ambassador to China Jorge Toledo, Bloomberg reported.

Not everyone’s in agreement: The continent’s biggest carmaker Volkswagen expects the negative effects of the move to outweigh the benefits. Other industry executives had warned against the decision in fear of Chinese counter-tariffs and other forms of retaliation that could impact EU product competitiveness in China. While Germany stands against the levies, France firmly supports the decision, Reuters reported in a separate article.

What’s next? Should the tariffs become definite, Chinese companies will find other ways to enter Western markets, VP of American consulting firm Frost & Sullivan Vivek Vaidya told CNBC (watch runtime: 2:53) he expects. One way they can do this is by setting up European companies that use Chinese technology to re-enter markets like the EU, US, and Canada that are considering or have already imposed duties on Chinese EVs. Another possible tariff evasion strategy would be setting up a plant in Thailand — which has a free trade agreement with Europe.

DANGER ZONE-

Climate tech startups enter “valley of death” as funding dwindles: Funding for climate tech startups has dropped 20% in 1H 2024 compared to the same period last year, Bloomberg reported on Friday, citing a report by intelligence company Sightline Climate. The climate tech industry received USD 11.3 in funding but only USD 2.8 bn went towards Series B (growth-stage) startups compared to the USD 4.2 bn they received in 1H 2023. The average time a company takes to reach Series B is now more than double what it was three years ago, forcing climate tech firms to be “stuck in a finance no-man’s land,” and trying to escape “a valley of death,” UK-based Sightline Climate co-founder and CEO Kim Zou told the news outlet.

Why is this happening? Green investors are drawn to more stable assets like solar and wind energy, or battery storage, compared to nascent technologies like advanced nuclear, geothermal, carbon capture, and hydrogen which are less bankable, Bloomberg added. For startups to receive funding, they often need to have at least USD 10 mn in revenue to prove commercial potential — a goal that is hard to achieve by most startups.

The solution: Climate tech startups need to secure buyers to prove their commercial worth to investors, Zou added. These startups should follow the lead of others like geothermal firm Fervo Energy which raised USD 244 mn by focusing on providing clean energy to data centers that are in need as AI booms, or silicon anode battery firm Sila which raised USD 375 mn by having a mature customer base.

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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 for a comprehensive listing of upcoming news events, national holidays and news triggers.