TODAY: Renewable energy capacities saw record additions in 2023

Good morning, folks. It’s a very quiet morning on the news front, so we’re delving into a closer look at MENA’s renewables capacity building performance in 2023 and taking a deeper dive into a new report on pathways to help nature restore itself. First…

THE BIG CLIMATE STORY OUTSIDE THE REGION- Shell to appeal order to shelf emissions: Oil giantShell is set to appeal a 2021 court order to slash 45% of its emissions — equivalent to 740 mn tons a year — by 2030 compared to its 2019 levels. The Dutch branch of environmental organization Friends of the Earth — called Milieudefensie — will face Shell in court over four days from April 8 as the oil giant tries to reverse the 2021 ruling in The Hague.Shell decided to water down its emissions targets aiming to reduce its scope 3 emissions — indirect emissions from the use of its products up and down the value chain representing 70% of a company’s carbon footprint — by 15-20% by the end of the decade, down from the previous 20%. The story grabbed ink in Reuters, Bloomberg, and The Financial Times.

WATCH THIS SPACE-

#1- UAE energy storage firm Enercap eyes IPO: Dubai-based energy storage company Enercap could IPO by the end of the year early 2025, Al Bayan reports, citing a statement by company chairman Wassim Qureshi. The company could decide to debut its shares on the Dubai Financial Market, the Abu Dhabi Exchange, or the Nasdaq Dubai. The move comes as Enercap expands operations with a new AED 220 mn manufacturing facility in Abu Dhabi, following its first plant in Dubai Industrial City.

About Enercap: To meet the demands of renewable based systems, Enercap has invented an “electrostatic, encapsulated-capacitor based energy storage, as an alternative to chemical storage,” according to its website. Enercap provides electrostatic storage across all applications from AA rechargeable cells to MWh grid storage and long-range, fast-charging EV storage, the website adds.

#2- Egypt’s float is increasing its renewable energy bill: After last month’s EGP devaluation,the Egyptian Ministry of Electricity’s bill for wind and solar energy purchased from USD-priced power purchase agreements (PPAs) increased by EGP 700 mn to reach a total of EGP 2 bn monthly, Asharq Business reports. The Egyptian Electricity Transmission Company (EETC) purchases the renewables in hard currency which are then transferred to the national grid to be distributed and sold by the government in EGP. The wind energy purchased alone costs the ministry USD 10 mn monthly, which is now equivalent to EGP 480 mn after the float, compared to the previous EGP 310 mn.

Which PPAs are the culprit? State-owned EETC is committed to purchasing 100% of energy generated from two wind power plants with the capacity of 250 MW each. One is owned by pan-African renewables firm Lekela Power — which was acquired by Infinity Power last year — and began operating in 1Q 2022, while the other is owned by a consortium made up of Egypt’s Orascom Construction, Japan’s Toyota, and France’s Engie which began operating in 4Q 2019, Asharq Business reports. EETC also purchases energy from the wind stations owned by the New and Renewable Energy Authority in Jebel El-Zeit and Zaafarana.

Small Egyptian solar energy firms are also feeling pain: Egyptian solar energy firm Africa Power is aiming to add 25 MW to its portfolio by the end of the year, a 50% drop from the 50 MW it built last year, the company’s managing director Ahmad Hamdy told Al Mal. The company attributed the decline to exchange rate instability and a 10% increase in solar panel prices since the beginning of the year. Africa Power has inaugurated a new branch in Saudi Arabia, capitalizing on the region’s faster-growing demand for solar energy.

Renewables and green hydrogen got a mention from El Sisi yesterday: Egyptian President Abdel Fattah El Sisi highlighted plans to increase activity in the Suez Canal and make Egypt a regional hub for “transportation and transit trade, new and renewable energy, and green hydrogen and its derivatives” during a seven-point speech after being sworn in for his third term. You can read the full speech here.

#3- EU Innovation Fund investments not working out as planned: The European Union’s USD 43 bn Innovation Fund — intended as a rebuttal to the US Inflation Reduction Act (IRA) — is not yielding the intended results for the projects it has backed, Bloomberg reports. Companies such as Germany’s Uniper and France’s Engie have backed out of their green hydrogen production plans due to the rising costs of electricity, labor, and financing which will be too expensive to pass on to customers. Attractive US subsidies have also been cited as a reason that companies are choosing not to launch projects in the EU, despite the Innovation Fund’s EUR 6 bn in investments since 2020. “If its early stumbles turn out to be widespread trends, that will be a worrying sign for the bloc’s ability to hit its 2040 climate targets,” Bloomberg writes.

What is the EU Innovation Fund? The fund — a EUR 40 bn investment vehicle at the core of Europe’s plans to get to net-zero emissions by 2050 — is financed through Europe’s cap-and-trade system where money is collected from permits sold to polluters. The fund returns the money to polluters as grants or subsidies for new technologies. Most of the funding has gone towards energy-intensive industries — including hydrogen, ammonia, electrification, and recycling — while the rest was granted to carbon capture and storage, energy storage, and renewable energy. The Innovation Fund’s inability to support some projects prompted the EU to launch a new fund designed specifically for green hydrogen called the European Hydrogen Bank.

Across the Atlantic, the IRA is faring much better: The US has doubled the pace of its carbon emission cuts since the IRA green subsidy program was launched in 2022, Reuters reports, citing a Clean Investment Monitor report (pdf). The IRA helped shore up USD 239 bn of investments towards clean energy, EVs, and carbon management last year — including from Asian and European companies — marking a 38% increase y-o-y. Experts anticipate that US climate policies under IRA could push green investments beyond the initial estimate of USD 400 bn, and Goldman Sachs’ projections indicate potential spending of up to USD 1.2 tn by the year 2031. This surge in funding has resulted in over 80 new solar, wind, and energy storage projects. The success of the IRA has prompted Europe to develop its own Green Industrial Plan, Reuters adds.

#4- Oil demand for mobility to peak by 2032: Demand for road oil is set to reach a peak of 50 mn barrels per day by 2032, Reuters reports citing estimates by Goldman Sachs. EV sales are estimated to make up more than 50% of car sales by 2040 causing a decline in oil use per vehicle. The peak is expected to be followed by a drop to 4% above 2023 levels by 2040. The rise in the global vehicle count, which is predicted to surge by 60% by 2040, is expected to nearly balance out the decrease in oil consumption per vehicle.

But emerging markets are behind in the transition: The peak for oil demand will vary across different countries, the report adds. Emerging markets excluding China likely to see growth through 2040, offsetting the declines in OECD nations and China, where demand is slated to peak in 2025. Petrochemical and jet products are also set to see significant growth despite the oil demand reaching a peak.

DANGER ZONE-

A solar panel waste crisis looming: Solar panel waste in Australia will reach a “crisis point” in the next 2-3 years (instead of the initially predicted 2030 tipping point) if production continues to grow at the current rate, according to an Australian white paper (pdf) picked up by The Guardian. The chances of the panels ending up in landfills are high given that recycling solar panels is expensive, there is no framework to ensure that recycled panels meet safety standards, and it is difficult to extract valuable materials from the panels, says the University of New South Wales Sydney, which added that “we will run out of the world’s reserves of silver in just two decades” if the production of solar panels expands by 5-10x as currently predicted.

It’s also a global problem: As solar panels become more efficient, users will opt to replace their own panels earlier, contributing to a higher rate of replacements that ultimately leads to more waste, the Harvard Business Review reported. There is currently no recycling infrastructure due to a lack of financial motivation with one panel costing USD 20-30 to recycle compared to USD 1-2 to send it to a landfill. Solar panels are difficult to recycle given the specialized labor needed to remove necessary materials such as silver. If producers are not incentivized to recycle, the industry could lose competitiveness, the report continues.

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***CIRCLE YOUR CALENDAR-

The UAE will host the World Future Energy Summit from Tuesday, 16 April to Thursday, 18 April in Abu Dhabi. The summit will address solutions for development in the transformation of future energy systems. The summit will also feature discussions on recycling, waste-to-energy, and air-to-water trends and progressions.

The UAE will host the Connecting Green Hydrogen MENA event from Tuesday, 23 April to Thursday, 25 April in Dubai. The event will explore green hydrogen partnerships, policies, and practices in the region, in parallel to a showcasing of the latest in the clean fuel’s technology.

Oman will host the Oman Sustainability Week from Sunday, 28 April to Thursday, 2 May in Muscat. The event will focus on exploring investment opportunities and implementing best practices in sustainability within the energy, water, and environmental sectors.

The UAE will host The Electric Vehicle Innovation Summit from Monday, 20 May to Wednesday, 22 May in Abu Dhabi. The event will see industry leaders come together to discuss sustainable mobility and tapping into groundbreaking advancements in electric vehicles while engaging with key decision-makers.

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