Good morning, friends. It’s a fairly dense news morning with updates from PIF-backed Lucid as earnings season picks up and the latest on Abdul Latif Jameel reviving plans to sell off Fotowatio. Let’s get the ball rolling.

THE BIG CLIMATE STORY OUTSIDE THE REGION- No single story is dominating the news, but Indonesia’s nickel ore supply plan to stabilize prices is grabbing some ink. Local smelters have resorted to ore imports from the Philippines due to shortages, and the country aims to balance supply and demand, ensuring steady supply and fair income for both industries and miners. The story got ink in Reuters and Bloomberg.

ALSO GRABBING INK- Germany said it is preparing new measures to boost the domestic wind industry, including improving cybersecurity, increasing independence for critical components, and leveling competition, especially against China. Coverage offered no details about whether these measures would include tariffs, but the government intends to offer volume assurances to wind turbine producers through its state-owned banks, Economy Minister Robert Habeck said.

China was singled out: Germany particularly singled out Chinese manufacturers as threats to the European industry and called on KfW, the EBRD, and the European Investment Bank to look over funds given to Chinese companies that “run counter to national or European industrial policy interests” and “are fundamentally suspected of distorting competition.” The story got ink in Reuters and Bloomberg.

COP WATCH-

EU ministers have agreed to support nuclear energy as part of their mandate for the upcoming COP 29, The Financial Times reported last week. The decision marks a significant shift in attitudes towards nuclear power in Europe and comes as the block aims to accelerate low-emissions technologies, including nuclear power. Countries including Germany, Austria, and Denmark have expressed concerns that focusing on nuclear energy might divert funds from more cost-effective renewable energy sources.

The finances are still murky: EU ministers are negotiating a new target for climate finance, with developing countries calling for up to USD 1.3 tn, the FT adds. The EU — the largest contributor — is cautious about committing more public funds without mechanisms to increase private investment. They also called for donations from countries they deem as financially able to contribute despite UN classification as “developing” nations, such as China, Singapore, and Saudi Arabia.

ALSO- The loss and damage fund could help climate refugees: Campaigners will push to secure funding from the Loss and Damage Fund to address the climate-linked refugee crisis at COP29 next month, United Nations High Commissioner for Refugees Andrew Harper told The National last week.

Action is needed: The pledged amounts for the fund have fallen short of expectations at Cop28 despite the commitments made at high-level meetings. Campaigners highlight the need for urgent action with mns displaced due to extreme weather and other factors and developing countries being forced to divert funds from essential services like healthcare to cope with the crises.

There’s been concern over the Fund’s process: The World Bank’s board approved a plan to serve as the interim host for the Loss and Damage Fund aimed at supporting developing countries affected by climate change in June, but some countries worry about donor influence and possible over-reliance on loans and debt in its approach.

WATCH THIS SPACE-

#1- EGP 10 bn worth of green bonds and sukuk by the end of the fiscal year? Egypt’s government is looking to issue new sukuk and green bonds worth between EGP 5-10 bn in 3Q-4Q of FY 2024-2025, as part of the government’s plans to diversify financing sources to attract investors and savers into the local debt market, Finance Minister Ahmed Kouchouk told Asharq Business (watch, runtime: 1:37) on Friday.

We’ve heard about the government’s plan to diversify its debt instruments: Kouchouk announced in his first presser as finance minister that the state plans to turn to the local debt market through treasury bonds, green bonds, and sukuk. A government source explained to EnterpriseAM last month that the key to reducing the cost of public debt is diversifying debt instruments and lowering interest rates by introducing innovative debt tools that attract more investors to the local market.

IN OTHER EGYPT NEWS- Egypt has revised down its 2040 renewable energy target from 58% to 40%, Reuters reports, citing Petroleum Minister Karim Badawi’s speech at the opening session of the Mediterranean Energy Conference 2024. The target has been tweaked numerous times. It first announced a 42% renewables share by 2035, then moved the timeline up to 2030. The target was then tweaked again last June, aiming for a 58% renewables share by 2040.

The country is setting its sights on natural gas instead: Egypt is aiming to ramp up investment for exploration projects, “particularly for natural gas,” Badawi added. The move comes as the government moves to assure international oil and gas investors whose operations were impacted by Egypt’s foreign currency shortage.

ALSO- Gov’t postpones sale of Zafarana wind farm: Egypt’s government has chosen to postpone the offering of stakes in the 545 MW Zafarana wind farm to foreign investors, Electricity Minister Mahmoud Esmat reportedly told Asharq Business on Saturday. The government has also inked an agreement with investors to establish hybrid wind and solar power stations at the Zafarana wind farm, Esmat said.

Remember: The Zafarana wind farm had been reported to be the subject of ongoing negotiations earlier this month after having been added to the privatization shortlist in 2023.

#2- French private equity firm Ardian eyes hydrogen partnerships with Masdar + PIF: Ardian is exploring teaming up with Abu Dhabi’s Masdar and Saudia’s Public Investment Fund (PIF) for joint investments in green hydrogen, Ardian’s senior managing director, Francois-Aissa Touazi told The National last week. Ardian, which manages USD 169 bn in assets, plans to announce its first joint investment with Masdar next year through its USD 2.2 bn clean energy fund. PIF and Adrian are set to discuss joint investment options in the coming weeks, Touazi said.

AND- The firm is putting together a dedicated hydrogen investment team in Abu Dhabi and has plans to launch a hydrogen tech fund.

PIF has its own big hydrogen plans: The fund reportedly plans to invest at least USD 10 bn in green hydrogen production via a newly formed company named Energy Solutions. News of the firm’s launch is expected as early as this month. Saudi Aramco is said to be a co-investor in the new company, although the size of its contributions is unknown.

#3- European power purchase agreements (PPAs) for green electricity saw a 12.4% y-o-y price drop in 3Q 2024, Reuters reported last week, citing quarterly report data by price tracking platform LevelTen. The decrease is attributed to a decline in inflation and reduced market volatility. The most competitive PPA prices for newly built capacity across 22 European countries dropped to 76.17 euros per MWh from 86.94 euros a year earlier, the report said. Yet, the index covering the whole continent recorded a 1.3% rise due to outlier hikes in Ireland, Hungary, and Italy.

PPAs Market is ripe for buyers: The variety of PPA options — long-term energy supply agreements between corporate consumers and solar and wind project developers — is at an all-time high, making market conditions for buyers more welcoming. Solar capacity installations are increasing due to low costs, and an oversupply-induced price drop is expected by 2025.

Regional companies have a stake in the PPAs: Masdar’s Baltic Eagle wind farm production off the coast of Germany has already been 100% sold via long-term offtake agreements. Masdar also acquired 48 operational solar plants with an aggregated capacity of 2 GW from Spanish power firm Endesa in a partnership that included PPA agreements, allowing Endesa to acquire 100% of the energy generated by its sold PV for 15 years.

#4- EU carbon prices are expected to jump by 2027: Analysts predict nearly a 78% rise in EU carbon permit prices by 2027 due to policy measures that will reduce supply, a Reuters survey showed on Friday. The EU’s Emissions Trading System (ETS) — which requires manufacturers, power companies, and airlines to pay for their carbon emissions — is expected to see prices soar to an average of EUR 111.14 per ton, up from the current EUR 62.5. For the near term, carbon prices are expected to align closely with EU natural gas prices, though this linkage may weaken as the industrial sector takes over the energy sector as the primary driver of emissions.

This comes as no surprise: Analysts raised their price forecasts for European Union carbon permits for 2024 to 2026 last July. EU Allowances (EUAs) were expected to average EUR 76.75 in 2025 and EUR 93.46 in 2026, reflecting a 3.7% and 1.1% increase, respectively, compared to April forecasts. October’s projections for 2025 and 2026 leave these prices almost unchanged.

#5- European carmakers make moves on China-dominated affordable EVs market:

European carmakers, including Citroen, Peugeot, and Renault, launched affordable EV models at the Paris Motor Show in a move to regain market share lost to Chinese brands, CNBC reported on Thursday. With prices starting below EUR 20k, these low-cost models aim to revive EV demand, which has slumped due to the high prices of the available premium models and limited infrastructure. The affordable EVs are expected to drive up sales, potentially increasing EVs share of the car market in Europe from 14% to 24% by next year.

DANGER ZONE-

Water scarcity could reduce global GDP by 2050, shrinking high-income countries’ economies by 8% and up to 15% in poorer nations, according to a new report (pdf) by the Global Commission on the Economics of Water (GCEW). Nearly three bn people and over half of the world’s food production are in regions facing increasing water shortages, including southern Europe, northeastern China, and northwestern India. Government subsidies encouraging water overuse, particularly in agriculture, exacerbate the crisis.

More efficient water management is needed: Urgent reforms in water pricing and policies are necessary to prevent further economic and environmental damage. With water mismanagement driven by subsidies for water-intensive crops like cotton and sugarcane in areas including South Asia and the Middle East, the report recommends redirecting these funds toward water-saving solutions.

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CIRCLE YOUR CALENDAR-

Saudi Arabia will host the Future Investment Initiative Conference from Tuesday, 29 October to 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.

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 the Parties (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.

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