Energy transition toward renewables ‘unstoppable,’ but fossil fuels ‘cannot shut down in a day,’ says IRENA chief Francesco La Camera

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Updated 12 March 2023

Energy transition toward renewables ‘unstoppable,’ but fossil fuels ‘cannot shut down in a day,’ says IRENA chief Francesco La Camera

Energy transition toward renewables ‘unstoppable,’ but fossil fuels ‘cannot shut down in a day,’ says IRENA chief Francesco La Camera
  • International Renewable Energy Agency director-general says COP28 summit in the UAE “will be historic”
  • La Camera has “no doubts about the ambition of Saudi Arabia” becoming a leading green hydrogen exporter

DUBAI: For the world to transition to green energy without disrupting existing supply lines, divestment from fossil fuels must be a gradual process, Francesco La Camera, director-general of the International Renewable Energy Agency, told Arab News.

“We have to understand that the old system, the one that is centralized and based on fossil fuels, cannot shut down in a day,” La Camera told Katie Jensen, host of the Arab News program “Frankly Speaking.”

“There will be a slow decline of oil and gas. And to maintain a smooth decline of oil and gas, we need some investment again in oil and gas. If not, there will be a disruption.”

A steady transition away from fossil fuels toward solar, wind, hydro, geothermal and other renewables would help maintain a stable supply for the industrialized world, while also meeting the energy demands of developing nations, he added.

“Everything should be balanced. We have to understand that we have a demand for energy that is needed for development. And this demand will be increasing, especially in Africa and Southeast Asia.”




Frankly Speaking host Katie jensen, left, interviewing Francesco La Camera, director-general of the International Renewable Energy Agency.

IRENA is an intergovernmental agency for energy transformation, supporting countries in their energy transitions and providing data and analyses on technology, innovation, policy, finance and investment.

La Camera, who has served as the agency’s director-general since April 2019, has helped forge a series of strategic partnerships with UN organizations, including UNDP, UNFCCC and the Green Climate Fund, to implement a more action-oriented approach.

However, the Italian diplomat is realistic in his expectations of the pace of the energy transition, especially in the context of the war in Ukraine, which has led to a spike in world energy prices, pushing several nations to readopt cheaper but dirtier alternatives like coal.

Environmentalists have accused developed nations of hypocrisy following recent moves in Europe and the UK to reopen coal mines, at a time when most countries are phasing out fossil fuels.

“In the very short term, to avoid collapses and disruption in the energy supply, countries are trying to do what is possible,” said La Camera. “In some cases, this has been reactivating coal mines, but they are not investing in new coal mines. At least we are not aware of that.”

However, La Camera believes these are only short-term measures, implemented in response to rising energy costs caused by Western sanctions on Russian oil and gas. The long-term trajectory toward green renewables, he says, is “unstoppable.”

He said: “We have to understand that we are living in the time of the Ukrainian crisis and countries have to respond to the lack of the gas coming from Russia. We have to always distinguish between the very short term and the medium to long term.

“In the short term, countries are trying to do what they can to not deprive their own public of the heating and cooling that is needed … they’re trying to find remedies to the shortage of Russian gas. But their policies in the medium to long term are very clear. We are not going backward.

“The last year has been a record year for investment in renewables. We have broken new records in the new installing capacity of renewables. We now have 81 percent of the new installing capacity of renewables.

“This process is unstoppable. The only question that we have now is not the direction of travel — that is clear and nothing can change it. The question is the speed and the scale of this transformation, because it is not at a pace that can achieve the Paris Agreement goals and the UN Sustainable Development Goals.”

The Paris Agreement is an international climate treaty adopted in 2015, covering climate change mitigation, adaptation and finance. The agreement’s overarching goal is to hold the increase in the global average temperature to well below 2 degrees Celsius above pre-industrial levels and pursue efforts to limit the temperature increase to 1.5 degrees Celsius.

“We are not in line with the Paris Agreement goals,” said La Camera. “We say very clearly that we need, this decade, $57 trillion in investment in the energy transition. We are not there at all. We say that we need to triple our installing capacity of renewables by 2030, and this is not happening.

“Where does this money come from? We have a clear idea on that. There is a lot of liquidity in the market. The question is our point of view that today there are not the right policies in place to activate the demand, for example, for green hydrogen.

“And there is not yet enough focus on the infrastructure needed to sustain the building of the new energy system. And when we talk about the infrastructure, we talk about the physical, the legal and the institutional capacity and professional skill careers.”

Saudi Arabia has pledged to achieve net-zero emissions by 2060. It has undertaken $1 billion in climate change initiatives as part of the Saudi Green Initiative, which seeks to establish a regional carbon capture and storage center, an early storm warning center and cloud seeding programs as part of its efforts to create a greener future.

Crown Prince Mohammed bin Salman said the Kingdom will plant 450 million trees and rehabilitate 8 million hectares of degraded lands by 2030, reducing 200 million tons of carbon emissions with additional initiatives to be announced in the years to come.

Saudi Arabia has also announced its ambition to generate 50 percent of its electricity from renewables by 2030, with the remaining 50 percent coming from natural gas.

It has launched several major renewable energy projects, taking advantage of its natural potential in solar and wind, including the Sakaka solar power plant, the first utility-scale solar power project in Saudi Arabia, and Dumat Al-Jandal, its first utility-scale wind project.

Furthermore, the Kingdom aims to become the world’s leading hydrogen producer and exporter. Saudi Aramco and SABIC, in partnership with the Institute of Energy Economics, Japan, announced in 2020 the world’s first blue ammonia shipment from the Kingdom to Japan.

NEOM, the Kingdom’s smart-city giga-project taking shape on the Red Sea coast, has also announced plans to build one of the world’s largest green hydrogen plants.

“They (Saudi Arabia) have ambitions for green hydrogen,” said La Camera. “They are ready to sign contracts to sell not oil and gas, but to sell green hydrogen. The question is that the demand is still not there. And so, the partners of demand have to be one of the elements to be considered for making things happen.”

So, what can be done to encourage greater demand for hydrogen products to make them a viable alternative energy source?

“First is industrial policies,” said La Camera. “Developed countries and others have industrial policies that may favor a demand for green hydrogen instead of fossil fuels. This is very important. This means the legal environment is critical.

“In the meantime, we need the infrastructure to bring what we are producing in terms of green hydrogen into the market. North Africa, they have five pipelines that can perhaps be adapted to transport, not gas, as such, but hydrogen. We may be able to have more ships for trading ammonia. We can think about electroducts that may let countries exchange energy in an efficient way.

“All these are elements of a comprehensive package that may, hopefully, push countries to go faster. But again, I have no doubts about the ambition of Saudi Arabia. I have no doubt about the ambition of the UAE, and I’ve also seen other countries in the Gulf that are moving quickly with this trend.”

COP28, the 28th session of the Conference of the Parties to the UN Framework Convention on Climate Change, convenes from Nov. 30 to Dec. 12 this year in the UAE — marking only the second time the summit has been held in the Arab world following Egypt’s presidency last year.

La Camera believes participating nations must use this year’s summit to go beyond pledges and promises and instead take concerted action on cutting greenhouse gas emissions and transitioning to renewables.

“We need everyone in the discussion. Oil and gas companies, governments, and countries where gases are relevant from an economic point of view. They must be part of the discussion,” he said.

“The UAE and Saudi Arabia have already shown big ambition in going for renewables. Here is a place where you can produce electricity at lower cost. And we have seen that countries in the Gulf are going for net zero, setting their own hydrogen strategy.

“For the first time, COP in the UAE will certify that we are not on track. This COP has to come up with a way to close the gap between where we are and where we should be. IRENA is trying to work on building this narrative, beyond COP28, offering the presidency something to base their work on, in funding compromise among all the other countries.

“We are quite sure that this COP28 will be historic.”

Given the widespread pessimism in many quarters, La Camera’s optimism about the transition to renewables and the proactive role played by the Gulf Arab oil producers is reassuring.

He is not complacent, however, and says he will continue to push for a faster and more ambitious adoption of clean energy at COP28 and beyond.

“Renewables are playing and will play a central role,” he said. “We are going to a new energy system that will be dominated by renewables and with the complement of hydrogen, mainly green hydrogen, and the sustainable use of biomass.

“There is no way to stop this process. The question is how to sustain this process happening at the speed and scale needed.”

 


Respite for oil market amid rate hike worries

Respite for oil market amid rate hike worries
Updated 01 June 2023

Respite for oil market amid rate hike worries

Respite for oil market amid rate hike worries
  • Oil markets may have been oversold in the last two trading days, says analyst

RIYADH: Oil steadied on Thursday as a potential pause in US interest rate hikes and the passing of a crucial vote on the US debt ceiling bill were offset by a report of rising inventories in the world’s biggest oil consumer.

US Federal Reserve officials on Wednesday suggested interest rates could be kept on hold this month and the US House of Representatives passed a bill suspending the government’s debt ceiling, improving the chance of averting a disastrous default.

Brent crude futures fell 10 cents, or 0.14 percent, to $72.50 a barrel by 1339 GMT while US West Texas Intermediate crude rose 7 cents, or 0.1 percent, to $68.16. Both benchmarks fell on Tuesday and Wednesday.

“Oil markets may have been oversold in the last two trading days,” said CMC Markets analyst Tina Teng. “Sentiment rebounded amid the debt bill’s passage in the House and (the) Fed’s rate hike pause signal.”

HIGHLIGHTS

Market sources citing American Petroleum Institute figures on Wednesday said that US crude inventories rose by about 5.2 million barrels last week.

• Brent crude futures fell 10 cents, or 0.14 percent, to $72.50 a barrel by 1339 GMT while US West Texas Intermediate crude rose 7 cents, or 0.1 percent, to $68.16.

Mixed demand indications from China, the world’s biggest oil importer, have nonetheless weighed on the market, as has industry data showing a rise in US crude inventories.

Market sources citing American Petroleum Institute figures on Wednesday said that US crude inventories rose by about 5.2 million barrels last week.

“The current mood is one of pessimism,” said Tamas Varga of oil broker PVM. “Investors have been pragmatic and risk averse of late.”

Also in focus is the June 4 meeting of the OPEC+ producer group, in which the Organization of the Petroleum Exporting Countries and allies including Russia will discuss whether or not to cut oil production further.

Barclays forecast

British multinational bank Barclays has slashed the average price of its Brent crude forecast for this year from $92 to $87 a barrel. The bank also slashed its price forecast of Brent for 2024 as it cut the average projected price to $87 a barrel from $97. 

Chinese company in Brazil 

China’s CNOOC Ltd. has begun production at the Buzios5 well off the coast of Brazil, the company said in a statement on Thursday. 

The well is the fifth phase of the Buzios oil field off Brazil’s southeast coast. At an average water depth of 1,900 meters to 2,200 meters, the field is the world’s largest deep-water pre-salt oil field, with daily production of 600,000 barrels, the company said. 

CNOOC’s Brazilian subsidiary owns 7.34 percent of the Buzios shared reservoir, which is 88.99 percent owned by Brazilian state-owned oil and gas company Petrobras.  CNOOC paid $1.9 billion to Petrobras last year to secure a 5 percent stake in a production sharing agreement at the field. 


UAE’s in-country value projects driving billions to local firms

UAE’s in-country value projects driving billions to local firms
Updated 02 June 2023

UAE’s in-country value projects driving billions to local firms

UAE’s in-country value projects driving billions to local firms

ABU DHABI: More than $27.23 billion has been redirected to the local economy since the UAE Ministry of Industry and Advanced Technology (MoIAT) and ADNOC launched major in-country value programs to support domestic industries.

Speaking at the Make in the Emirates Forum, Abdulla Al-Shamsi, Assistant Undersecretary of MoIAT, said more than $14.43 billion of investment was redirected to the local economy last year alone, an increase of 25 percent year-on-year.

“The National In-Country Value Program is a nationwide program that speaks one language across many different sectors,” Al-Shamsi said. “It’s one methodology and this is something we’re very proud of because it benefits the private sector and when the private sector sees this it helps them prepare, invest, and spend.”

The forum heard how the National ICV Program is “functionating well and accelerating.”

The forum also heard how industrial zones are playing a critical role in the in the country’s sustainable industrial development and broader economic prospects. Local industrial leaders described how they are utilizing alternative energy resources such as solar and hydrogen to reduce their carbon footprint.

The second edition of the Make it in the Emirates Forum concluded on Thursday with the UAE showcasing its unique value proposition to international investors.

Investors were invited to explore opportunities and competitive advantages, with panel discussions focusing on the National In-Country Value (ICV) Program, the role of industrial zones, competitive financing as a key enabler and local talent in the private sector.

The UAE’s industrial exports reached $47.6 billion in 2022, growing 49 on 2021. The industrial sector's contribution to GDP rose to $49.5 billion in 2022, a 38 percent increase on 2020.

The Make it in the Emirates Forum is organized by the Ministry of Industry and Advanced Technology in partnership the Abu Dhabi Department of Economic Development (ADDED) and ADNOC.

On the first day of the forum, the UAE government announced $2.7 billion in industrial offtake agreements, building on the $29.9 billion of offtake agreements announced at the 2022 edition of the forum.


Saudi fintech firm secures $3.2m in seed funding

Saudi fintech firm secures $3.2m in seed funding
Updated 01 June 2023

Saudi fintech firm secures $3.2m in seed funding

Saudi fintech firm secures $3.2m in seed funding

RIYADH: EdfaPay, a Saudi-based fintech startup that helps companies use their smartphones for payment, has raised $3.2 million in a seed funding round.

The funding round was led by Sanabil 500 MENA, Nufud Wealth International, Atmiid Investment, Basmah Commercial Investment, and a group of local and international angel investors.

EdfaPay aims to utilize the capital to strengthen its operations in the Kingdom and expand to Pakistan and South American countries.

Founded in 2022 by Ghormallah Alghamdi and Nedal Sabbah, it uses NFC technology to allow companies to collect payments through smartphones.

In February 2022, the firm secured $1.6 million in a pre-seed funding round led by Nuwa Capital, InspireUs VC, and Wallan Investment Group.

The fintech channeled its acquired funds into launching its financial services across the Kingdom and supported its market-entry efforts.

The Kingdom’s fintech investments reached $400 million in 2022, recording a 79 percent increase compared to 2021.

The Saudi Central Bank, also known as SAMA, is one of the country’s key players in enabling fintech across all subsectors.

Earlier this week, SAMA granted licenses to Spotii and Madfu, two fintech companies that aim to offer consumer financing options.


Saudi Central Bank grants open banking certifications to 2 fintech firms 

Saudi Central Bank grants open banking certifications to 2 fintech firms 
Updated 01 June 2023

Saudi Central Bank grants open banking certifications to 2 fintech firms 

Saudi Central Bank grants open banking certifications to 2 fintech firms 

RIYADH: Saudi Arabia is fostering personalized financial products and services tailored to customer needs with the Kingdom’s monetary authority, granting open banking certifications to two fintech companies. 

The Saudi Central Bank, or SAMA, has permitted Umg Alholol Trading Co. and Drahim App to test their open banking solutions in its regulatory sandbox, reported the Saudi Press Agency. 

This brings the total number of innovators permitted to operate under the central bank’s regulatory sandbox to 45. 

Of the 45 firms, 18 have graduated effectively and become licensed by SAMA to provide their solutions to consumers. 

On Tuesday, SAMA granted open banking certification to Dubai-based Tarabut Gateway, which aims to intensify its operations in the Kingdom.   

Tarabut Gateway, the region’s leading regulated open banking platform, has become one of the early recipients of SAMA’s permit to operate in Saudi Arabia.   

Talking to Arab News, Abdullah Almoayed, CEO and founder of the fintech company, said that consumers in the Kingdom can now expect a wide range of innovative and personalized financial services.     

“We are aware of the unique challenges faced by small and medium enterprises in Saudi Arabia, particularly regarding cash-flow management and access to funding. We will address this issue head-on by assisting SMEs to access the funding they need via open banking-enabled financial services and products,” Almoayed said.     

He said: “The new era of financial services we stand for is user-centric and contributes to customers’ financial well-being.”     

Those moves and initiatives are projected to help the Kingdom come one step closer to achieving the objectives of the Financial Sector Development Program in making the Kingdom among the leading nations in financial technology.   

The central bank has been working toward increasing the adoption of the fintech sector to boost the effectiveness and flexibility of financial transactions.    

Moreover, it has also been promoting financial inclusion for the various segments of society. 

On Wednesday, SAMA permitted Spotii and Madfu to provide consumer finance through the buy now, pay later platform. 

That said, Saudi shoppers can soon find more flexible payment options as two more BNPL companies enter the consumer finance market.


PwC Middle East inaugurates its regional headquarters in Riyadh

PwC Middle East inaugurates its regional headquarters in Riyadh
Updated 01 June 2023

PwC Middle East inaugurates its regional headquarters in Riyadh

PwC Middle East inaugurates its regional headquarters in Riyadh

RIYADH: PwC Middle East, a leading professional services firm in the region, officially inaugurated its regional headquarters in Riyadh on Wednesday.

This move demonstrates the company’s commitment to the region, including creating 6,000 new jobs and continued investments in digital technology, environmental, social, and governance capabilities.

PwC Middle East obtained its regional headquarters license from Saudi Arabia's investment and commerce ministries.

The company established its headquarters before Jan. 1, 2024, a deadline set by the regional headquarters program commissioned by the Investment Ministry and the Royal Commission of Riyadh.

The inauguration ceremony, held at a local hotel in Riyadh, was attended by Saudi Investment Minister Khalid Al-Falih, Hazim Zagzoog, a royal court adviser, and Kevin Ellis of PwC EMEA.

“I am delighted to join PwC Middle East as it inaugurates its new regional HQ in Riyadh, which will help to build the RHQ ecosystem in Saudi Arabia and set global standards for how a professional services sector RHQ should operate,” Al-Falih said.

“It is a natural continuation of a longstanding and mutually beneficial relationship. I also commend PwC on its strong record of employing more than 1,000 talented Saudis in its workforce,” he added.

Hani Ashkar, a senior partner at PwC Middle East, expressed enthusiasm about obtaining the license for their regional headquarters and the honor of supporting Saudi Arabia’s remarkable transformation as it progresses toward its Vision 2030 and beyond.

“At PwC Middle East, we are fully committed to supporting Saudi Arabia’s next phase of its transformational agenda as we digitize, decarbonize, localize, privatize and modernize,” Ashkar said.