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.”

 


Give youth tools to overcome cost-of-living crisis, Saudi envoy to US tells FII Priority conference

Give youth tools to overcome cost-of-living crisis, Saudi envoy to US tells FII Priority conference
Updated 20 sec ago

Give youth tools to overcome cost-of-living crisis, Saudi envoy to US tells FII Priority conference

Give youth tools to overcome cost-of-living crisis, Saudi envoy to US tells FII Priority conference
  • Princess Reema bint Bandar said that ‘having financial literacy and financial engagement at a younger age will allow us all to be more efficient citizens’
  • She highlighted the success of Saudi Arabia’s Vision 2030 national development project in engaging the Kingdom’s youth and the speed with which new opportunities have been created

MIAMI: Equipping the youth of the world with financial literacy and opportunities is vital if they are to overcome the growing cost-of-living crisis, Saudi Arabia’s ambassador to the US told the Future Investment Initiative’s Priority conference in Miami on Thursday.

Princess Reema bint Bandar was speaking during a panel discussion of what the UN has described as the “largest cost-of-living crisis of the 21st century,” and its disproportionate effects on young people around the globe, who are on the front lines of the crisis.

She said there certainly needs to be more personal accountability and understanding of what is needed at an individual level, but also at the national and international levels.

“We have all been overspending, overbuying and overconsuming and this ‘click button, immediate delivery’ has skewed our perception of what our personal costs are, personal needs and our engagement,” she said. “I think we have been thinking too macro; let’s go back to micro and have little bit more personal responsibility.

“I think (understanding) the concept of interconnectivity of our behavior and our actions, and having financial literacy and financial engagement at a younger age, will allow us all to be more efficient citizens, regardless of whether it’s in the Kingdom, the Middle East or the West.

“I think we’ve lost the concept of our personal impact on economies and other people’s lives,” she added.

The ambassador highlighted the success of Saudi Arabia’s Vision 2030 national development project in engaging the Kingdom’s youth and the speed with which new opportunities have been created outside of the traditional governmental and public sector.

Five years ago in Saudi Arabia, she said, very few young people had any desire to step outside the “comfort zone” of the government sector; now, 58 percent of young people aspire to entrepreneurship pathways, confident that a system is in place in the Kingdom to support them.

“The reason you’re seeing success among young people, not just entering the government but also the private sector, is because today every single young person knows their role in this vision of evolving our country,” she said.

“It is creating opportunity for the individual to be part of the collective and recognize that every piece or step of work or ambition they have adds to the collective well-being of everybody else. That is what’s really driving us as a nation.

“We’ve been able to create education pathways; over $100 million has been spent not just on traditional education but expanding the pipelines of opportunity for young people in (sectors such as) hospitality, tourism and sport,” Princess Reema added.

She also refuted criticism from outside the Kingdom of investment and job creation in these sectors being “culture-washing” or “sport-washing” by pointing out it had created 3 million jobs so that young people can earn a decent living and wage, which could “help them uplift not just themselves but their households and their families and create opportunities for others.”

She said she feels the Saudi approach in this regard is what is “inspiring about being in the Kingdom today,” adding: “We have a moment to inspire young people to not just take, but to also give.”

On the growing engagement of young Saudi women in the process, she said: “You cannot create an opportunity for one gender and not the other, and that’s something we’ve been able to accomplish through Vision 2030.”


Saudi Arabia, Miami offering development blueprint for rest of the world: FII Priority panel

Saudi Arabia, Miami offering development blueprint for rest of the world: FII Priority panel
Updated 30 March 2023

Saudi Arabia, Miami offering development blueprint for rest of the world: FII Priority panel

Saudi Arabia, Miami offering development blueprint for rest of the world: FII Priority panel
  • FII Chairman and Saudi Public Investment Fund Gov. Yasir Al-Rumayyan joined Miami Mayor Francis Suarez to discuss how humanity can get through the challenges of a post-COVID world
  • Al-Rumayyan said progress could be achieved anywhere in the world by running full diagnostic of economy and society

MIAMI: Economic and social reforms being carried out on a national level in Saudi Arabia and on a city level in Miami offer a model for progress and development for the rest of the world, the FII Priority conference heard on Thursday.

FII Chairman and Saudi Public Investment Fund Gov. Yasir Al-Rumayyan joined Miami Mayor Francis Suarez to discuss how humanity can get through the challenges of a post-COVID world, marked by the war in Ukraine, potential economic crises across the world, catastrophic weather events and soaring costs of living.

Since his election as mayor, Suarez said he had transformed Miami’s economy through lower taxation, investment in public security and enticing the future technology industry to the city, telling the conference that parallels could be drawn with Saudi Arabia’s transformation through its Vision 2030 plan.

Al-Rumayyan agreed, adding that progress could be achieved anywhere in the world by running a full diagnostic of an economy and society, as happened in the Kingdom with the launch of its Vision 2030 plan, by setting benchmarks, targets and key performance indicators.

“(The plan) is very challenging, but achievable,” he said. “You need the political will, the right processes and the right people. That’s what has made it work so well, so far, and hopefully we will achieve all of our targets by 2030,” he added.

Al-Rumayyan highlighted progress already made ahead of schedule in certain metrics across the Kingdom, including having 37 percent female employment by 2020, 7 percent more than initially expected, as well as Saudi Arabia’s 8.7 percent gross domestic product growth in 2022, which was 1.2 percent more than predicted by the IMF, making the Kingdom’s economy the fastest growing in the G20.

This week, with nationwide unemployment falling below 9 percent in Saudi Arabia for the first time, Al-Rumayyan was also keen to stress that Vision 2030 does not set out simply to create jobs, but to create “good quality” jobs, which is key for engaging an ever-youthful workforce.

Calling PIF the “enabler of Vision 2030,” Al-Rumayyan added that a healthy investment portfolio such as the Kingdom’s was key to sustainable progress and development; he highlighted its assets are worth $650 billion today, but it plans to expand this to $1 trillion by 2025 and to between $2-$3 trillion by 2030.

As chairman of Saudi Aramco, Al-Rumayyan outlined the company’s green energy ambitions and its low-emission credentials, but warned that the approach of some countries toward fossil fuels threatened the likelihood of achieving real development as a result of chasing unrealistic clean energy goals.

“Oil, gas and fossil fuels is not such a bad thing,” he said. “I could talk for days about why we should really invest in exploration. We should have long-term views and not (follow) a certain ideal or ideology without thinking about the consequences of that,” he added.

Completely dropping fossil fuels is not a practical solution for global development and progress, Al-Rumayyan told the panel, adding that the shift from traditional to renewable sources of energy would be a slow process, especially considering that much of the net zero infrastructure still requires petrochemicals and fossil fuels to produce.

The PIF governor said: “Some of the governments around the world bullied the oil and gas companies (because of the climate mission) and instead of looking at the problem and trying to fix it, they just wanted to stop it, and what happened after that?

“It started with the oil crisis, because you have less exploration, less supply and demand is increasing, because we want to change to renewable. I understand that, but it takes time to have a transition from fossil fuels to renewables.

“Are we making things better, or worse? From two sides, first, (damage to) the environment and secondly the affordability of energy for the world’s people, and that’s the problem we are facing now,” he added.


Oil rises on US crude draw and Iraqi supply risks

Oil rises on US crude draw and Iraqi supply risks
Updated 30 March 2023

Oil rises on US crude draw and Iraqi supply risks

Oil rises on US crude draw and Iraqi supply risks
  • US crude oil stockpiles fell unexpectedly in the week to March 24 to a two-year low
  • Crude inventories dropped by 7.5 million barrels, compared with expectations for a rise of 100,000 barrels in a Reuters poll of analysts

LONDON: Oil prices rose on Thursday as a surprise drop in US crude stockpiles and a halt to exports from Iraq’s Kurdistan region offset a smaller than expected cut to Russian supplies.
Brent crude futures rose 57 cents, or 0.73 percent, to $78.85 a barrel by 1327 GMT, while West Texas Intermediate crude rose 82 cents, or 1.12 percent, to $73.79.
US crude oil stockpiles fell unexpectedly in the week to March 24 to a two-year low, the Energy Information Administration said on Wednesday.
Crude inventories dropped by 7.5 million barrels, compared with expectations for a rise of 100,000 barrels in a Reuters poll of analysts.
The continuing halt to exports from Iraq’s northern region provided further support.
Producers have shut in or reduced output at several oilfields in the semi-autonomous Kurdistan region of northern Iraq after the northern export pipeline was shut, with more outages on the horizon, company statements showed.
But the Kurdistan-Iraq premium in oil prices could vanish sooner than expected, Citi analysts said Thursday.
The “changes in Iraq’s domestic politics may lead to a durable political settlement very soon,” Citi said, estimating that pipeline flows could increase by 200,000 barrels per day (bpd).
These factors offset bearish sentiment after a lower than expected cut to Russian crude oil production in the first three weeks of March.
The 300,000 bpd production decline compared with targeted cuts of 500,000 bpd, or about 5 percent of Russian output, sources familiar with the data told Reuters.
Markets are now waiting for US spending and inflation data due on Friday and the resulting impact on the value of the US dollar.
Meanwhile, OPEC+ is likely to stick to its existing deal on reduced oil output at a meeting on Monday, five delegates from the producer group told Reuters.
“While we think oil prices may remain volatile in the near term, we still expect rising Chinese crude imports and lower Russian production to lift prices over the coming quarters,” UBS said on Thursday.
China’s refined fuel consumption this year is likely to grow 3 percent from 2019 pre-COVID levels, state energy giant PetroChina said on Thursday.
“If all goes as expected, and we manage to avoid a recession, oil prices will dance around $75-$85/bbl in the coming months,” FGE analysts said in a note.


Closing bell: Saudi bourses edge up 

Closing bell: Saudi bourses edge up 
Updated 30 March 2023

Closing bell: Saudi bourses edge up 

Closing bell: Saudi bourses edge up 

RIYADH: Saudi Arabia’s Tadawul All Share Index rose for the sixth session in a row on Thursday, up by 86.92 points – or 0.83 percent – to 10,590.10, driven by favorable market conditions. 

Parallel market Nomu also went up by 288.68 points – 1.47 percent – to close at 19,892.03, while the MSCI Tadawul 30 Index rose 1.09 percent to 1,435.05.

The total trading turnover of the benchmark index was SR6.2 billion ($1.65 billion).

The top gainer of the day was Gulf Union Alahlia Cooperative Insurance Co. whose shares went up by 9.93 percent to SR9.74. 

Other top gainers of the day were BinDawood Holding Co. and Batic Investments and Logistics Co. whose share prices rose 8.39 percent and 5.99 percent respectively. 

Meanwhile, Red Sea International Co. announced that it will not be able to publish its annual financial results ending on Dec. 31, 2022 as the firm is still working with the external auditor to issue the annual financial statements. 

It also noted that it will complete the audit work and publish the annual financial statements before April 27, 2023. 

Red Sea International Co. was also the worst performer on Thursday, as the company’s share prices dropped by 3.82 percent to SR25.15. 

On the announcements front, Saudi Real Estate Co., posted a net profit of SR110.5 million in 2022, almost double the earnings of SR 54.9 million in 2021. As the profits surged, the company’s share prices ticked up on Thursday by 0.16 percent to SR12.38. 

Raydan Food Co. also announced its financial report. The company narrowed its 2022 net losses to SR 24.6 million, from SR 42.2 million in 2021.The shares of the firm, however, dropped by 2.69 percent to 25.35. 

Horizon Food Co. reported a 12 percent dip in its earning to SR8.88 million in 2022, compared to SR10.16 million in 2021. The company attributed the decrease in net profit to a rise in selling and marketing expenses due to increased sales and geographical expansion. Horizon Food Co.’s share prices remained unchanged on Thursday at SR40.35. 

Another company which announced its financial report was MOBI Industry Co. The firm reported a 13.68 percent fall of net profit year-on-year to SR13.92 million. Despite a fall in net profit, the company’s share prices rose 0.35 percent on Thursday to SR58. 

Fesh Fash Snack Food Production Co. reported that its net profit surged 54.67 percent to SR2.16 million in 2022, compared to SR1.40 million in 2021. Amid a rise in profit, the company’s share prices dropped 1.2 percent to SR144 million. 

Natural Gas Distribution Co. also announced its financial results. The firm’s net profit rose by 32.66 percent in 2022, compared to SR2.48 million in 2021. The company’s share prices fell by 0.97 percent SR51.


Saudi capital market regulator gives nod for 4 new listings on stock exchange

Saudi capital market regulator gives nod for 4 new listings on stock exchange
Updated 30 March 2023

Saudi capital market regulator gives nod for 4 new listings on stock exchange

Saudi capital market regulator gives nod for 4 new listings on stock exchange

RIYADH: Saudi Arabia’s Capital Markets Authority approved First Milling Co.’s application for an initial public offering of 30 percent of its share capital on the Saudi Stock Exchange, also known as Tadawul.  

The company was the first of several flour milling privatizations in Saudi Arabia, sold to Raha AlSafi consortium for $540 million in 2020.  

The consortium was led by Saudi Arabian firm Almutlaq Group and also included Al Safi, Abunayyan Holding and UAE-based Essa Al Ghurair Investment, with investment bank Canaccord Genuity acting as a financial adviser, it was reported at the time. 

The CMA also gave the green light to Lumi Rental Co. to register and offer 16.5 million shares, or 30 percent of its share capital, on Tadawul. 

In December 2022, Seera Group Holding approved, during an extraordinary general meeting, the demerger of Lumi from the group in order to offer 16.5 million ordinary shares, or 30 percent of Lumi’s capital, on Tadawul.   

During the same month, Seera Holding submitted an application to the CMA for Lumi’s Tadawul IPO.   

Lumi is specialized in car rental in Saudi Arabia. It has 25 branches, of which nine are in the Kingdom's airports.   

In addition, CMA approved both Saudi Call Trading’s application to float 675,000 shares, or 15 percent of the company’s share capital, on the parallel market Nomu.  

Another firm that received CMA approval is Abdul Aziz Al-Tuwaijri Trading Co. which applied for the registration and offering of 600,000 shares representing 13.04 percent of the company’s share capital on Nomu. 

The approval for IPOs of the four companies is valid for six months, said CMA. 

This comes as companies from the Middle East raised some $21.9 billion through IPOs in 2022, accounting for more than half the total from wider Europe, the Middle East and Africa, according to Dealogic data.