Working towards a common energy-transition goal28 November 2022
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In the end, it went right to the wire. Just as it looked like the UN’s 27th Conference of the Parties (Cop27) would conclude without an accord, the weary delegates announced that they had reached a landmark agreement on setting up a fund to help compensate poorer nations for the economic and social destruction caused by climate change.
The statement, two days after the Sharm el-Sheikh summit’s original 18 November end date, was a culmination of some 30 years of negotiations between developed economies and developing nations. The latter had long argued that the damage they have experienced from global warming should be paid for by richer countries responsible for the crisis in the first place.
Although far from perfect, the global ‘loss and damage’ fund was hailed as an important and symbolic step towards hitting the agreed target of limiting global temperature increases to 1.5C above pre-industrial levels by 2030. It also marked the continuing engagement and collaboration by governments across the globe.
“We rose to the occasion,” said Egypt’s Minister of Foreign Affairs and president of Cop27 Sameh Shoukry.
“We worked around the clock, day and night, but united in working for one gain, one higher purpose, one common goal. In the end, we delivered. We listened to the calls of anguish and despair.”
Private sector involvement
While Cop27 has been and will continue to be a policy-setting mechanism negotiated at the highest level, companies played a critical role during the conference.
Firms representing a broad range of sectors, including Vodafone, Microsoft, Boston Consulting Group and Bloomberg, partnered with the event, and many more participated in the main conference and exhibition areas.
Ultimately, governments understand that the private sector will lead the drive towards net zero. Without corporates worldwide investing in clean energy projects and technology, there is little hope that targets will be reached.
Five consistency points
A key supporter of Cop27 was Siemens Energy. Sharing its expertise through panels covering subjects as varied as the Mediterranean’s North-South Energy Partnership, improving power access in Africa by unlocking its green hydrogen potential, and overcoming the challenges of decarbonisation, the energy technology company played a pivotal role in discussions and thought leadership.
It also participated in the world leader’s summit at a roundtable discussing green hydrogen, reinforcing its positioning of energy transition at the heart of its strategy.
Before the Sharm el-Sheikh conference, Siemens Energy president and CEO Christian Bruch outlined five points of consistency that his company considers to be unifying elements in the decarbonisation drive.
The first is the acceleration of renewables. Replacing conventional power generation systems with solar, wind, hydro and other forms of renewable energy is essential to reduce greenhouse emissions.
Despite a considerable increase in the overall share of renewables in the past three years on the back of ever-lowering costs and more efficient technology, more must still be done.
For example, the US needs to triple its share of renewable energy as a proportion of the energy mix by 2050 for the energy transition to succeed. The Asia-Pacific region, meanwhile, will have to increase this figure fourfold.
In the Middle East, every country has now set ambitious targets to increase renewable energy. The likes of Saudi Arabia, Morocco and the UAE are aiming for renewables to account for up to 50 per cent of total production by 2030. To reach these objectives, almost all new power generation projects come in the form of renewables.
However, the impact of greener electricity production could be somewhat offset by continuing demand growth caused by an increasing global population and economic growth.
In this context, the second point is the requirement for improved energy conservation measures, such as policies to incentivise the electrification of industry and transport.
Regionally, the industrial electrification of energy-intensive industries is an optimal opportunity to reduce harmful emissions by harnessing electric boilers and/or electricity-based fuels. Future large-scale blue and green hydrogen production will also have a role to play in industrial processes.
Siemens Energy’s third point of consistency is improving electrical efficiency. The increase in renewable energy capacity and the growth in power capacity, in general, require significant investment in transmission and distribution networks.
This is particularly important in areas such as sub-Saharan Africa, where almost 25 per cent of the population has little to no access to electricity.
The fourth point covers the requirement to use existing conventional power infrastructure to help bridge the gap between the fossil-fuelled economies of today and the net zero of tomorrow.
Progress cannot be made in one step alone and requires a gradual transition. In the meantime, existing thermal plants can employ measures such as combined-cycle technology and carbon capture to make them as efficient and environmentally friendly as possible.
The energy transition is the biggest investment programme since the dawn of industrialisation. If governments, business and society work together, energy transition is a massive opportunity
Christian Bruch, Siemens Energy president and CEO
Finally, to achieve all of this, it is necessary to improve supply chains and increase the production of necessary minerals and rare earth metals required in net-zero technologies, such as lithium, nickel, cobalt and chromium.
Bruch gives the example of a typical electric car, which requires six times more mineral inputs than one powered by an internal combustion engine. He also cites onshore wind plants, which need nine times more than a gas-fired power plant.
If mineral production is not increased and geographically diversified, there is a risk of future supply bottlenecks.
In the Middle East, a good illustration of this is the potential future supply gap for electrolyser systems, and the anodes and cathodes typically made from metals such as zinc, nickel and lithium.
MEED estimates that about 75GW of electrolyser production capacity will be required by 2030 to meet the demand for the raft of planned green hydrogen plants in the region alone, compared with a total global output capacity of just 8GW today.
Industrial decarbonisation alliance
All five consistency points make salient arguments. However, they can only be achieved with close cooperation between the private and public sectors. While the former can spearhead and implement the decarbonisation drive, the latter can provide the regulations and incentives to encourage these initiatives.
The newly formed Alliance for Industry Decarbonization initiated by Siemens Energy and coordinated and facilitated by the Abu Dhabi-based International Renewable Energy Agency (IRENA) is an example of greater collaboration between the public and private sectors.
The 28-member alliance – which encompasses a range of global energy, renewable, consulting and manufacturing companies – met for the first time during Cop27 to outline its joint vision and implementation plan. Its strategy focuses on six pillars and enablers that tie into the points of consistency: renewables, green hydrogen, bioenergy with carbon capture, utilisation and storage (CCUS), heat process optimisation, human capital and finance.
Only through this kind of stakeholder dialogue can the immense and existential challenges posed by global warming be overcome. Governments or companies acting in isolation will only achieve so much on their own. The points of consistency must be considered as a whole and in unison if the world’s climate objectives are to succeed.
As Bruch says: “The energy transition is the biggest investment programme since the dawn of industrialisation. If governments, business and society work together, energy transition is a massive opportunity. There is no excuse for waiting any longer.”
- New alliance forged to accelerate net-zero ambitions
- The journey towards net zero
- Solving Europe’s energy challenge
- Africa’s energy trilemma
- Region primed for global green hydrogen leadership
Exclusive from Meed
Kuwait cancels oil financing tender
6 June 2023
Region positions itself for sustainable future
6 June 2023
Hospital boost for Jordan construction
5 June 2023
Political deadlock in Lebanon blocks reforms
5 June 2023
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Sports Boulevard to seek construction partner for iconic buildings
6 June 2023
Saudi Arabia’s Sports Boulevard Foundation plans to work with contractors on a collaborative basis for the iconic buildings that are part of the world’s longest park stretching across the centre of Riyadh.
“There are still many infrastructure and iconic building projects in the design stage, and we will be seeking great construction partners to join us on a collaborative basis on this great journey,” said Tony Aikenhead, chief development officer, Sports Boulevard Foundation at MEED’s Saudi Giga Projects conference in Riyadh on 5 June.
Iconic destinations planned for the development include the Sands Sports Park, Amphitheatres, the Centre for Cinematic Arts, the Arts District, the Discovery Park, Wadi Ajyasen, and the Global Sports Tower.
The large-scale project aims to turn the cityscape of central Riyadh, which today is dominated my major highways, into a recreational area. “It is truly a transformational project, which will become the world's longest park at over 135 kilometres in length and help to deliver on the objectives of Vision 2030. Sports Boulevard runs across Riyadh from east to west. That's where the complexity comes in because it's right through the centre of Riyadh along the service corridor,” said Aikenhead.
The project will be spread across different districts within the park. “The Boulevard will be split into street districts to maximise the unique features and attractions that the city has to offer. Each district will deliver a different destination and a different array of opportunities for residents and visitors alike. We are making good early progress in the delivery of these districts. Construction has already begun in the Wadi Hanifa district on the site of the bridge, the arts district, and the promenade. We have also started work on the Prince Turki and King Abdulaziz underpasses,’ said Aikenhead.https://image.digitalinsightresearch.in/uploads/NewsArticle/10916967/main.jpg
Kuwait cancels oil financing tender
6 June 2023
Kuwait’s national oil company Kuwait Petroleum Corporation (KPC) has cancelled its tender for a consultant to study financing options for the country’s state-owned oil and gas companies.
In a statement published by KPC’s Higher Purchase Committee it said that the companies that purchased tender documents are eligible for a refund.
The invitation to bid on the tender was issued on 18 December 2022.
KPC did not give a reason for the cancellation of the tender.
Kuwait has been looking to increase efficiency and restructure its state-owed oil and gas companies for several years.
In 2020, a contract for a study to look into the restructuring was won by UK-based Strategy&, a subsidiary of the financial services company PwC.
The plan was expected to cut costs and merge many of the state-controlled companies in the country’s oil, gas and petrochemicals sector.
At the time, KPC said that the mergers would slash the number of large state-controlled companies in the sector from eight to four.
In 2020, local reports said the Supreme Petroleum Council (SPC) and KPC had already approved plans to restructure the oil sector.
It is thought that the restructuring could have significant benefits for KPC in the long term.
A similar restructuring by Abu Dhabi National Oil Company (Adnoc) helped to open the door for increased foreign investment in the UAE’s energy sector.
After a sweeping restructuring, in December 2017 Adnoc listed 10 per cent of Adnoc Distribution, the largest operator of retail fuel service stations and convenience stores in the UAE. This raised $851m, making it the largest initial public offering in Abu Dhabi in a decade.
In May 2022, KPC said that it was considering selling shares in its downstream subsidiary Kuwait National Petroleum Company (KNPC), with the Higher Purchase Committee tendering a contract for a feasibility study regarding the potential “partial divestment of shares in KNPC”.
At the time, the announcement about the potential share sale from the Higher Purchase Committee surprised many within Kuwait’s oil and gas sector.
Despite Kuwait publicly discussing the restructuring of its oil and gas sector for several years, very little concrete progress has been made towards making the planned mergers.https://image.digitalinsightresearch.in/uploads/NewsArticle/10915058/main.gif
Region positions itself for sustainable future
6 June 2023
At the end of November, the region will host the UN’s climate change conference for the second time in two years. Cop28 in the UAE, like Egypt’s Cop27 last year, will bring world leaders together to discuss energy transition and the fight against climate change.
Arresting climate change will arguably be humankind’s greatest challenge over the coming decades. To succeed, people from all over the world will need to work with each other, which is why events like Cop28 that bring countries together are so important – despite the criticism they can attract.
At the project level, cooperation will also become an increasingly important trend.
This year there are clear signs that governments are jointly working on projects that will contribute to the fight against climate change.
Some of the best examples are in the transmission and distribution sector. In recent months, significant steps have been taken across a range of interconnection projects to link countries’ electricity grids.
Efficiency is the main driver for these projects. Particularly for GCC nations, the capacity to obtain large-scale solar energy affordably, combined with the marked differences in peak energy demands between the colder and hotter months, frequently leads to considerable surplus capacity.
Smoothing out these peaks and troughs as part of a larger regional or international grid also means less power generation is required and reduced carbon emissions.
As the shared challenge of climate change rises up the global agenda, more projects that pool resources, share expertise, and transcend borders and politics will be needed.
From regional collaborations on electricity grid interconnections to international climate conferences, the region is positioning itself at the centre of a more collaborative and sustainable future.
This package includes:
> Region plans vital big grid connections
> Soaring data demand drives boom
> Read the June 2023 MEED Business Reviewhttps://image.digitalinsightresearch.in/uploads/NewsArticle/10910825/main.gif
Hospital boost for Jordan construction
5 June 2023
This package on Jordan's construction sector also includes:
> Egis selected for Jordan hospital project
> Jordan's largest construction project to move onsite
> Hill wins work on Saudi-backed hospital project in Jordan
> PIF to invest $24bn in six Mena countries
Jordan’s construction sector will get a major boost this year as the country’s largest project prepares to move onsite over the summer after the first phase of its masterplan has been finalised.
The $400m hospital project is being developed by the Saudi Jordanian Fund for Medical and Educational Investments Company (SJFMEI) on a build-operate-transfer (BOT) basis.
For the hospital project, SJFMEI appointed US-based Hill International in partnership with the local sub-consultant Dar al-Omran to provide project construction management services last year. The project team is now preparing to tender construction contracts.
“We have completed the first phase of the masterplan,” Said Mneimne, senior vice-president of Hill International, told MEED in an interview.
“This summer, we will appoint a contractor for the enabling works. We will then appoint a contractor for the foundations and the structure,” he added.
The scale of the project is a challenge for Jordan’s construction sector, and an international engineering, procurement and construction (EPC) contractor may be needed to deliver the project.
“We have not yet decided what the contracting strategy will be,” Mneimne said.
The project involves the construction of a university hospital with 330 beds, 72 outpatient clinics, a children’s hospital, and a medical school with a total capacity of 600 students and a projected annual intake of 100 students.
The project also includes five medical centres of excellence focused on disciplines such as cardiology, oncology, neurology, gastroenterology and orthopaedics. There will also be four scientific research centres in genomics and precision medicine, stem cells and regenerative medicine, health systems and public health, and bioinformatics.
The built-up area is estimated at 110,000 square metres. It will be located on the airport road, near the Ghamadan area on the outskirts of Amman.
A joint venture of Lebanon’s Dar al-Handasah (Shair & Partners) and Perkins & Will was appointed for the engineering design and supervision services.
SJFMEI is a wholly owned subsidiary of the Saudi Jordanian Investment Fund (SJIF). Saudi Arabia’s Public Investment Fund (PIF) owns 95 per cent of the fund, while Jordanian banks hold the remaining 5 per cent.
Ownership of the project will be transferred to the Jordanian government after the end of the investment period.
The hospital is the largest active standalone project in Jordan, according to regional projects tracker MEED Projects. The second-largest project is the estimated $228m King Hussein Bridge Terminal and Freight Yard project, which is at the prequalification stage.
Major projects are needed after a disappointing decade for Jordan’s construction sector.
Data from MEED Projects shows a fluctuating trend in the value of construction and transport contracts awarded in Jordan over the past 10 years.
In 2013, the total value stood at $1.429bn. A sharp rise in 2014 to $2.475bn marked the peak of contract awards during the period.
A steep fall was witnessed in the subsequent years, with the total value plunging to just $662m in 2015, a dramatic decrease of nearly 73 per cent from the previous year. This downward trajectory continued, with the value plummeting further to a record low of $79m in 2020 amid the global economic disruption caused by the Covid-19 pandemic.
A closer look at the data indicates periods of minor recovery, notably in 2017, when contract awards rose to $866m, following a particularly poor performance in 2016 at just $159m.
Despite these rebounds, the overall trend illustrates a declining construction and transport sector in Jordan, with the years 2021 and 2022 recording values of $32m and $86m, respectively, a stark contrast to the highs of 2013 and 2014.
The fluctuating values in contract awards reveal the industry’s volatility over the past decade, linked to regional instability, economic downturns and global disruptions including the Covid-19 pandemic.https://image.digitalinsightresearch.in/uploads/NewsArticle/10914437/main.gif
Political deadlock in Lebanon blocks reforms
5 June 2023
Lebanon’s political deadlock is likely to continue to weigh on the country’s economy and undermine security over the medium term, according to experts.
The country currently has an interim government and has been without a president since former President Michel Aoun’s term ended at the end of October last year.
Progress towards forming a new government is likely to be slow, with the legislature divided over who should replace Aoun as president.
In March, the Iran-backed Hezbollah group and House Speaker Nabih Berri’s Amal Movement party – which together constitute Lebanon’s Shia base – announced their support for the Christian politician Sleiman Frangieh.
Hezbollah and its allies have since tried to gather support for Frangieh as president, but strong opposition from the majority of the country’s Christian, Sunni and Druze political blocs has left him short of the 65 votes required to be elected in the 128-member legislature.
Over recent weeks, members of Lebanon’s parliament that oppose Frangieh have started to rally around the former finance minister Jihad Azour.
Azour currently serves as the director of the Middle East and Central Asia Department at the International Monetary Fund (IMF).
As the parliament is divided, whether either candidate can obtain a majority vote remains uncertain. According to experts, even if a president is named, it will be extremely difficult for them to form a government.
Nicholas Blanford, a non-resident senior fellow with the Atlantic Council’s Middle East programmes, says it will likely be some time before a government is formed.
“Getting a president elected is only the first step,” he said. “Once the new president is in place, there is the tricky task of forming a new government.
“As we’ve seen over the past 20 years, forming a new government can take months as people bicker and jostle for various lucrative and influential portfolios.”
Barbara Leaf, the US assistant secretary for Near Eastern affairs, said on 31 May, during a Senate committee hearing, that the Biden administration was considering sanctions if a new president is not elected soon
Only when a government has been formed will Lebanon be able to start initiating the series of reforms that the international community has demanded to unlock aid, grants and loans to try to put the country on the path to economic recovery.
As Lebanon’s economic crisis has worsened and the security situation has declined, increasing pressure has been applied from other countries that want to try to restore stability in the region.
Barbara Leaf, the US assistant secretary for Near Eastern affairs, said on 31 May, during a Senate committee hearing, that the Biden administration was considering sanctions if a new president is not elected soon.
Separately, two members of the US House Foreign Affairs Committee called on the administration to impose sanctions on individuals involved in corruption to “make clear to Lebanon’s political class that the status quo is not acceptable”.
In a letter to Secretary of State Antony Blinken on 30 May, they said: “We also call on the administration to continue pressing for full accountability for the August 2020 Beirut port blast and support independent, international investigatory efforts into egregious fraud and malfeasance by the governor of Lebanon’s central bank.
They added: “We must not allow Lebanon to be held hostage by those looking to advance their own selfish interests.”
French officials have also taken action to try to crack down on perceived corruption by members of Lebanon’s political elite.
In May, French prosecutors issued an arrest warrant for Lebanon’s central bank governor, Riad Salameh.
The warrant followed Salameh’s failure to appear before French prosecutors to be questioned on corruption charges.
In response, Salameh issued a statement saying that the arrest warrant violated the law.
Salameh has been the target of a series of judicial investigations at home and abroad on allegations that include fraud, money laundering and illicit enrichment.
European investigators looking into the fortune he has amassed during three decades in the job had scheduled a hearing in Paris for 16 May.
A key problem is you still have the same cabal of oligarchs in power and it is likely they will still be represented in the next government
Nicholas Blanford, Atlantic Council’s Middle East programmes
Breaking the deadlock
Analysts believe cracking down on corruption among Lebanon’s political elite is key to breaking the country’s political deadlock.
“A key problem is that you still have the same cabal of oligarchs in power and it is likely that they will still be represented in the next government,” said Blanford. “These oligarchs do not want reform because if they implement a meaningful reform process, they run the risk of losing their positions of power.”
While the country’s opposing political blocs continue to vie for power and the formation of a new government seemingly remains only possible after at least several months of negotiations, the outlook for Lebanon in the short term looks bleak.
Meaningful government assistance for Lebanese citizens struggling with declining security and heightened economic pressures remains a distant prospect. High levels of emigration are also likely to continue as the country’s population seeks relief from the hardships at home.https://image.digitalinsightresearch.in/uploads/NewsArticle/10907713/main.gif