Tuesday, 21 June 2022

Enterprise sits down with Marina Wes, Egypt country director at the World Bank

Enterprise sits down with Marina Wes, country director for Egypt, Yemen and Djibouti at the World Bank: With the clock slowly ticking down to COP27 in November, Egypt’s energy policy and its agenda for the summit are drawing increasing amounts of global attention. Having set new renewable energy targets last year and recently signing up to the Global Methane Pledge, the government could announce a commitment to net-zero emissions during the gathering. During the two-week summit, Egypt wants to put implementation front and center of discussions. The thinking? Until acted upon, the pledges made last year at Glasgow will remain just that: pledges.

Progress, yes, but Egypt has more to do if it is to hit its ambitious energy targets, ensure a smooth and sustainable transition, and successfully implement climate adaptation strategies. We sat down with Marina Wes (bio), the World Bank’s country director for Egypt, Yemen and Djibouti, to talk about the energy transition, climate finance, and the importance of bringing the private sector into the fold.

Edited excerpts of our conversation:

ENTERPRISE: Egypt aims to generate 42% of its power from renewable energy by the middle of the next decade. In your view, how realistic is this target? And what steps do policymakers need to take to ensure it can be met?

MARINA WES: With the substantial solar and wind resources that Egypt has, and emerging technologies such as battery storage, Egypt can achieve its 42% target by 2035. To scale up and meet this target, continued energy reforms to encourage private participation will be critical.

This will require establishing a more competitive electricity market, expanding regional electricity interconnections with neighboring countries for exporting clean electricity, electrifying transport through electric vehicles, and putting in place strategies for developing green hydrogen.

E: What can you tell us about how the World Bank is planning to support Egypt meeting its renewable energy targets and SDGs going forward?

MW: Integrating climate and development is a pillar of the World Bank’s 2021-2025 climate action plan. Scaling up renewable energy and clean energy development will be core to the energy transition. The Bank is currently discussing with the government the expansion of regional electricity interconnections with neighboring countries and to Europe.

E: In your view, does the private sector play enough of a role in Egypt’s renewable and clean energy industries? How can policymakers attract more private investment into the sector?

MW: The private sector, with support from the Bank and other partners, has played a leading role in the development and financing of one of the largest renewable energy projects worldwide, well-known here in Egypt, the Benban Solar Park. There is potential and scope for the private sector to play more of a role in other areas too. For instance, the private sector can support the government’s efforts towards shifting to greener modes of transport and reducing emissions from conventional transport. The private sector can also provide energy efficiency services for reducing energy wastage for cooling and lighting buildings, water desalination and pumping, and industrial production.

E: What is the World Bank doing to support Egypt as it prepares to host COP27?

MW: We have launched a new core country diagnostic tool, the Country Climate and Development Report (CCDR), which is being prepared in close consultation with the government and other stakeholders in Egypt.

Egypt’s CCDR will offer a set of policy options and investment opportunities in certain sectors, which will be considered in the coming years. The report will also identify opportunities to reduce inefficiencies and bring in increased private sector participation. Our engagement with the government — on the road to COP27 and beyond — will be geared towards developing robust institutional frameworks and mobilizing finance for climate action, including through the support of innovative and sustainable country platforms supported by the Bank and our international partners.

E: How do you see the surge in commodity prices and continued supply chain disruptions impacting the development of Egypt’s renewable energy sector?

MW: While the surge of commodity prices provides many challenges, it also provides new opportunities to scale up the development of renewable energy, improve energy affordability and resilience, and achieve energy transition. Egypt is also well-placed to take advantage and expand its local manufacturing capacity of renewable and energy-efficient technologies. This will not only support clean energy development, but it will also help to create more jobs and opportunities for Egypt’s growing young and entrepreneurial population.

E: What advice would you give policymakers looking to maintain growth in the sector in the face of these headwinds?

MW: Egypt has many paths to meet climate, competitiveness, and development objectives. The interconnections for regional energy trade, for example, will allow Egypt to export green electricity from solar and wind. A sustainable transition will need to be supported by strong energy policies, and partnerships with the private sector will be critical for this.

Remaining in tune with the times: Egypt’s contribution to global emissions is not high, with a share of global emissions of less than 1%. Yet, its current emission levels could present a barrier to economic growth as markets shift toward greener and lower carbon content products, for example through the implementation of the EU’s Carbon Border Adjustment Mechanism (CBAM). Egypt stands to be one of the 20 most-affected countries from the CBAM particularly due to the magnitude of its fertilizer sales to the EU, but also because of aluminum, iron and steel exports.

E: What does Egypt need to do to develop an internationally competitive green hydrogen industry? What role do you see the World Bank playing in this?

MW: As one of the larger economies in the Middle East, Egypt already produces gray hydrogen. Egypt is embarking on a new hydrogen strategy that would help transition to low carbon hydrogen production, capitalizing on its vast renewable energy potential and strategic geographic location. Although for now green hydrogen may not be commercially attractive, it is estimated that with more efficient electrolysis technologies and larger scale availability of cheaper solar and wind power, green hydrogen costs could fall below USD 1.5 to USD 2 per kg in countries with rich endowments such as Egypt. The challenges to transition from gray to green hydrogen are numerous but the country’s preparation should start today. We stand ready to support Egypt.

E: How important are green bonds to the future development of clean energy and efficiency projects in Egypt? What steps do policymakers need to take to increase corporate issuance?

MW: Impact investors are interested in financing sustainable development. Clean and energy efficiency projects developed by the private sector are very suitable projects to be financed through green bonds (whether a general sovereign bond or a project bond). Green bonds finance environmental and sustainability objectives and provide an opportunity for sovereign issuers to tap into the USD 715 bn in assets in the impact investing market. Policymakers can help the development of the sustainable finance market through the issuance of guidelines, tax breaks and developing investment opportunities.

E: The World Bank and the International Finance Corporation have supported Egypt’s maiden sovereign and corporate green bond issuances. Do you foresee the bank participating in future issuances?

MW: After our support to the first sovereign green bond issuance, the Bank remains ready to support Egypt in any kind of sustainable issuances that would help to diversify its investor base and make sustainable financing an even bigger reality in the country.

Your top green economy stories for the week:

  • The Egyptian Electricity Holding Company signed MoUs with GE Gas Power and other firms aimed at supporting decarbonization in the energy sector. (Statement)
  • The UAE’s Mubadala Petroleum is interested in raising its investments in our natural gas sector, company CEO Mansoor Al Hamed told Oil Minister Tarek El Molla. (Statement)

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