The United Arab Emirates, long dependent on fossil fuel for its economic growth and existence, has started to look to the future of energy by turning its attention to renewable sources. Hosting, for the sixth year running, a global summit on renewable energy, the Emirates hopes to attract the best thinkers and businesses in the field. However, much still needs to be done to spur a higher rate of adoption of renewable energy before they can truly lay claim to leadership in green energy. Read more
World Future Energy Summit, WFES: Oil And Renewable Energy – Exxon And Masdar City – Meet In The United Arab Emirates
By Jacey Fortin (19 January 2013):
On an expanse of desert land in the United Arab Emirates, about 11 miles (7 kilometers) away from the bustling capital city of Abu Dhabi, there is a lonely outcropping of peculiar buildings — a work in progress.
It’s called Masdar City, and it could represent the future of green living if all goes according to plan. This mini-metropolis — where cars are prohibited and buildings are designed according to strict energy-efficiency rules — is intended to generate almost no waste or refuse and be virtually free of air pollution.
Charles Ebinger, the director of the Energy Security Initiative at the Brookings Institution, has been to this experimental village. “You’re whisked to Masdar City on futuristic trains with no conductors, all on magnetic strips,” he said. “All the buildings there are using renewable energy. And they have channeled the airflow so the winds come through the streets in such a way that even in the dead of summer, it creates a cooling effect that obviates the need for a backup source of cooling energy.”
Amazing as it sounds, Masdar City is at risk of becoming a high-profile failure. Only a few hundred researchers and students live in this urban oasis, which was planned to house tens of thousands of people. An ambitious layout, including homes, businesses and recreational areas, has not yet materialized. The project’s initial 2016 completion date has been pushed back by at least 10 years.
This situation is indicative of the UAE’s strange relationship with renewable energy technology. The government is serious about green research and development — and keen to publicize it. But in fact, this oil-rich gulf state has some major glitches to address before it can take its place as a global leader in green energy.
Meeting of Minds
The UAE makes no bones about its intention to become a hub for green energy enthusiasts around the world. This week, for the sixth year in a row, Abu Dhabi hosted a global summit to attract some of the best thinkers and businesses in the field of renewable energy.
The World Future Energy Summit, or WFES, ran from Tuesday to Thursday; over 30,000 people were in attendance. Keynote speakers included such luminaries as French President Francois Hollande, Argentinian President Cristina Fernandez de Kirchner, and Abu Dhabi’s own Crown Prince, Sheik Mohammed bin Zayed Al Nahyan.
The Emirates are a big oil producer, the seventh-largest in the world, according to the International Energy Agency: they pumped upwards of 3 million barrels per day in 2011, more than Iraq. Dimitra Ampela of Reed Exhibitions, which organized the WFES, does not see a paradox there. In fact, she said it’s precisely the Emirates’ history that makes the country well-suited to playing a leading role in renewable energy.
“UAE’s commitment to renewable energy and sustainability traces back to the late president and founder of the UAE, Sheikh Zayed bin Sultan Al Nahyan, who was adamant about conservation and encouraged the reduction of the UAE’s environmental footprint,” she said.
The summit attendees represented about 150 countries and 514 registered businesses, which set up booths in a massive convention hall and took the opportunity to build new connections.
“The atmosphere is very electric,” said Scott Burger, who traveled to Abu Dhabi to represent GTM Research, a division of the Boston-based Greentech Media, a clean technology research and media organization.
The paradox of building a center for Big Green Energy in one of the capitals of Big Oil was not lost on him; he noted that oil giants like Exxon (NYSE:XOM), Shell (LON:RDSA) and Statoil (NYSE:STO) were out in force at the event.
“There are some interesting dynamics on display. Given the deep relationships that many oil majors have with the Abu Dhabi government, they have some of the most prominent booths at the WFES. This is an interesting juxtaposition against the booths of solar, biomass and wind companies that are also present,” Burger said.
That oil companies would dominate the convention floor should come as no surprise; hydrocarbons were essentially the enabler for this event. Because of oil revenues, the country enjoys a friendly relationship with the West, its status as a major commercial hub, and a GDP-per-capita of about $48,000 — the 12th highest in the world, just after the United States. Oil fuels the state-sponsored research that has made the UAE a pioneer in green energy.
The strong dependence on hydrocarbon fuels leaves the UAE in a bind. The country actually has to import natural gas, and demand has outpaced domestic production since 2007. Oil, on the other hand, is plentiful — but government officials aren’t fooled by the impressive profits. They are scrambling to diversify in order to avoid falling victim to market volatility, fluctuating prices and geopolitical conflicts in other oil-producing states.
And when it comes to renewable energy, the UAE may be impressive in terms of its commitment to research and development — but in terms of performance, it’s got a long way to go. The tiny state is certainly not leading the way in terms of reducing its carbon footprint.
Carbon dioxide emissions per capita are sky-high at 22.6 metric tons, according to the latest data from the World Bank. That’s higher than any Western country — but to be fair, much of that output can be blamed on factors somewhat beyond the UAE’s control: its role as a major oil and gas producer, its costly need to desalinate seawater, and its high-traffic international airports in Abu Dhabi and Dubai.
That’s why the UAE set a very low bar for itself in terms of renewable energy generation. The government is aiming for 7 percent of domestic power to come from renewable energy by 2030. By comparison, the European Union is shooting for 20 percent by 2020.
In large part, this sluggishness can be blamed on heavy government subsidies for the wrong kind of energy.
“The UAE is in a strange situation because they subsidize oil, gas and electricity so heavily for their domestic citizens that demand is spiraling out of control,” said Ebinger of the Brookings Institute. “There’s no demand to conserve gas and electricity because it’s so cheap, and it’s eating into the oil and gas that the country could export for profit.”
It would make sense to cut the subsidies that effectively cheapen its hydrocarbon output, but here political concerns outweigh economic ones. Recent Arab Spring revolutions in other Middle Eastern countries have spooked public officials in the UAE, a federation of seven monarchies in which average citizens have little say in the policies that govern their daily lives.
Vast wealth, and the fuel subsidies they enable, have so far kept the public complacent.
“[The government is] just so fearful of ending the subsidy in fear of a political backlash,” said Ebinger. “They really are sitting on a time bomb.”
If hydrocarbon subsidies are here to stay, the UAE’ s only way to generate more energy profits at home is to find new ways of generating power. But renewable sources like wind and solar just can’t be scaled up fast enough to meet growing demand, which will only accelerate with rapid population growth.
“You have to distinguish between research and commercialization,” Burger of GTM Research said. “What makes renewable energy technologies so difficult is the price it takes to scale them.”
For the UAE, nuclear energy presents a viable alternative. The government has already ordered four nuclear plants from South Korea, to be installed in Abu Dhabi. One is already under construction and could become operational by 2017, and educational initiatives are underway to train a new generation of students in nuclear reactor operations.
That leaves the market with little incentive to invest in cleaner, safer alternatives like solar, wind and biomass. So the government is footing the bill for research in that arena, crossing its fingers in the hopes that the risk will pay off.
“The market is simply not competitive, and renewable energy is very cost intensive,” said Karim Elgendy, the founder and general coordinator of Carboun, an advocacy organization promoting energy sustainability in the Middle East.
“With energy prices so low in the UAE, you can’t sell renewable energy at a reasonable price to make a profit, and you’re not going to invest in it. So instead of liberating the market and letting electricity prices go wherever they would go, the government takes it on. That’s why the country’s renewable energy initiatives are almost exclusively government-led projects.”
The UAE has the resources to fund these sorts of ventures; it also has the long-term incentive. But without the market on its side, the monarchy is walking a lonely road.
The Global Stage
If Masdar City and the WFES are any indication, the UAE is certainly eager to put on a good show. Both these ventures are funded by Masdar, a subsidiary of the government-owned Mubadala Development Company. Masdar has never been shy about funding travel and accommodation for renewable energy buffs, public relations professionals and the press. The idea is that these investments will eventually pay off — and judging by the deals closed at this week’s WFES, the strategy is working.
Masdar inked a deal with the kingdom of Jordan, laying a framework for future cooperation on renewable energy projects. France also negotiated a stronger partnership with the UAE-owned company, building on years of collaboration on green projects.
Down in the booths, the deal-making was just as fervent. A handful of companies even received prizes for their work in renewable energy, including Ceres, a Boston-based non-governmental organization that works with investors and policymakers in Europe and the United States to advocate for sustainable energy practices.
Ceres received $1.5 million when it won the Zayed Future Energy Prize in the NGO category. Company spokesperson Peyton Fleming said the funds would be used to strengthen its ongoing initiatives.
“Our perspective is that you need both stronger government policies and strong private action from companies and investors,” he said. “Unless companies and investors are investing trillions of dollars in this space in coming years, and until that amount of capital is moved into the clean energy economy, we are still going to be wrestling with rising greenhouse gas emissions.”
That’s a philosophy the UAE can certainly relate to. And despite formidable challenges the government faces in the field of renewable energy generation at home, there’s no denying the progress the small Gulf country has made.
Masdar City, that metropolis in limbo, can now boast a fully operational school and research facility called the Masdar Institute for Science and Technology.
“The UAE has invested a lot in the Masdar Institute for Science and Technology, which has an extensive renewable energy lab and is collaborating with Massachusetts Institute of Technology,” said Elgendy, who has visited the facility.
The green businesses and clean-energy homes may be missing from the scene, but research and development are flourishing.
That’s where the UAE has made the most impact so far, and where it still leads much of the world in terms of committed resources. Polluted air, oil rigs and half-finished projects notwithstanding, the UAE has at least proven its dedication to engineering the technologies that the rest of us may need in the decades to come.