Magazine article The Middle East

Gulf Renewables: Like Chalk and Cheese: The Gulf Has No Incentive to Develop Alternative Energy Sources to Oil and Gas. or Has It? What Is the Motivation for the Abu Dhabi Government's Establishment of a Renewable Energies Project?

Magazine article The Middle East

Gulf Renewables: Like Chalk and Cheese: The Gulf Has No Incentive to Develop Alternative Energy Sources to Oil and Gas. or Has It? What Is the Motivation for the Abu Dhabi Government's Establishment of a Renewable Energies Project?

Article excerpt

MENTION THE GULF states and renewable energy in the same breath and most people would be cynical. The two simply don't go together. Producing a large proportion of the world's oil and gas reserves, the Gulf has a vested interest in ensuring that the global economy continues to run on hydrocarbons rather than cleaner forms of energy. It would therefore be easy to attribute any investment in renewables in the region as little more than a public relations exercise. Yet the launch of the new Masdar project in the UAE and growing interest in alternative technologies seem to suggest more substance than mere publicity stunts.

Masdar has been set up by the government of Abu Dhabi to promote renewable technologies in the Gulf. It comprises a research institute, an industrial development zone, an alternative energy centre of excellence and a renewable energy development company, Abu Dhabi Future Energy Company (ADFEC), which will coordinate the various Masdar schemes. A number of research partners have already been brought on board, including BP, GE, Shell, Total, and academic institutions such as Britain's Imperial College, the Tokyo Institute of Technology and the German Aerospace Agency. Research in the various centres will be coordinated under the Masdar Research Network umbrella.

The centrepiece of the Masdar project is the Masdar Clean Tech Fund LP, launched in London in September 2006, with initial funding of $250m for long term investment in sustainable and renewable technology projects. At present, ADFEC intends to invest 35% of the money in solar energy; 30% in clean technology funds; 20% in water research and 15% in sustainable technologies. Apart from the Abu Dhabi government, funding has been provided by Credit Suisse and Consensus Business Group (CBG), a British property company.

The chief executive of ADFEC, Sultan Ahmad Al Jaber, commented: "We want the Masdar Research Network to act as the catalyst for fusing research and innovation from the best research groups around the world, whether in academia or corporations, enabling creative technology breakthroughs at a faster pace than is possible through traditional funding routes. All projects are selected on the basis of imagination, scientific creativity and practical outcomes; each one under evaluation has an industry partner to ensure research leads to real solutions with broad market appeal. We have a vision of Abu Dhabi becoming an incubator of next generation research and its practical applications in the advanced energy and environment sector."

Al Jaber added: "The fund's strategic objective is to attract advanced energy and sustainability-related technologies to Abu Dhabi by leveraging considerable energy expertise and financial resources. It reflects our long-term commitment to meeting the world's growing energy needs in an environmentally sustainable manner through the development of innovative and sustainable technologies."

Such sentiments sound impressively upbeat but it would be easy to question Abu Dhabi's commitment to "environmentally sustainable" development given its somewhat questionable track record of oil and gas dependency and little government investment in exploiting the emirate's solar power potential.

However, apart from the size of the investment already committed, there are other reasons to take Masdar seriously. Firstly, the Gulf states are currently awash with surplus oil revenues and seeking suitable investment projects that will generate substantial long-term returns. In the past, the region's main oil producers tended to invest surplus oil revenues in projects outside the Middle East. During the current oil price boom, however, they are investing a far greater proportion of their capital in projects within the region and new and alternative technologies are attracting a far greater interest than in the past. Local renewable energy projects would therefore be attractive on both counts. …

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