The recently-created Abu Dhabi Future Energy Company (ADFEC) is establishing far-reaching and innovative projects that will eventually position the Emirate on the global stage as a principal contributor to renewable international energy solutions.
The Emirate is now using all the influence and credibility resulting from its 40 year record as a significant and reliable fossil fuel exporter to make an immediate impact on world energy markets and public opinion.
ADFEC, which is a 100% government-owned entity, announced in April this year the 'Masdar Initiative', aimed at giving Abu Dhabi a leading role in the renewable energy market. Sultan Al Jaber, CEO of ADFEC, told OBG: "Abu Dhabi has already earned an equity and brand name in the global energy market. We want to ensure that we maintain this name in the future."
Al Jaber believes that developing renewable energy is crucial to this: "We are not saying that renewable energy will compete with oil and gas but it will complement them in the short term and then supplement them in the longer term. Fossil fuels will be with us for a long time but what lies beyond? If we don't invest in renewables today through research and development, we will miss that train. We believe that we have the capabilities and incentives to position ourselves as one of the top global energy providers of the future."
The United States Department of Energy has predicted that almost half of the global energy supply will come from sustainable sources by the year 2100, creating strong commercial opportunities for leaders in this field. Abu Dhabi plans to invest heavily in this area through research and development to position itself as a global player in sustainable energy. Currently, Arab countries only spend 0.2% of GNP on research and development compared to 3.1% in the US and Japan. This is a trend that Abu Dhabi intends to reverse..
The Masdar Initiative is based on five pillars: an institute and research network, an investment and innovation unit, a carbon management unit, a special projects unit and a special free zone unit.
Under the research network, ADFEC will collaborate with Imperial College London, RWTH Aachen, the University of Waterloo in Canada, Tokyo Institute of Technology, Columbia University in the United States and the German Aerospace Centre. The network will carry out research in alternative energies and sustainability related technologies specialising in solar thermal systems, water desalination and carbon capture technologies. Presently, the work is carried out at the individual institutes, however within three years specialists will come to pursue research in Abu Dhabi and commercialise these technologies. Their research network will be the nucleus of the Institute, which will offer Masters and PhD programmes in science and engineering with the assistance of a leading international university. Masdar Institute will be the source of talent and future IP for ADFEC.
The investment and innovation unit, which announced a $250m clean tech fund last month, will invest in early stage and late stage green technology companies in Europe, the USA, Canada and Japan. ADFEC will leverage its equity stake in these companies to bring these technologies to Abu Dhabi. The fund was established with capital investments of $100m from both Credit Suisse and the Abu Dhabi government and $50m from the UK-based Consensus Business Group. Al Jaber confirmed to OBG that some initial investments have already been made.
One of the main projects of the Masdar Initiative will be the carbon management unit (CMU) which will use the carbon-monetization market created under the Kyoto Protocol's Clean Development Mechanism (CDM), trading in carbon credits to the financial advantage of Abu Dhabi.
The CDM in Abu Dhabi will focus on the oil and gas, manufacturing and cement plant sectors. Working closely with the newly reconstituted Environment Authority - Abu Dhabi (EAD), ADFEC has already started an initiative to develop carbon capture and storage products which can be used for enhanced oil recovery. Al Jaber noted that this will have a threefold affect: it will reduce carbon emissions, develop carbon credits and diminish the reliance on gas for enhanced oil recovery.
The fourth area of development is the special projects unit which will work on large scale projects for Abu Dhabi. The first such of these is a large integrated hydrogen plant in Abu Dhabi which will be the largest in the world. The project is in the formative planning stages, but it is expected to be operational by 2012.
The pillar of ADFEC - hosting its projects and components - is a four square kilometre special free zone, designed to create a conducive business environment with favourable tax and IP laws. The zone will be developed by ADFEC's property development unit as an iconic, sustainable showcase that integrates both planning and design to achieve an environmentally responsible development.
The zone will also host the Masdar Institute and its associated research facilities. ADFEC is coordinating with ADNOC's petroleum institute the development of the curriculum and the sharing of faculty members.
The Masdar Initiative is not only aiming to create a new business sector in Abu Dhabi - but also to position the emirate as a world leader on environmental and sustainable energy issues through its technology and human capital. As Al Jaber told OBG: "Since the foundation of the United Arab Emirates, Abu Dhabi has always been an importer of technologies. Today, we strongly believe that we have all the capabilities to position Abu Dhabi as a technology provider and exporter to the world."