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 / Spring 2010 / Issue 58(originally published by Booz & Company)


A Renewable Oasis

Why oil-rich Abu Dhabi is building the world’s first zero-carbon city.

Amid the oil fields and beachfronts of Abu Dhabi, in the United Arab Emirates (UAE), a city powered entirely by renewable energy is rapidly coming into existence. Masdar City (named after the Arabic word for source) is a planned urban environment of about 2.5 square miles (6 square kilometers) that is expected to house 40,000 residents after its completion over the next decade.

The blueprints show a city designed to sit lightly on the earth: to use recycling and energy conversion to reduce its waste to nearly nothing, and to leave a negligible footprint of carbon and other industrial emissions. Cars will be replaced by “public rapid-transportation units” — essentially, shared solar-powered vehicles that hold six people and can be directed to any one of 1,500 stations beneath the city. Parks and plazas, filled with greenery and modeled after traditional Arab gardens, will foster a sense of community and encourage walking. Narrow alleys between buildings will offer shade and reduce the need for air conditioning.

This vision of Masdar City tries to resolve a series of contradictions. It is a verdant oasis surrounded by desert; it is a proposed hub for research in renewable energy in the middle of a region plagued by talent gaps, particularly in the sciences. Perhaps most unexpectedly, it is the world’s first city to aim for zero-carbon status, in a country that depends on fossil fuels for income.

Masdar City is one element of the larger Masdar Initiative, which includes a carbon management unit dedicated to reducing greenhouse gases, a developer and operator of renewable energy utilities, an asset management arm that invests in renewable energy and clean technologies, and a new university called the Masdar Institute of Science and Technology. The Masdar Initiative is a wholly owned subsidiary of the Mubadala Development Company, which is the Abu Dhabi government’s investment arm; in 2008, the government allocated US$15 billion to Masdar. In July 2009, Abu Dhabi won the bid to sponsor the headquarters of the International Renewable Energy Agency, which will be located in Masdar City. Taken together, these initiatives indicate the magnitude of Abu Dhabi’s commitment to renewable energy and its intention to maintain its status as a world energy leader even if fossil fuels eventually cede their dominance in the global energy portfolio.

Sultan Ahmed Al Jaber, CEO of the Masdar Initiative, sat down with strategy+business in October 2009 to discuss the vision of a clean energy future as represented by this new city.

S+B: What spurred the creation of the Masdar Initiative?
AL JABER: Many people thought the founding of the Masdar Initiative in 2006 marked a fundamental shift in Abu Dhabi’s environmental policy. That’s not the case. Conservation has been part of our culture for decades, thanks to the efforts of our late president, His Highness Sheikh Zayed bin Sultan Al Nahyan. He was an environmentalist who, in many ways, was ahead of his time. For instance, in 1978 he banned gas flaring — the practice of burning off leftover natural gas on oil rigs. The World Bank, by contrast, just began its initiative to ban gas flaring in 2002.

We wanted to build on our environmental legacy. We were also looking for ways to diversify Abu Dhabi’s economy; we know oil and gas are finite resources. Creating a renewable energy sector would let us capitalize on our energy expertise and our substantial financial resources, while honoring His Highness’s vision by developing clean sources of power that have no impact on the environment.

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