The United Arab Emirates has become a jewel in the desert because it is floating on a sea of oil. Such a place seems like an unlikely candidate for “an ambitious plan to build a zero-emission clean-tech centre” [“Masdar plan,” The Economist, 6 December 2008]. Statistically, however, The Economist asserts that it may be exactly the right place to build such a complex because the “world’s grubbiest people, measured by emissions of greenhouse gases per head, are the citizens of the United Arab Emirates.” It is the wealth generated by oil that helped create the problem and UAE leaders are hoping that their wealth will also show the way to correct it.

“The country’s huge oil wealth allows many of them to drive big, fuel-guzzling cars and live in huge, power-guzzling homes. What is more, the country’s hot and muggy climate means that almost all the buildings are air-conditioned, and almost all the water is obtained from energy-intensive desalination plants. The result is an offence to the atmosphere. What is more, Abu Dhabi, the biggest of the country’s seven princely city-states, has a huge vested interest in the continued domination of the world economy by fossil fuels. It sits atop some 8% of the world’s proven reserves of oil. At current rates of extraction, the oil will last for another 92 years. So it is with some scepticism that the world has greeted Abu Dhabi’s plans to reinvent itself as a crucible of greenery.”

The plan is not new, it was first unveiled in 2006, “to pursue ‘solutions to some of mankind’s most pressing issues: energy security, climate change and truly sustainable human development.” The Masdar Initiative, if nothing else, is ambitious. If anyone can pull off ambitious plans, however, it is UAE leaders — as any visitor to the country can readily observe. Because of the Enterra Solutions® Development-in-a-Box™ concept, I’m interested in any initiative that purports to support “sustainable human development.” The Masdar Initiative is following a strategy that has been used successfully by many universities. It is going to establish a research institute to develop environmental technologies and a complementary “investment arm” to implement and exploit them. The unique twist added by the Masdar Initiative is the “eco-city” that will be home to these organizations. Masdar’s managers want to create an academic institution that rivals the Massachusetts Institute of Technology (MIT) and then surround it with “a global manufacturing hub for technologies such as solar power and desalination, and a city of 40,000 people with no greenhouse-gas emissions and no waste—all while turning a profit.” Although the government of Abu Dhabi is putting up $15 billion in venture capital, it expects the investment arm and the city to be profitable.

The emirs know how to make money and so I’m sanguine that if they actually get their Masdar plan up and running it will run successfully on a commercial basis. Perhaps the most exciting part of the plan is that the proposed city will serve as a large-scale testbed for innovative ideas. If such ideas prove useful and profitable in the desert, they should have broad global application. The Economist also issues a caution. It notes that some of Abu Dhabi’s past “grandiose schemes” have failed to materialize. The article mentions a “plan to build a global financial hub from scratch a decade ago.” Looking at Dubai’s current troubles, Abu Dhabi’s leaders probably don’t regret that the hub never developed. The plans for Masdar, however, are continuing to go forward; probably because most people believe that green technologies will define the future. The first students who will benefit from the project will be admitted next year into the Masdar Institute of Science and Technology (MIST). The first phase of the city is also under construction and Masdar’s investment arm has already “built up a big portfolio of renewable-energy investments, including a stake in an offshore wind farm in Britain and three solar-thermal power plants in Spain. It has also placed an order for machinery for two solar-panel plants: one that is already under construction in Germany, and another that is to be built in Abu Dhabi itself.”

For a country awash in oil, it might seem odd that it would invest in technologies that exploit fuels that can be obtained for free (i.e., the sun and the wind). That’s what makes the project so interesting; it’s about technology not about natural resources. The project, according to the article, is attracting a lot of interest.

“Outsiders seem keen to get involved. MIT is helping MIST with the recruitment and training of its faculty. Credit Suisse, a Swiss bank, has invested $100m in the initiative’s clean-tech fund—the same amount as Masdar itself. Foster + Partners, a British architecture firm, has come up with the master-plan for Masdar city. BP, a big oil firm, and Rio Tinto, a mining giant, will collaborate on a carbon-capture and storage scheme. Masdar is working with such partners not because it lacks capital, says Mr al-Jaber, but because it wants to take advantage of foreign expertise and have its ideas independently scrutinised.”

The fact that big oil and mining firms are involved and that their focus is on “carbon-capture and storage” may appear out of place in a city whose dream is creating a zero-emission future. The truth is that although the age of fossil fuels may be waning it is far from over. Without finding a way to manage fossil fuel emissions, developing alternative energy sources may come too late for the environment. Many environmentalists believe that pursuing technologies that will make oil and coal emissions “clean” are simply fantasies [“The Dirty Truth About Clean Coal,” by Ben Elgin, BusinessWeek, 30 June 2008]. Elgin writes:

“For years to come—’clean coal’ will remain more a catchphrase than a reality. Despite the eagerness of the coal and power industries to sanitize their image and the desire of U.S. politicians to push a healthy-sounding alternative to expensive foreign oil and natural gas, clean coal is still a misnomer. … [Coal-fired] plants, which provide half of U.S. electricity, are [America’s] biggest source of greenhouse-gas emissions linked to global warming. No coal plant can control its emissions of heat-trapping carbon dioxide. “‘Clean coal’ is like a healthy cigarette,” says Blan Holman, an attorney with the Southern Environmental Law Center in Charleston, S.C. ‘It doesn’t exist.’ … All the talk relates to the idea of separating CO2 from the coal-burning process and burying it in liquid form so it won’t contribute to climate change. … Corporations and the federal government have tried for years to accomplish ‘carbon capture and sequestration.’ So far they haven’t had much luck. The method is widely viewed as being decades away from commercial viability. Even then, the cost could be prohibitive: by a conservative estimate, several trillion dollars to switch to clean coal in the U.S. alone.”

That is the reason that research into carbon-capture and storage schemes has a place in the larger picture. Returning to The Economist‘s article the author notes that it is not the partners involved, the technologies under development, nor the outside investments being made that are attracting the most scrutiny — it is Masdar city itself. The buildings are being designed and built to be super efficient and water will be recycled to reduce the need for desalination, which requires a great deal of energy [see my post The Future of Desalination]. In addition to recycling water, “there will be dew-catchers, rainwater harvesting and electronic sensors to raise the alarm in case of leaky pipes.” There will be plants in “green spaces,” but they will be flora adapted to the harsh conditions of the desert. Transportation within the city involves walking or using a “personal rapid transit” system involving “small pods that will zoom around the city on tracks, akin to metro cars for individuals.” Supplies for the city will also move via the pods. The city will be walled, but not for security purposes. The walls are intended to keep out the hot desert wind. Those winds will be used, however, to power turbines that generate electricity for the city. Streets will be narrow in order to achieve the greatest amount of shade and are designed to “funnel breezes from one side of the city to the other.” The city will also take advantage of solar power. Most, if not all, roofs and canopies will be topped with solar panels. In addition, a large plot of land on the city’s edge will become a solar power farm. Other technologies that will be employed include solar water heaters and “waste-to-energy” facilities — incinerators like those being used in Japan [to read more about the Japanese system see my post Pollution in Asia].

City planners are also leaving plenty of empty space so that as new technologies are developed they have a place to be tested. For example, an area has been reserved for algae ponds that may some day produce biofuel [for more on that subject see my post The Potential of Pond Scum]. A lot of the space for new technologies will be found beneath the city. The entire enterprise is being built on a raised platform so that pipes and wiring are out of sight but can be easily accessed. The article notes that “the source of roughly a fifth of the city’s power supply has not yet been decided, on the assumption that there will be better options available by the time the project is due to be completed, in 2016.” Ironically, if successful, the city may become a tourist attraction and, if that is taken into consideration, travel to and from the city could dramatically increase its carbon footprint. For that reason, I suspect that visitors might be restricted. Developers hope “the city [will] produce more energy than it consumes and ensure that less than 2% of the waste it generates ends up in landfills.” Developers are even trying offset the carbon footprint of the city’s construction.

“Carbon sequestered in the city’s vegetation, along with exports of surplus green energy, should be enough to offset the emissions associated with construction, says Khaled Awad, who is managing the site. Contractors say they are keeping careful track of their carbon footprints and mutter about the difficulties of finding concrete and steel with a high recycled component. A bewildering array of recycling bins stands prominently in the waiting area of the site office.”

Don’t expect Masdar city to be lit up like Las Vegas. The city will not produce enough electricity to power itself at night (at least in the beginning) because it will rely so heavily on solar power. Should storage technologies improve, that could change. Until then, it will have to draw energy from Abu Dhabi’s power grid during the hours of darkness. Manufacturing will also be scarce since developers will not permit energy-intensive industries within the city walls. This is ironic, the article points out, since one of the objectives of the Masdar Initiative is to foster local manufacturing. It just has to be done outside the city. The developers are okay with that because Masdar is, after all, an experiment — a point the article is forced to admit.

“Masdar’s creators, to be fair, seem to see it more as a development project than as an environmental one. They do not pretend that Abu Dhabi is about to wean itself off oil and gas. But its rulers, they say, want to diversify its economy, in preparation for the day it runs out of oil—or of customers for it. Since local workers and officials have already built up some expertise in energy, it makes sense to capitalise on that. What is more, Abu Dhabi, with its intense, year-round sunlight and desperate thirst for water, is ideally suited to develop technologies such as solar power and desalination. And thanks to all that oil, there is no shortage of capital. Masdar plans to help finance promising technologies at all stages of development. It will set up its own incubator to nourish local start-ups, in addition to the clean-tech fund and other strategic investments in mature firms.”

Another reason this particular article interested me was that it explained that developers put a lot of thought into how the project could attract business partners and people by creating a local technology cluster.

“[Sultan al-Jaber, Masdar’s boss] says that Masdar has studied successful technology clusters around the world in an effort to recreate the same conditions in Abu Dhabi. He is particularly keen to mimic the welcoming regulatory environment and efficient infrastructure of places such as Singapore and Ireland.”

I encourage leaders of emerging market countries to look for ways to establish an economic cluster in sectors in which they have a natural competitive advantage. Identifying local competitive advantages is part of the Development-in-a-Box process. Masdar city’s developers are hoping that foreign partners setting up shop in the city will opt to partner with local businesses, but, even if they don’t, foreign firms will be able to move capital freely in and out of the country. Just as importantly, “there will be strong protection of intellectual property and little in the way of paperwork. Most alluringly, they will not pay any taxes.” Protecting intellectual property rights are particularly important in global business transactions. Poor enforcement of such rights still plagues China.

One might wonder what (besides money) could attract some of the world’s best minds to the deserts of Abu Dhabi. The Masdar Institute of Science and Technology “seeks to entice great minds with the promise of minimal teaching requirements—just one course at a time—and plenty of opportunities to pursue original research. The ‘open laboratory’ of Masdar city is another draw, says Marwan Khraisheh, who runs the institute.” So far it seems to be working. The article reports that faculty and students have been recruited from universities such as Cornell, MIT, and Princeton. The Initiative has also attracted some luminaries as supporters.

“Masdar itself, meanwhile, has recruited such figures as Rajendra Pachauri, the head of the United Nations’ climate panel, and John Browne, a former boss of BP, to help select the winner of a prize for innovation in energy. Britain’s Prince Charles is a patron.”

The article concludes that “Abu Dhabi is still not Silicon Valley. MIST is tiny, and will not admit its first doctoral student until 2011. The city has a miserable climate and little in the way of entertainment apart from malls and restaurants. But it is more cosmopolitan and less conservative than many imagine.” It will probably take a decade or more for us to learn whether or not this grand experiment pays real dividends. But there is an urgency, even in these bad economic times, that compels research and development efforts. I suspect that the Masdar project will produce valuable research and that it will begin trickling out over the next few years. It would be great if some true breakthroughs were discovered and developed. If they aren’t, it won’t be for lack of trying.