What will the impacts be of the Dubai credit crisis on Masdar City, the famous living sustainability lab being built in Abu Dhabi, United Arab Emirates (UAE), with the goal of being a zero-net carbon city?
So far the UAE capital city-state of Abu Dhabi, backed by significant revenues from oil production and collateral from reserves, has escaped the financial panic that has gripped neighboring Dubai. This bodes well for Masdar City, to which Abu Dhabi pledged $15 billion in investments; some are predicting the Dubai domino effect will not stir up dust in Masdar.
Abu Dhabi is looking at Masdar as being an international crucible for renewable energy and other sustainability technologies so that the UAE can make the transition from relying exclusively on fossil fuels to exporting technologies for future low-carbon/ low-water global energy and resource needs.
Masdar, which will have about 55,000 residents when complete before 2020, is notable in that it is serving as a large-scale test bed for new technologies in renewable energy, passive wind cooling, advanced materials design, innovative car-free transportation, water conservation and local food production.
The project is financed by funds through partners such as Deutsche Bank and Credit Suisse and is being developed with technology corporations such as General Electric, the anchor tenant in Masdar’s Ecoimagination Center.
The Masdar Institute, which started classes this fall, is backed in a cooperative agreement with MIT (The MIT Technology Review is the source above that predicted things will be hunky dory in Masdar despite Dubai’s situation).
In terms of financing, The Abu Dhabi Future Energy Company, which is the government entity behind Masdar, announced in late September that it was seeking $600 million over seven years to fund construction of Masdar, where ground was first broken earlier this year. The government reported that it was not seeking an estimated $18 billion to finance the project, a figure that was published in other media reports.
Carbon credits and trading represents another form of project financing for Masdar. Last month Masdar was required by the United Nations to resubmit four out of six its carbon credit schemes that were part of the Clean Development Mechanism program of the Kyoto Protocol under the UN, which will become active in earning credits in June of next year.
Masdar is currently engaged in a wide assortment of R&D, including working with the nation of Spain to test large-scale concentrated PV solar power production in semi-tropical desert conditions. Masdar features some 30 manufacturers of PV and thermal solar products testing more than 40 solar related technologies alone.
With GE, the city is testing smart-grid technologies, including smart appliances, for home energy monitoring and energy conservation, among other technologies.
It seems that Masdar represents a completely different mindset than the ‘build it and they will come” approach taken in Dubai.
Instead of Dubai’s living-for-today mentality with giant indoor ski slopes and man-made islands built in the desert for jet-setting tourists, Masdar is more about channeling global innovation for both the future of its own nation’s economy and the growing demands of the world.
Still, many interested in clean technologies and sustainable cities will be watching Masdar closely during the next few months to look for signs of how a critical sustainability innovation ecosystem will survive the stress tests of a volatile global financial ecosystem.
Warren Karlenzig is president of Common Current, an internationally active urban sustainability strategy consultancy. He is author of How Green is Your City? The SustainLane US City Rankings and a Fellow at the Post Carbon Institute.