Imagine if you and your extended family were digging in the backyard and found something valuable like, say, 10% of the world’s oil reserves. That’s the story of the United Arab Emirates (UAE), a small country with big assets and bigger ambitions.
UAE should be a powerful defender of the status quo on energy use. Denying climate change would also make tremendous sense. But this country is attempting a pivot of historic proportions, trying to build a oil-free future in the desert. UAE has become a major player in clean technologies, funding large-scale renewable energy projects around the world, and investing millions in fundamental research (in partnership with MIT) in energy, water, microelectronics, advanced materials, and transportation systems.
Earlier this year, I spent a few days in Abu Dhabi (on a press trip with travel paid for by the PR firm that represents Masdar and the UAE), attending the city’s annual World Future of Energy summit and spoke with key executives from the country’s clean energy business arm. In recent weeks, I was struck by the difference between the UAE’s approach and that of a similar sized entity, ExxonMobil. The oil company released a long statement on the risk of its oil and gas assets being “stranded” (that is, made worthless) by the world’s potential pivot away from fossil fuels.
Not surprisingly, Exxon said there was no real risk to its investors – it would burn all the fuel it has in reserve, climate change be damned, because a) the world’s poor and growing middle classes need energy and b) the world’s governments would not take strong enough policy action to seriously reduce carbon emissions. On the latter point, sadly, the company may be right. On the first, though, it was top-notch propaganda to conflate the need for energy to a need for their form of carbon-based energy. We can provide carbon-free energy to the world, with or without Exxon.
In comparison to Exxon’s backward-looking position, the UAE seems positively progressive on clean energy. At the Future of Energy Summit, UAE leaders announced a partnership with Denmark, and with Vestas Wind in particular, to tackle energy poverty in the developing world. The Wind for Prosperity project will offer carbon-free electricity to those who mostly use very expensive diesel generators for power. This partnership is only one example of the UAE’s strategy to help bring about a clean economy future, which, according to Bader Al Lamki, the director of Masdar Clean Energy, has two major elements.
First, the country is helping build the global supply of clean energy, recognising that, as Al Lamki told me, “conventional forms of energy are going to decline” (a statement in direct opposition to Exxon’s projections). Al Lamki runs a couple of funds investing hundreds of millions of dollars in some of the largest utility scale solar and wind projects in the world, as well as water desalination, energy storage, and energy efficiency.
Second, UAE built Masdar City, a demonstration project and research facility, to show how clean technologies could work in practice. Assessing the progress of Masdar City (which I visited), is a longer conversation. But the research going on there is real. UAE partnered with Massachusetts Institute of Technology (MIT) to build a graduate degree programme and research facility to patent and leverage new technologies.
Cynics would say the UAE is doing this all for show, but it doesn’t feel that way. And it’s not new. Decades ago, the father of the UAE, Sheikh Zayed bin Sultan Al Nahyan (who died in 2004), laid out a surprising vision of critical issues that would shape the future of his country. The four main ideas, according to Fred Moavenzadeh, the MIT professor running the Masdar Institute of Technology, were the diversification from oil and gas, concern about climate change, the importance of good education for his people, and equal rights for women.
UAE is certainly not alone in trying to make a fundamental pivot away from fossil fuels. There’s a surprisingly long list of countries that get over half their electricity from renewables already, although most are using hydropower to get there. A smaller group is going for the true renewables like solar, wind, and geothermal.
Germany, while struggling at times, is pursuing green energy aggressively. Kenya is planning to get half its electricity from solar by 2016. Morocco is shooting for 42% renewables by 2020. Even Saudi Arabia has some aggressive solar goals and is investing over $100bn in a solar future.
The business case for oil countries to go clean first is strong – every barrel they don’t use they can sell at a vast profit to all of us. And it was actually a Saudi leader who once said memorably that the Stone Age did not end for lack of stones. But UAE seems to be taking that concept to heart. I heard the phrase, “If you can do it here …” repeatedly. They were talking about both the literal challenge of creating a net-zero building in a country with no water and 120F temperatures, and also about building a clean oasis in the middle of so much oil.
The scale of UAE’s clean activity may not be enough to replace their oil-based economy any time soon. But it’s clear that the country is trying to avoid a round trip from a nomadic existence to untold riches and back again. Companies and countries of all sizes should heed the heretical questions that this small, unusual country is posing, or risk a similar fate.Advertisement
Andrew Winston, founder of Winston Eco-Strategies, is a globally recognised expert on green business strategy.
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