Over the next five years the UAE will expand its renewable energy (RE) sector with the goal of RE accounting for 7% of energy output by 2020 – making the country the undisputed regional leader in clean energy development. Gerald Butt reports.
Visitors to Abu Dhabi city tend to be amazed both by the scale and variety of the high-rise buildings and the amazing areas of green grass and trees between them. Abu Dhabi is unique among Gulf cities in this respect thanks to the vision of the late UAE president, Shaikh Zayed, who believed passionately in the need for a green environment.
Shaikh Zayed’s vision has been taken a step further over recent years with the UAE establishing itself as a centre for RE investment that outstrips by far anything similar in the Middle East and North Africa. Indeed over the coming years the UAE plans to expand its research and development facilities to turn Abu Dhabi into a global hub, with the capacity to export advanced RE technology.
At the recent World Future Energy Summit in Abu Dhabi, the UAE set out some of its goals for the decades ahead – including commitment to produce around 10% of domestic electricity from RE by 2030. Up to $1 billion has been allocated for future investment in the renewables sector in the coming years.
But why, one might ask, would one of the world’s leading hydrocarbon producers be so dedicated to the cause of RE? The answer is that the UAE realizes that domestic demand for oil and natural gas is rising every year and hydrocarbon reserves are not inexhaustible. With the consumption of electricity soaring, the UAE is already having difficulties acquiring the volumes of gas it needs to operate its power stations, particularly during summer peak demand periods.
The figures tell the story: at present the UAE consumes some 68 billion cubic metres (bcm) of natural gas, but it produces only 56 bcm. The shortfall of 12 bcm has to be imported at market prices, imposing a considerable burden on the economy. The gap between consumption and demand is expected to widen significantly, with gas consumption predicted to reach around 100 bcm over the coming decade and a half. So an expanded share for RE in the energy mix makes perfect sense.
Developing Abu Dhabi as a clean energy hub will create employment opportunities and be an important plank in the UAE’s strategy of gradually diversifying the economy. At present, most of the available natural gas is required for power generation. With increasing amounts of RE, the country will have the opportunity of establishing more non-hydrocarbon-associated industries. Such moves would help the UAE to move away from its huge dependence on oil and gas – accounting for three-quarters of national revenue and more than 30% of GDP.
The state-owned Masdar project, which was set up in 2006, says in its mission statement that it seeks to “invest, incubate and advance the establishment of a clean energy industry in Abu Dhabi and around the world”. Masdar is already involved in renewables projects in Europe and Asia – aside from several harnessing solar and wind energy in the Middle East.
Perhaps the most remarkable aspect of the emergence of the UAE as a clean-fuel hub is that other oil and gas producers in the MENA region and elsewhere have been so slow in following suit. But there again these states were not lucky enough to have had a ruler who cared as passionately about the environment as Shaikh Zayed did.
Gerald Butt, a former BBC Middle East correspondent, is an analyst and author on the region.