Abu Dhabi green city the start of a new Middle East energy vision

If Abu Dhabi were a canvas, few painters would consider using “green” to paint the skyscraper-clad urban desert oasis. Sure, the rich United Arab Emirates city pumps artificial green into its oven of a climate — tree-lined boulevards, expansive golf courses and other vegetation that could never survive without plundering a tremendous amount of resources give the metropolis a more Western feel.

Maintaining this Middle Eastern fantasy ecosystem comes at a heavy environmental and social price. Environmentalists last year warned, “the country, already reliant on costly desalination plants powered by its lucrative fossil fuels, must cut consumption by its 8.2 million people or risk depleting groundwater resources in 50 years,” according to a Reuters report.

It appears Masdar City, an Abu Dhabi community, took that message seriously. Masdar aspires to be the world’s first zero-carbon community and hopes waste timber will earn it that distinction. Masdar also will use native plants in landscaping, which require one-third the amount of water compared with Abu Dhabi’s penchant for unsustainable, unnatural flora. The city intends to divert 50 percent of all waste from landfills by recycling and reusing timber and other materials in the project’s first phase.

Sustainability practices are the first step in attracting research and business opportunities in other energy fields, especially for a region like the Gulf Coast. With European energy markets already more mature and those economies lacking the capital to initiate expensive, advanced projects, energy firms are looking toward emerging economies in the Middle East, Latin America and Asia Pacific for investment.

Scotland struck a deal with Masdar City on Monday to support  university research and other initiatives. That deal is potentially worth billions of dollars, Scottish First Minister Alex Salmond said:

“I firmly believe this agreement will yield great results for Abu Dhabi, great results for Scotland, and I do believe it will lead to significant advances that will benefit this entire planet. That’s the importance of what’s been talked about.”

As I’ve said in this space many times before, Middle Eastern nations must diversify their energy economies. That will that help avoid dependence on state-owned oil c0mpanies that prone to corruption. It also will provide a place for investment dollars, as energy firms are simply waiting for the next market to pop up so they can do something with all their money. In turn, that will spur research institutions — possibly leading to patents and valuable innovation — in Middle Eastern nations that desperately need to create skilled jobs for its educated, underemployed and young citizens.

The Middle East, with its well-documented dependence on fossil fuel production as a main economic driver, is an embryonic energy market. Energy pioneers there realize the benefits of technologies like PV solar, but too few people in the region have enough understanding of the technology for any sort of renewable energy movement momentum. However, investors will be more than ready when that momentum builds.

The Masdar City project is a good start, as it will get people in the region thinking about renewable energy and sustainability. Already, Masdar Institute, a graduate-level university focusing on renewable energy and sustainability, hosted a meeting with 12 UAE universities about joining the European Union-Gulf Cooperation Council (EU-GCC) Clean Energy Network. That organization strives to “build a functional partnership and extensive new networks relevant to renewable energy sources, energy demand side management and energy efficiency, clean natural gas & related clean technologies, electricity interconnections and market integration; as well as carbon capture and storage.”

The Middle East needs a new energy picture. It’s time to paint the region green.

US should reevaluate Iraq exit after oil attacks

Recent reports that Iraqi insurgents are attacking the oil industry should give the US pause about its planned exit considering the impact these incidents could have on long term economic development.

Joel Wing at Musings on Iraq has a good summary (with links) to the reports. In all, there were five mishaps related to oil in June.

Wing explained that oil accounts for 90 percent of the nation’s revenue. He said insurgents plan such attacks to grab headlines, which leads to recruits, which leads to money, which leads to continued operations.

The constant threat of those attacks lead to unpredictability, and Wing hypothesized that insurgent timing was planned to coincide with the beginning of several foreign oil contracts.

This dynamic will have a tremendously negative effect on Iraq’s economic development potential. In his essay “International Investment and Colonial Control: A New Interpretation,” Jeffrey Frieden explained that site-specific foreign investment during a host country conflict is easier to defend with force — for example, oil fields. But there are some major security concerns ahead of the planned US exit from Iraq. The Iraqi police and army do not appear trustworthy or legitimate to many citizens, which means they cannot be counted on to provide vital security for the nation’s precious oil resources.

Whether this causes investor flight remains to be seen — although that’s doubtful considering every country has oil needs. But it could significantly alter the contracts Iraq receives. Maybe not monetarily, but something may have to give. What that is remains unclear, but one thing is certain — investors won’t like the prospect of their millions of dollars going ablaze.

The attacks on oil have another effect — by crippling the nation’s main breadwinner, the insurgents render the government ineffective. Depleted jobs numbers and oil revenue sends a bad signal to the Iraqi people that their government cannot provide for them. That in turn feeds into insurgent recruiting, as those groups are bankrolled by wealthy people and can offer essential services such as education, food and shelter.

In essence, the attacks on oil encourage civilian dependence on insurgent groups for general welfare. It’s a scenario the U.S. has tried to avoid for years, but one that may still be a factor when it leaves.