Ms. Luomi is a researcher at the Finnish Institute of International Affairs and a PhD candidate at the Institute for Middle Eastern and Islamic Studies at Durham University.
Abu Dhabi, the leading monarchy of the United Arab Emirates (UAE), has arguably been the most successful polity in the Gulf region in seizing the opportunities brought about by the rise of climate change on the international agenda. Instead of emphasizing the threats of international climate-change mitigation to oil-export revenues, Abu Dhabi, despite its vast fossil-fuel reserves, has opted for a proactive domestic approach to the challenge. In 2006, it established the Abu Dhabi Future Energy Company, commonly known as Masdar, and started positioning the UAE among the world’s leading countries in clean technology and energy. In 2008, Abu Dhabi announced its national nuclear policy and is now well on the way to making the UAE the first Arab state with a civilian nuclear energy program and several operating plants by the 2020s. Moreover, in 2009, in international recognition of the credibility of its stated ambitions, Abu Dhabi won a tight race against Germany for hosting the headquarters of the recently established International Renewable Energy Agency, IRENA, aimed at promoting renewable energies in both developing and industrialized countries.
While these domestic developments undoubtedly have been influenced by wider changes taking place in the UAE’s external environment, especially in the energy sphere, they also encompass important domestic motivations and perform key functions in a larger pattern of strategic economic transformation that has been taking place in Abu Dhabi since 2004. Evidently, Masdar, the nuclear program, and the IRENA headquarters are all geared to some of the most momentous of domestic challenges: economic diversification and job creation for the growing national population, demand-side management of energy security, and transfer of technology and knowledge. Moreover,the three examples serve to illustrate the different ways in which Abu Dhabi seeks to raise its profile and prestige both regionally and internationally. Finally, these recent alternative-energy projects also reflect the multidimensional ways in which key members of Abu Dhabi’s ruling elite seek to maintain domestic legitimacy. Fundamentally, the three examples represent the many ways in which the emirate’s elite strive to secure the country’s long-term economic prosperity and sociopolitical stability, so as to maintain the regime’s rule beyond the current energy paradigm.
Abu Dhabi is the wealthiest of the seven emirates that form the UAE. It owns 7.4 percent of the world’s proven oil resources, 3.2 percent of global proven natural gas supplies, and over 90 percent of the country’s proven oil and natural gas. Abu Dhabi’s gross domestic product is well over half of the federal total, and it is currently planning to spend $175 billion on economic diversification over a period of six years.1 Due to its oil wealth, Abu Dhabi’s long-term economic strategy relies extensively on a combination of overseas investments and industrialization in the energy-intensive and hydrocarbon sectors.2 In essence, with Abu Dhabi’s oil reserves expected to last until the end of the century,3 its diversification efforts, like those of Saudi Arabia, have never aimed at a complete shift away from oil.
Abu Dhabi can be described as a strong rentier state due to its vast fossil-fuel resources, small national population (estimated at 20 percent of a total population of 1.8 million in 20104), and stable and consolidated authoritarian rule. The ruling elite’s domestic legitimacy is based on a combination of rentier wealth distribution and “neotraditional”5 legitimacy resources, a number of which are ultimately connected to the figure of the late emir, Sheikh Zayed bin Sultan Al Nahyan, also known as the father of the nation and the man who “turned the desert green.” Those neotraditionalist legitimacy resources that are derived from the environment6 are of particular interest for this study. The external stability of both Abu Dhabi and the UAE is mainly guaranteed by military alliances with the United States, France and other Western states, but also through the decision to maintain partial foreign ownership of its national oil companies.
Up to 2004, Abu Dhabi presented a rather restricted infrastructural development trajectory, especially when compared with its oil-scarcer neighboring emirate Dubai, where earlier diversification was imperative. Shortly after the death of long-time ruler Sheikh Zayed in 2004, Abu Dhabi began fast-track development of a “new economy” alongside its oil and overseas-asset-based “old economy.” The new sectors include high-technology heavy industries, cultural tourism, real estate, and low-carbon energy technology and production.7
Many of the country’s future challenges relate closely to the rentier economy and the sociopolitical system it has created: the high dependence on oil and other external revenues for economic stability, the growing population and unsuccessful human-resources-management strategies, and high levels of natural resource consumption that have lead to a weak environmental record as well as a domestic energy and water crisis. Climate change will further increase the existing challenges.
In the medium term, Abu Dhabi is regarded as well-positioned, owing to its robust combination of energy resources and sovereign wealth funds, the latter estimated at nearly one trillion dollars,8 to cope with the main negative consequences of climate change. These will potentially include intensifying natural disasters, gradual sea-level rise, increasing water scarcity and food-import dependence, and climate-change-induced migration from poorer states in the region. Nevertheless, Abu Dhabi’s continuing heavy reliance on oil revenues makes its ability to adapt contingent on the permanence of global demand for oil and/or its ability to diversify to new economic sectors and sources of external rent.
However, with global oil demand not expected to decrease in the coming decades, domestic demand-side management issues will constitute the UAE’s main energy security challenge, especially during the next decade. Driven by rapid population and economic growth, a harsh climate and high per capita consumption rates, domestic energy demand is increasingly challenging domestic energy security. The population of Abu Dhabi alone is expected to grow to 3.1 million by 2030.9 The government’s primary response has been to increase supply and cost-effectiveness. In the late 2000s, major capacity-expansion plans, totaling tens of billions of dollars and aimed at electricity production and water desalination, were announced by the government-owned gas companies. However, coming already late, many of these have suffered from repeated delays, and their ability to meet expectations is therefore highly uncertain.10 Moreover, additional imports of Qatari gas, which began in 2007 through the Dolphin Energy pipeline, are uncertain.11 While natural gas will remain the backbone of the UAE’s domestic energy security, insufficiency of supply has pushed the individual emirates, like most other Gulf monarchies, to consider alternatives. Nuclear energy became a viable option in the region as a confluence of several factors, including the global drive to find low-emission sources of energy and fear of Iran’s alleged nuclear-weapons program, whereas heavy domestic investments in renewables have followed a subregional trend that began in 200612 but have been considerably accelerated by the government’s strategic decision.
The UAE’s environmental unsustainability is another topic that has received wide international attention in recent years, touching a nerve among the federation’s image-conscious rulers, especially in Abu Dhabi and Dubai. According to some estimates, although the UAE had only produced 0.16 percent of historical global CO2 emissions by 2005, it had the world’s third-highest per capita emissions — 28.3 tons per person a year — surpassed only by Kuwait and Qatar. Growth of total emissions is also estimated to have been rapid during the last decades.13 Moreover, the UAE has been repeatedly ranked by the World Wildlife Fund as the country with the world’s largest per capita ecological footprint.14
By 2009, important developments were taking place in Abu Dhabi in the areas of clean energy and environmental sustainability, including both planned and implemented projects. The most significant of these is the Masdar Initiative, launched in 2006, which in itself has acted as a thrust for further projects. A major undertaking in the field of urban planning, Plan Abu Dhabi 2030, launched in 2007, includes a comprehensive sustainability dimension. While many other initiatives and policies are currently underway in the UAE — including Dubai’s green-building directive, Abu Dhabi’s sustainable building methodology (Estidama) and a new energy policy — these still lack content and implementation.15 The three cases chosen for this study — the Masdar Initiative, the nuclear program and the Irena headquarters campaign — all from the field of energy politics, are among the most tangible and advanced of these developments. They also reflect Abu Dhabi’s leading position in this field within the federation.
There is little information as to the exact origins of the Masdar Initiative, but the idea is known to have come from the energy and industry unit of Mubadala’s Operations Group.16 The Masdar Initiative is owned by the private joint stock company Abu Dhabi Future Energy Company (ADFEC). This, in turn, is owned by Mubadala Development Company, one of the investment vehicles of the government of Abu Dhabi. Mubadala, set up by Sheikh Mohammed bin Zayed in 2002, is geared at advancing the economic diversification of Abu Dhabi through a diverse portfolio in sectors such as energy, aerospace, real estate, technology, infrastructure and services.17
What sets the case of Abu Dhabi’s Masdar Initiative, as well as the emirate’s general approach to the issue of climate-change mitigation, apart from related developments in the region’s other monarchies, including the OPEC climate-change research fund established with the lead of Saudi Arabia in 2007,18 is its focus on alternatives to fossil fuels. The scale of the project is also without regional precedent or comparison.
Initiated in 2006, Masdar (Arabic for “source”) comprises a set of projects in the fields of alternative energy and carbon management, including research and development. According to the plans, it will culminate in a “totally green city” of 40,000 residents and 1,500 businesses by the late 2010s. Its four main aims are to diversify the economy, maintain and expand Abu Dhabi’s position in global energy markets, transform the emirate into a developer and exporter of energy technology, and contribute to sustainable development.19
Masdar consists of five main units: property development, a research institute, industries, utilities and asset management, and carbon management. Signaling the government’s support for the initiative in 2007, CEO Sultan Ahmed Al Jaber, Masdar’s most visible and influential figure, was quoted as saying anecdotally that it had “an unlimited budget for renewable energy projects.”20 In January 2008, the Abu Dhabi government announced a $15 billion investment in the initiative.21 Of the five units, Masdar City ($4 billion), the carbon capture and storage operations of the carbon unit ($3 billion), and the photovoltaics-production unit ($2 billion) are to receive the most funding. Masdar has already built up a portfolio that includes companies and projects over the entire technology life cycle.
The most visible aspect of the initiative, Masdar City, ranges over an area of six square kilometers next to the Abu Dhabi airport. Launched officially in May 2007 (with a virtual cornerstone laid in February 2008), it is declared to be the world’s first carbon-neutral, zero-waste and car-free city. It is envisaged to become fully powered with renewables (mainly solar energy), with all waste recycled, and cars replaced by public transport and rapid personal-transit vehicles. Other sustainability features include reduced use of water, recycled grey water, reduced installed-power capacity, and urban planning adapted to the local culture and climate.22
Masdar City’s budget was announced in February 2008 to be $22 billion, $4 billion of which will be funded by Masdar and the rest through foreign investment and various financial instruments. The city is expected to add over 2 percent in Abu Dhabi’s GDP and, based on 2008 energy prices, is estimated to save the equivalent of $2 billion in oil by the mid-2030s.23 The city also incorporates a conscious effort at systematically scaling up and integrating advanced renewable technologies.24 Moreover, it will function as a free zone and promises to create over 70,000 jobs.25 The city is also designed to attract wealthy expatriates interested in this unique niche of Abu Dhabi’s high-end real-estate market.
The Masdar Institute of Science and Technology (MIST), established with the Massachusetts Institute of Technology, has been set up in order to attract both foreign companies and knowhow to the emirate. Research will concentrate in a wide range of alternative-energy technologies and policies, and the institute aims to grow into a 120-faculty, 800-student institution by the late 2010s. 26 The first master’s degree programs began in 2009; PhD programs are expected to start in 2011.27 Another research-related endeavor is the building of an innovation center around the Ecomagination concept of General Electric as a part of an $8 billion joint agreement between Mubadala and GE signed in July 2008. The center will concentrate on developing energy-efficient products and raising awareness on energy conservation.28
The industries unit concentrates on the development and production of photovoltaic (PV) solar-energy technologies and energy. The main investment of the unit has been in Masdar PV, a company established in April 2008 with the aim of rising to the global top-three of the industry. With a total of $2 billion to be invested in the endeavor, an initial $600 million investment includes the construction of PV manufacturing plants in Germany and Abu Dhabi. The total output of 210 megawatts is set to rise to 1 gigawatt.29
The utilities and asset-management unit seeks to build a portfolio of different renewable and alternative-energy operating assets and invests in companies with promising technology and intellectual-property profiles. The first and main investment vehicle of the unit is the $250 million Masdar Clean Tech Fund — launched in November 2006 in cooperation with Credit Suisse, Consensus Business Group and Siemens — which has bought strategic-equity stakes in clean-energy, water and environmental technology companies.30 The unit has also engaged with the Spanish concern Sener in a $1.2 billion joint venture called Torresol Energy to build solar-power plants in Spain.31 In September 2008, the unit invested $175 million in the Finnish wind-turbine manufacturer WinWinD, the largest foreign industrial investment in Finnish history.32 In October 2008, after Shell had withdrawn from the massive British wind-energy project the London Array, complaining of rising costs and low government incentives, Masdar joined the energy companies E.ON and DONG Energy by buying a 20 percent share in the project.33
Domestic production of concentrated solar power (CSP) is another target area. The flagship project in this sector is the Shams 1, a 100 MW CSP plant to be built in Madinat Zayed, Abu Dhabi.34 In May 2009, a 10 MW photovoltaic system — the MENA region’s largest, worth $50 million — was connected to the electricity grid in Abu Dhabi.35
In early 2008, plans for building the world’s first commercial hydrogen-power plant, costing $2 billion, were announced. The 420 MW plant will be constructed with Hydrogen Energy, a joint venture between BP and Rio Tinto. In addition to producing hydrogen from natural gas, it also captures the carbon dioxide produced in the process and injects it back into depleting oil fields for enhanced recovery. The plant should capture 1.7 million tons of CO2 per year, equal to the emirate’s domestic-transport sector’s emissions.36
Masdar’s carbon-management unit is geared to attract Kyoto Clean Development Mechanism (CDM) projects and carbon-capture and storage technologies and projects. The unit’s quantitative goal is to cut emissions by 30 million tons of CO2 annually by 2020, decreasing Abu Dhabi’s carbon footprint by a third.37 In April 2009, the complete tentative CDM portfolio of the unit was 16 projects.38 The emission reductions and financial returns expected from Masdar’s first registered seven-year CDM project, the 10 MW PV solar-energy plant, are a modest 15 kilotons of CO2 equivalent, valued at less than $300,000 per year at late 2009 prices.39
The principal task of the carbon unit is the development of carbon-capture and storage (CCS) technology. In 2008, Masdar announced plans to develop an emirate-level network for enhanced oil recovery that would be the largest single integrated CCS project in the world, including 300 km of pipelines.40 The first phase of the $3 billion project is expected to capture 5-6.5 million tons of CO2 from a steel plant, a conventional power plant, the hydrogen power plant and a future aluminum smelter by 2013. Moreover, each injected ton can add 2.5-3 barrels of oil to oilfield production.41 If successful, not only will the network increase oil production, it will save for domestic consumption the natural gas that is conventionally used for injection.
Two other Masdar-related initiatives, the Future Energy Summit and the $1.5 million Zayed Future Energy Prize, are geared mainly at drawing global-investors’ and media attention to Abu Dhabi’s new industries.
Is Masdar connected more to economic diversification or energy security? Or is it an attempt at enhancing Abu Dhabi’s sources of external revenue? Is Masdar climate policy or mainly a prestige project? Is it aimed at maintaining domestic legitimacy, boosting regional power or projecting Abu Dhabi onto the new global energy map?
The official narratives of Masdar, often repeated in commercial material and by the company’s representatives, can be grouped under three themes: its myth of origin, its economic function and its environmental motivations. First of all, according to the company, Masdar reflects Sheikh Mohammed bin Zayed’s vision and is a natural continuation of his environmental legacy. Also, Abu Dhabi’s experience in the oil industry gives it a comparative advantage in alternative energies. Second, it is said that Masdar is an important part of Abu Dhabi’s diversification strategy: the industries it incorporates will establish a new economic sector and transform the emirate into a global leader in and exporter of sustainable-energy technologies, reversing the flow of high technology and ultimately transforming Abu Dhabi into a post-oil economy by the twenty-second century. Third, the initiative’s spokesmen and government officials have repeatedly stated that Masdar shows Abu Dhabi’s serious commitment and regional leadership in both climate-change mitigation and energy security. They also stress Masdar’s complementarity to Abu Dhabi’s energy and economic security interests, framing the initiative as proof of a rentier state’s ability to do long-term planning as well as an oil exporter’s ability to be green.42
Clearly, the functions of the Masdar Initiative are as multidimensional as the project itself. The fact that the impulse to establish Masdar came from inside Mubadala indicates that it is, first and foremost, another part of Sheikh Mohammed’s new economy, aimed at diversifying Abu Dhabi’s fossil-fuel-based rentier state. However, some of Masdar’s elements, such as the massive CCS projects, will provide important support to the old rentier economy, and others, such as renewables and real estate, will boost Abu Dhabi’s “neo-rentier” economy.
As to energy policy, Masdar is the largest single cluster of investments in renewables and other alternatives to fossil fuels in the region. The comparative advantages achieved from decades of experience in the fossil-fuel industry and the scaling up of technologies might provide additional support for the project’s success. Most important, however, is the fact that Masdar is entirely dependent on the government’s confidence and financing. Without Abu Dhabi’s oil resources and massive windfall profits from the 2000s, combined with the small size of the national population engaged in the rentier bargain, Masdar would never have materialized.
If trust and confidence at the highest levels are maintained through successful performance, Masdar has the potential to reinvent Abu Dhabi as a solar energy power, both in terms of technology and energy exports. However, in the medium term, Masdar’s role in energy policy will be mainly domestic, and even here rather marginal. While the share of renewables of Abu Dhabi’s domestic energy mix is to rise to 7 percent by 2020, solar energy is currently seen as mainly a supplement to help ease peak-load supply during summer months. 43 However, given that the first UAE nuclear plant is expected to be operational at the earliest around 2017, Masdar’s solar-energy installations could still play a relatively important role in alleviating the federation’s energy crisis if implemented promptly.
Although the initiative does not have a defined authority in the UAE’s international-level climate policy,44 climate change is one of the central motives of the “Masdar narratives,” as described above. The director of Masdar’s property unit, Khaled Awad, has stated that one of the motives behind the project was that “Abu Dhabi wanted to show that it’s aware of its carbon footprint today.”45 Additionally, Masdar has brought about the most ambitious and clearest formulation of a domestic climate policy in the Arab world so far. In January 2009, Abu Dhabi declared a 7 percent renewable-energy target for domestic consumption by 2020, to be achieved predominantly through solar energy produced by Masdar’s CSP power plants.46 Also, in a decade or two, carbon capture and storage will potentially yield significant emission reductions, contributing directly to global mitigation.
Accusations of Masdar being merely a green façade that will allow the rest of Abu Dhabi and the UAE to continue business as usual, are, however, pertinent. Most of the renewable-energy projects will be connected with Masdar City itself and will, therefore, not contribute to changing the energy mix in the rest of the emirate, let alone the federation. Renewable-energy production as such does not receive any state subsidies to encourage its wider use. Total UAE energy demand is still expected to grow significantly. Massive industrial and real-estate projects are planned and constructed, which will further increase domestic greenhouse-gas emissions. Without enhancing energy efficiency and other curbs on demand — the most important being to dismantle the untouchable consumer subsidies — this growth will both undermine the positive impact of renewable and clean “future energies” and continue to challenge domestic energy security.
Since its announcement in early 2008 that it would consider nuclear energy, the UAE has carefully sought to frame its nuclear ambitions as stemming from domestic energy needs, taking pains to demonstrate its peaceful intentions. Despite an international environment increasingly conducive to supplying the Gulf Arab states with the needed expertise, Iran’s nuclear program continues to cast a shadow on external evaluations of the UAE’s motives.
The Domestic Dimension
The UAE government has been alleged to have begun considering nuclear energy in 2006.47 After a rapid series of consultations, negotiations and bilateral agreements between mid-2007 and early 2008 with several Western governments and the International Atomic Energy Agency (IAEA), the UAE government approved a memorandum in March 2008 that explained the motivations and principles of its plans to potentially develop a peaceful nuclear-energy program.48 The rapidly rising demand for electricity — which, according to a study commissioned by President Sheikh Khalifa, would increase by 165 percent by 2020 (from 15.5 GWe in 2008 to 41) — was presented as the main factor behind the decision. The study showed that natural gas would be able to supply only half the needed increase, and renewables 7 percent, at most.49 At the time of the evaluation, nuclear energy was considered as practical, commercially viable and clean, while coal was discarded for both environmental and energy-security reasons, and crude oil and diesel rejected as costly and environmentally detrimental.50
Contents of the memorandum were released in April 2008 in a white paper titled “The Policy of the UAE on the Evaluation and Potential Development of Peaceful Nuclear Energy.” The paper stresses the need to develop additional sources of electricity to meet increasing demand and the exclusively peaceful nature of the UAE’s intentions. It also underscores the principle of maximum transparency and renounces domestic enrichment of nuclear fuel on the basis of economic infeasibility and international proliferation concerns.51
Despite the global economic downturn of the late 2000s, plans regarding production capacity apparently continue to be based on the high estimate of 9 percent annual growth in electricity demand. The first nuclear power plant is supposed to be operational by 2017, with construction envisaged to begin in 2012. Although exact details were still not available in late 2009, the plans included three 1,500 MW reactors by 2020 with 11 more of similar size proposed. Two of the first three reactors would be located in Abu Dhabi and the third possibly in Fujairah, reflecting the fact that Abu Dhabi financial assets are key to the program.52
The seriousness of the UAE’s efforts was confirmed in June 2008, when the call for initial bids for the construction of the first reactor was announced.53 The plants will be built through joint ventures with foreign companies, these most likely holding a foreign-equity stake of up to 40 percent. The price of the contract was estimated by newspaper sources as $41 billion.54 In July 2009, the local implementing authority presented a short list of three consortia (French, U.S.-Japanese and South Korean), and the decision on the winning tender is expected by late 2009.55
Maintaining absolute transparency and the highest possible security and quality standards is seen as the vital condition any Gulf state will have to fulfill if it wishes to have a nuclear-energy program. A number of key elements, such as competent staff and assistance for setting up a nuclear law and the necessary regulatory institutions, are available only from abroad.56 The UAE’s peaceful intentions have been repeatedly stressed by the government, along with calls to Israel to sign the Nuclear Non-Proliferation Treaty (NPT) and Iran to continue cooperation with the IAEA.57 In October 2009, going beyond the NPT, the UAE issued a nuclear-energy law that outlaws domestic enrichment of uranium.58 The country is a member of the NPT (1995) and the IAEA Safeguards Agreement (2003); and, in 2009, it signed the Additional Protocol to the Safeguards Agreement.59
The government white paper implies that long-term storage of nuclear waste on national soil is not a preferred option.60 The country has supported the establishment of an international nuclear fuel bank as a safeguard for countries that do not enrich uranium domestically, and it donated $10 million to the American Nuclear Threat Initiative administered by the IAEA.61
The Emirates Nuclear Energy Corporation (ENEC) was set up in 2008 as the responsible implementing authority with an initial budget of $100 million.62 In October 2008, ENEC appointed the American company CH2M Hill (that also manages Masdar City) as the managing agent of the nuclear program with a 10-year contract.63 A Federal Authority for Nuclear Regulation and an international advisory board are also being set up.64 A detailed implementation plan for the entire program will be prepared using external expertise.65 Although the nuclear program will rely heavily on contractor services for technological expertise for the foreseeable future, Khalifa University is planning degrees in nuclear science and engineering with European and American colleges.66 Importantly, all the consulting contracts have been signed with the government of Abu Dhabi instead of the central government.67
The Regional Dimension
There is a complex strategic calculus behind the UAE’s nuclear program: security apprehensions concerning Iran’s intentions, the three-islands dispute, and the Iranian population in Dubai — in addition to the desire to present a counterexample to Iran’s handling of its own nuclear program.68 The UAE’s head start on Saudi Arabia can be seen as one means of boosting its position within the GCC. While declaring support to the GCC joint nuclear-energy-viability study, the UAE government’s white paper implicitly affirms (1) a strong determination to pursue a national program that is independent of the often difficult regional cooperation, and (2) its will to raise its regional status as the first Middle Eastern state to operate a civilian nuclear-energy program with the full approval of the IAEA.69 Arguably, Saudi Arabia will be keeping a close eye on the UAE program, as it might perceive this as an attempt to weaken its relative power vis-à-vis both the GCC and its Western allies. Also, if and when external suppliers of technology and financing replicate the “UAE model” in their cooperation with other regional states, such as Saudi Arabia, Jordan, Egypt, Tunisia and Libya, the country will always constitute a reference point, a “Gold Standard,”70 to which other countries’ programs will inevitably be compared.
The International Dimension
The major global suppliers of nuclear technology and fuel have engaged in supporting and promoting the nuclear option to the UAE government and at the same time sought to win a stake in the multi-billion-dollar project. The external powers have, above all, used the case as a carrot for Iran in demonstrating the benefits of complying with internationally agreed standards on nuclear development. By taking advantage of this opportunity, the UAE managed not only to gain the confidence of relevant international powers, it also succeeded in pitching them against each other in competing for the significant business opportunities.
Negotiations with the French government and the Bush administration in the latter half of 2007 confirmed that both countries were interested in promoting nuclear energy in the UAE. An agreement on peaceful nuclear cooperation with France was signed in January 2008, when three French companies (Areva, Suez and Total) also signed a partnership agreement with Emirati counterparts proposing the construction of two reactors.71 Understandably, observers have seen the nuclear issue as linked to the French military base inaugurated in Abu Dhabi in May 2009 that purportedly derived from France’s aspiration to secure its commercial interests in the region and even to contain the Iranian threat. 72
The United States, under presidents Bush and Obama, has been a strong supporter of the UAE nuclear program. A bilateral memorandum of understanding (MOU) was signed in April 2008, but due to the transition of power in the U.S. administration, the signing of the so-called 123 agreement was delayed until January 2009.73 The agreement was finally ratified by the U.S. Congress in October 2009, after delays caused by concerns about non-proliferation issues and rule-of-law and human-rights violations, including a torture case involving a member of the ruling family.74 The 30-year treaty allows companies to practice nuclear trade in the two countries, but the United States reserves the right to withdraw if its terms are violated.75
The UAE has also signed MOUs with the United Kingdom (May 2008) and Japan (January 2009), and an agreement with South Korea (June 2009). South Korea and the UAE had reportedly explored the possibility of constructing a small pressurized-water reactor as early as in 2005.76 While the major global suppliers have similarly sought to court other states in the region, so far the UAE program is advancing the fastest.
Having won the confidence of almost all decision makers in the West, many observers still argue that the program could increase the possibilities of a regional nuclear race. Other concerns have included terrorist attacks and domestic political instability. The UAE does not have a completely clean record in non-proliferation; according to U.S. and UN officials, Dubai was a central transfer point for the Pakistani nuclear scientist A. Q. Khan in illicitly selling nuclear technology to Libya and North Korea in the 1990s. Dubai, in addition to its thriving trade with internationally embargoed Iran and its hosting of many Iranian banks, has also been alleged to have been the transit point for military and dual-use material to the country.77
As a show of will, the UAE reported it had closed dozens of Iranian companies and blocked illegal shipments of goods destined for Iran. Also, Abu Dhabi, with its less warm relations with Iran, pledged to put pressure on authorities in Dubai if this were required for assuring its external supporters.78 Still, a stronger export-control law adopted by the UAE in August 2007 continues to lack implementing regulations and a responsible institutional body in 2009.79
Currently, the prospects for the actual implementation of the nuclear program appear good. The long-term projections on the price of oil, Abu Dhabi’s financial surpluses, the current domestic energy-security situation, as well as the political determination shown by the local government, aided by the authoritarianism of the state, are all factors confirming this assessment. The main challenges arguably arise from the rentier mentality of the UAE government: human resources, institutional infrastructure and wide-scale implementation all require consistent and long-term planning and implementation. Similarly to Masdar, while acquiring technical expertise only requires international approval and interest, the success of the UAE’s nuclear-energy program will require the sustained political support and financing of key ruling-elite members so as to deliver on the grandiose promises laid out in the early master plans.
While international pressure to cut greenhouse gas emissions was not the main motive for launching the ambitious program, if implemented, the nuclear-energy capacity will push the country significantly towards lower carbon intensity and lower per capita emissions.
Since domestic debate on the topic has been non-existent, the government now has a head start in “educating” public opinion. Due to the weakness of local civil society, significant domestic opposition is unlikely to evolve in the future. International support for the program, in turn, will be secured as long as the UAE keeps to its principles of complete operational transparency, safety, security and cooperation with the relevant international non-proliferation bodies. So far, President Obama has been said to perceive the UAE’s nuclear program as “a model for the world.” A number of other countries have also presented it as an example for developing countries in general and Iran more specifically.80
Along with the French military base, the UAE withdrawal from the GCC currency union in 2009,81 and the various dimensions of the strategic branding of Abu Dhabi by Sheikhs Khalifa, Mohammed and Abdullah bin Zayed, the nuclear program should also be understood as a part of Abu Dhabi’s external strategy to raise its profile both among regional peers and internationally. Whether the nuclear program will spur a future regional nuclear (proliferation) cascade will depend on the external actors that are now looking at securing a stake in the Gulf economic and security architectures. In the absence of technological expertise, neither strong financial resources nor political will alone suffice for building a nuclear program.
Abu Dhabi recently successfully campaigned to host the headquarters of the International Renewable Energy Agency (IRENA). This is another example of how the emirate’s perceptions of the international energy and climate-change agendas changed rapidly as a consequence of the Masdar Initiative and the key persons behind it, and how Sheikh Zayed’s conservationist legacy was again reconstructed in the present-day context of sustainable development.
In January 2009, IRENA was established in Bonn. Originally a German initiative, its mission is to support and advance the use of renewable energy in both industrialized and developing countries, and its establishment is widely seen as a result of discontent with the International Energy Agency (IEA) in promoting renewable energy. Among the 75 countries that signed the establishing treaty were four OPEC member states: Algeria, Iran, Nigeria and the UAE, the latter announcing it would compete to host the headquarters of the organization. Other candidates were Austria, Germany and Denmark.
By June 2009, the membership of the agency had risen to 136, and the UAE had already secured supporting statements from numerous countries and high-level personalities, such as Ban Ki-Moon, Rajenda Pachauri of the IPCC and Amr Moussa.82 The vote for hosting IRENA was supposed to take place in late June 2009 in Sharm El Sheikh, Egypt, but at the last moment, the two remaining contenders, Germany and Austria, withdrew (Denmark having withdrawn a few days earlier), recognizing the majority of votes (between 92 and 101) already secured by the UAE. Abu Dhabi was declared the winner; runner-up prizes were given to Vienna and Bonn, which will host IRENA’s interorganizational liaison office and a technology and innovation center, respectively.83
From the Western countries’ perspective, the placement of IRENA’s headquarters in Abu Dhabi was a symbolic move; they held the participation of developing countries in climate-change mitigation as vital. However, the victory was secured by the votes of developing countries, the majority in IRENA. Abu Dhabi’s success can also be attributed to a campaign capitalizing on the good international publicity for Masdar and portraying the UAE as a catalyst for the introduction of renewable energy in the developing world. Nevertheless, the consequences of IRENA’s headquarters being in Abu Dhabi are even more important. It implies a further commitment of the emirate’s fossil-fuel revenues to renewables and binds it to closer international scrutiny on the delivery of Masdar’s promises.
Abu Dhabi’s Campaign
Although the candidacy for the headquarters of IRENA was made in the name of the UAE, the bid was purely that of Abu Dhabi and Masdar; the main figure behind the campaign was Masdar CEO Sultan Al Jaber. The campaign consisted of sending different ministers and delegations to tour over 100 countries. The case for the UAE was formulated through a few main arguments coupled with substantial financial promises. The UAE was said to be no less than “geographically, politically, economically, financially and technologically in a good position” to win the bid.84 It was noted that the Middle East had not yet hosted a global agency. It was also argued that Abu Dhabi and Masdar would set an example that would encourage other developing countries to see the advantages of renewable energy and related technologies. Masdar City provided an attractive platform for the organization, and the initiative itself was used for providing proof of Abu Dhabi’s commitment to the cause. The official campaign declared that Abu Dhabi’s candidature signaled that “even oil-producing and developing nations can and should participate in embracing renewable technologies.” Moreover, the UAE was the first state to ratify IRENA’s statute, in mid-June 2009.85
Abu Dhabi’s offer included plans to build the headquarters in Masdar City, in a green building that will also host Masdar’s headquarters when finished in 2012. The emirate promised to cover all the building and operating costs of the agency as well as underwrite an allowance for conference facilities and the employees’ immigration fees. Financial promises totaled $135 million, of which $70 million was in cash, the rest coming from in-kind support. Annual loans of $50 million through the Abu Dhabi Fund for Development were also offered for IRENA-approved projects in developing countries during the period 2009 to 2015. The package also included 20 scholarships for IRENA-recommended students at the Masdar Institute (MIST). The offer submitted by Germany, considered generally as the toughest competitor for Abu Dhabi, included only $6 million for setting up the agency and $3-4.5 million for annual operating costs.86 Ironically, Abu Dhabi’s oil wealth may have been the deciding factor in its victory over Europe’s leader in renewable energy, which had originally envisioned the organization.
Motivations and Prospects
Above all, Abu Dhabi’s IRENA campaign should be seen as an effort to raise the emirate’s international profile. Whereas the existence of Masdar was undoubtedly a precondition for candidacy, the visibility and synergy gains are obvious. Turning the IRENA headquarters contest into a North-South issue undoubtedly played a key role in securing the majority of votes. From an international energy-security perspective, some argued, Abu Dhabi’s victory was a sign of willingness to cooperate and engage in a dialogue with the energy-consuming countries, also indicating a concern for climate change.87 The victory arguably also reassures Abu Dhabi’s elite of their abilities at the international level.
Moreover, Abu Dhabi, yet again, took advantage of the benevolent “green-energy giant” narrative that turned the very contradiction of its being one of the world’s largest oil exporters into a publicity asset. Even the UAE’s weak environmental record and its high ecological footprint and per capita greenhouse-gas emissions were turned into assets. It was argued that the headquarters should be placed in a country that still has a lot of work to do in enhancing its environmental record but has already shown a positive effort.88
At the domestic level, the environmental legacy of Sheikh Zayed was yet again brought up as an example of Abu Dhabi’s continuous long-term commitment to environmentalism. The campaign website included a citation from Sheikh Zayed on the importance of conservation in the UAE’s heritage, linking this to his achievements in wildlife conservation and Abu Dhabi’s zero-gas-flaring policy and to the more recent Masdar-related developments.89 Sultan Al-Jaber also hailed the legacy in The National: “The IRENA success is the natural harvest of what our late leader, Sheikh Zayed, planted.”90
Certainly, the placement of IRENA’s headquarters in Masdar City will not only assure the agency of robust financial support and a state-of-the-art building; it will also increase the chances of Masdar’s success by adding pressure on the emirate to deliver on its promises. The presence of IRENA will also raise the prominence of those in the ruling elite who are pushing for renewables and more sustainable energy policies as a complementary source for oil-based growth.
At the Gulf level, a domino effect in renewables in the next few years can be envisaged following the positive experiences and the image gained by the UAE from taking a proactive role in the area. If realized, this would be only a logical continuation to a pattern of previous subregional diffusions in the areas of finance, free zones, real estate and media, among others.
At least one major problem arises from Abu Dhabi’s hosting the IRENA headquarters. While Abu Dhabi seems committed to raising the share of renewables in its domestic energy mix, committing to climate-change mitigation at the international level is still considered impossible.91 So far, the UAE has taken advantage of OPEC’s clout and the voluntary nature of actions the developing countries face as members of the UN climate convention (UNFCCC). With its newfound role as the green leader of the region, the new home of IRENA might have to reconsider this policy.
I have argued that Abu Dhabi’s alternative-energy projects have three main functions: economic diversification, domestic energy security and political legitimacy. These goals are fundamentally linked to the government’s quest to maintain the domestic rentier bargain beyond the era of oil.
Why did Abu Dhabi become active in the sphere of alternative energy and sustainability policies, and what are its chances to succeed? The key factors that explain the emirate’s emergence as the most proactive and innovative of all Gulf monarchies in this sphere are the dynamic leadership behind the emirate’s “new economy,” an abundance of external rent from oil and sovereign wealth combined with a small national population, an authoritarian political system that speeds up policymaking and implementation, a long tradition of joint ventures in the energy sector, and a national myth of environmentalism embodied in the legacy of the founding father of the federation, Sheikh Zayed bin Sultan Al Nahyan.
In the short term, Abu Dhabi is arguably among the least affected in the region by the global economic downturn. Rather than perceiving the negative impacts of climate change and its mitigation as merely threats, Abu Dhabi has capitalized on the economic opportunities associated with the changing global energy agenda. While the international level was a source of pressures and expectations, and regional dynamics played a catalytic role, proactive individuals, led by Sheikh Mohammed bin Zayed, were the key impetus behind the new energy strategies.
With the rise of climate change on the international agenda, oil producers have been forced to admit that a gradual, long-term shift in global energy sources towards a decarbonized energy economy is inescapable. Renewable energy technologies have emerged as an attractive option for Abu Dhabi, facilitating economic diversification and reducing its long-term dependence on oil revenues. Not only can solar energy supplement domestic supply; investing in related technologies will attract foreign investment and international know-how to the country. If coupled with successful human-resources-management policies, this would also gradually build up a local knowledge economy. Furthermore, projects with associated emission reductions would also be potential sources of external rent through sales of carbon credits. With the decarbonization of oil production seen as imperative in the longer term, investing in carbon capture and storage technologies from their early stages therefore appears a wise choice. Also, Masdar’s well-built concept and successful exploitation of Sheikh Zayed’s environmentalist legacy in this new context, have already served to raise Abu Dhabi’s international prestige, while also contributing to consolidating the ruling elite’s domestic legitimacy. Nevertheless, only time will tell whether Abu Dhabi’s leadership is able to overcome the challenges of climate change by successfully implementing these extremely ambitious goals.
2 See, for example, Christopher M. Davidson, Abu Dhabi: Oil and Beyond (Hurst, 2009), p. 69.
3 With current production levels. UAE Yearbook 2009, p. 122.
4 Abu Dhabi Tourism Authority, www.visitabudhabi.ae.
5See, for example, Gerd Nonneman, Political Reform in the Gulf Monarchies: From Liberalisation to Democratisation? A Comparative Perspective, (Durham University, 2006), pp. 3-4.
6 See Christopher Davidson “Abu Dhabi’s New Economy: Oil, Investment and Domestic Development,” Middle East Policy, Vol. 16, No. 2, 2009, p. 69.
7 Davidson, Oil and Beyond (2009), pp. 77-79.
8 Various estimates exist. See, for example, Davidson, “Abu Dhabi’s New Economy” (2009), p. 62; Rawi Abdelal, “Sovereign Wealth in Abu Dhabi,” Geopolitics, Vol. 14, No. 2, 2009, p. 317.
9 Abu Dhabi Urban Planning Council, Plan Abu Dhabi 2030: Urban Structure Framework Plan (2007), p. 45.
10 UAE Yearbook 2009, pp. 128-130; Reuters, July 9, 2009.
11 Middle East Economic Digest (MEED), June 23, 2009; Financial Times, May 26, 2009.
12 CNET News, May 14, 2007.
13 World Resources Institute, Climate Analysis Indicators Tool, version 6.0 (2009).
14 World Wildlife Fund, Living Planet Report, (2008), p. 14.
15 On the energy policy: The National, July 10, 2009.
16 Juha Wilén, United Arab Emirates: Sustainable Building and Green Buildings (Finpro, 2008), p. 9.
18 AFP, November 18, 2007.
19 Sam Nader, “Paths to a Low-Carbon Economy—The Masdar Example,” Energy Procedia, Vol. 1, Issue 1, 2009, p. 3952; www.masdar.ae.
20 Gulf News, October 29, 2007.
21 Masdar press release. February 9, 2008.
22 Nader 2009, pp. 3953-3954; Ryan Tompkins, presentation in Helsinki, April 29, 2009.
23 Masdar press release, February 9, 2008.
24 Nader 2009, pp. 3952-3952.
25 Masdar press release, February 9, 2008; www.masdar.ae.
26 Personal interview with a Masdar employee, Abu Dhabi, October 2008; The National, May 14, 2008.
27 www.mist.ac.ae; Gulf News, September 6, 2009.
28 General Electric press release, January 20, 2009.
29 Masdar, Today’s Source for Tomorrow’s Energy, 32 pp brochure (2009); The National, May 29, 2009.
30 Ziad Tassabehji, presentation in Helsinki, April 29, 2009.
32 Jari Varjotie, presentation in Helsinki, April 9, 2009.
33 The National, October 16, 2008; Masdar press release, November 4, 2008.
35 UAE Interact, June 1, 2009.
36 BP press release, January 21, 2008.
37 Vilén 2008, p. 10; Nader 2009, p. 3955.
38 Ziad Tassabehji, April 29, 2009.
39 Jorgen Fenhann, CDM Projects in the Pipeline (UNEP Risoe Centre, September 2009).
40 UAE Interact, January 22, 2008; Reuters, April 24, 2008.
41 The National, December 10, 2008; Reuters, November 18, 2008; UAE Interact, October 29, 2008.
42 Sources include the Masdar Initiative’s web pages; Masdar-related brochures from 2008 and 2009, a Masdar City presentation in Helsinki in April 2009, ADNOC’s CEO Yousef Omair Ben Yousef in Time Magazine, February 13, 2008, and Sultan Al Jaber in The National, May 29, 2008.
43 Al Jaber in Mubadala press release, July 2, 2007.
44 Personal interview with Masdar employee, May 2009; Nader 2009, pp. 3957-3958.
45 National Public Radio web article, May 5, 2008.
46 RenewableEnergyWorld.com, January 19, 2009; The National, July 10, 2009.
47 The Wall Street Journal, April 2, 2009.
48 Khaleej Times, July 21, 2007; Economist Intelligence Unit ViewsWire, May 28, 2008; www.uae-embassy.org.
49 Consumption would rise 9% annually. Government of the United Arab Emirates, “Policy of the United Arab Emirates on the Evaluation and Potential Development of Peaceful Nuclear Energy,” released by Gulf News on April 20, 2008 (hence: UAE nuclear white paper).
50 The Wall Street Journal, April 2, 2009; UAE nuclear white paper.
51 UAE Nuclear white paper.
52 World Nuclear Association, “World Nuclear Power Reactors & Uranium Requirements,” September 1, 2009; WNA, “Nuclear Power in the United Arab Emirates,” www.world-nuclear.org, July 1, 2009.
53 Emirates Business 24/7, June 23, 2008.
54 Economist Intelligence Unit, May 28, 2008; The National, October 5, 2009.
55 MEED, July 7, 2009.
56 Seminar on “Enhancing the EU-GCC Relations within a New Climate Regime,” Brussels, February 26, 2009.
57 See, for example, Gulf News, October 19, 2008.
58 The Wall Street Journal, October 4, 2009.
59 UAE nuclear white paper, p. 3; The National, August 2, 2009.
60 UAE nuclear white paper, pp. 9-10.
61 IAEA News Centre, August 7, 2008.
62 “Nuclear Power in the United Arab Emirates,” World Nuclear Association, 2009.
63 MEED, October 14, 2008.
64 Adnan Shihab Eldin, presentation in Brussels, February 26, 2009.
65 UAE nuclear white paper, pp. 2, 14.
66 The Wall Street Journal, April 2, 2009.
67 Christopher M. Blanchard and Paul K. Kerr, The United Arab Emirates Nuclear Program and Proposed U.S. Nuclear Cooperation, Congressional Research Service, July 17, 2009, p. 4.
68 See for example: IISS, “Nuclear Programmes in the Middle East: In the Shadow of Iran,”. IISS Strategic Dossier (2008), pp. 53-54.
69 UAE nuclear white paper, pp. 1, 13.
70 Gulf News, January 16, 2009.
71 “Nuclear Power in the United Arab Emirates,” World Nuclear Association, 2009.
72 IISS, “Balancing Act,” IISS in the Press, from The Gulf, June 8, 2009.
73 Blanchard and Kerr 2009, p. 8.
74 Sheikh Issa bin Zayed Al Nahyan. CNN, April 29, 2009.
75 Associated Press, July 8, 2009.
76 Khaleej Times, May 15, 2008; Stratfor, June 16, 2009; Gulf News, January 19, 2009; IISS, “Nuclear Programmes in the Middle East,” p. 53.
77 Blanchard and Kerr 2009, pp. 1-2, 9-10.
78 The Wall Street Journal, April 2, 2009; IISS, “Nuclear Programmes in the Middle East,” p. 55.
79 Blanchard and Kerr 2009, p. 10.
80 The Wall Street Journal, April 2, 2009.
81 The National, May 21 2009.
82 The National, June 10, 2009; Gulf News, June 29, 2009.
83 The National, June 30, 2009.
84 Sheikha Lubna Al Qasimi in Gulf News, June 19, 2009.
86 The National, June 30 and July 10, 2009.
87 MEED, July 1, 2009.
88 The National, July 8, 2009.
90 The National, July 8, 2009.
91 The National, June 30, 2009.