Funding a greener world

A sense of tension dominated the meeting hall in Sharm Al Sheikh, Egypt, last June 29, where 129 countries were set to vote on where to base the headquarters of the International Renewable Energy Agency, Irena.

The race was a close one between Bonn and Abu Dhabi. While the Germans were riding on their legacy of renewable energy projects as well as their expertise as world leaders in the field, the Emiratis were counting on their lobbying efforts and a grand plan to take Germany's exclusivity as a global leader of renewable energy in the future.

While the Emirati delegation had exerted all efforts to bring the headquarters of the agency home with it, the German delegation had assumed that its 20-year track record on renewables would speak for itself when voting time arrived. A deal was eventually made. Seeing the overwhelming number of votes the UAE was about to receive, the German delegation and the Austrian delegation, which was also bidding to house the agency, agreed to withdraw from the race and let Abu Dhabi have the headquarters provided that Bonn took the research wing for Irena.

Abu Dhabi had pledged to pump about $500 million (Dh1.8 billion) worth of funding into renewable energy projects, singling out developing states as a focus of that funding, aside from $10 billion (Dh36.7 billion) into Masdar, the carbon-neutral city.

Ambition meets practicality

It seemed ironic at first that one of the world's largest oil producers had a sudden interest in an energy source that had long been the domain of Europe. The move is in fact pragmatic, as part of Abu Dhabi's ambitious plans to diversify its energy sources. The UAE's status as the largest consumer of natural resources, according to the World Wildlife Fund Living Planet report 2008, compels it to look beyond hydrocarbons to power its future. The country's energy consumption is expected to rise by more than 160 per cent by 2020, at a rate of 9 per cent annually.

Current gas reserves can only supply the UAE with 20,000 to 25,000 megawatts of power by 2020, half of the country's requirement by then. With the high environmental and monetary cost of fossil fuels, the UAE argues it has no choice but to look at alternative sources of energy.

The country's diversification plans also include a $40 billion (Dh147 billion) nuclear energy programme, with the first reactor due by 2017. By 2020, nuclear energy is expected to amount to 15 per cent of the country's energy consumption. Aside from that, as Helene Pelosse, Director General of Irena points out, hydrocarbons, unlike renewables, are a finite source of energy. The capital plans to have 7 per cent of its energy needs fulfilled by renewable energy by 2020. Pelosse has said the plan is ambitious "but feasible".

Carbon-neutral city

The interest of oil-producing countries in Irena is especially telling. Blessed with hydrocarbons, the region's states have come to realise it is time to tap into the other resource they are blessed with: the one that will not run out. By hosting a massive carbon neutral city and the go-to centre for anything related to renewable energy, the UAE has attempted to ensure it is well prepared for an era when hydrocarbons will be history.