Masdar: Abu Dhabi aims for first zero-carbon city

When Sheikh Mohammad Bin Zayed stooped to lay a stone in the ground on February 11, it signified more than the inauguration of yet another poorly built, concrete-heavy Middle Eastern city.

By kicking off the $22 billion Masdar City project, due for completion in 2016, the Crown Prince of Abu Dhabi further promoted claims by the United Arab Emirates to be the most forward-thinking and sustainably built and managed nation in the world.

Nothing about Masdar, located in the emirate of Abu Dhabi, wants for ambition. Designed and developed by a clutch of the world’s leading engineers and architects, it is being promoted as the world’s first zero-carbon, zero-waste city, powered entirely by renewable energy sources.

Covering 6 million square metres, and boasting schools, universities and a renewable energy institute, Masdar will be entirely car-free, and boasts that no inhabitant will need to walk more than 200 metres before encountering some part of the transportation network, at the heart of which will be a world-class rapid transport rail system.

One of the project’s lead designers, the eminent British architect Norman Foster, has said that Masdar "promises to set new benchmarks for the sustainable city of the future". The city will be dotted with wind turbines and photovoltaic panels, with cooling provided via concentrated solar power. In a further attempt to become as carbon neutral as possible, crops including wheat and corn will be grown in and around the city’s walled limits, all irrigated by waste water produced by internal treatment plants. Retail outlets will be required to supply organic and fair-trade food products wherever possible. Masdar’s sustainability plans extend to ensuring that it’s also a living, breathing city, with shaded walkways, parks and cafes providing a human backdrop to daily life for as many as 50,000 people and 1,500 businesses.

On completion, Masdar expects to generate 100% of its energy from sustainable sources, and to dispose of 99% of its waste via recycling or composting, or by converting it to energy. The city’s superstructure and internal structure will be built using recycled material and using sustainable materials, such as timber and bamboo, licensed by the US-based Forest Stewardship Council. The UAE government has also promised to pay "fair" salaries to all workers (without specifying what the minimum wage will be), with all endangered species currently inhabiting the used land to be either relocated or conserved.

The UAE isn’t simply throwing cash at the project in the hope that it will work. Just under a third of the financing for Masdar is being provided by a $15 billion dedicated renewable energy fund established by the Abu Dhabi government.

The project’s chief executive, Sultan Al Jaber, said in early February that he was "looking at an array of financing vehicles for [Masdar]. Large financial institutions and banks have approached us to build the Silicon Valley of renewables in Abu Dhabi."

Yet it’s not clear how this funding will be forthcoming. Masdar declined to provide specifics on financing structure when contacted, and senior green business-focused investment bankers based in London said they had not yet been approached by the project’s managers and advisers. Questions will continue to be raised about the long-term efficacy of the new city so long as the project’s controllers and managers decline to provide a specific, detailed, financial plan. Those include how inhabitants will be taxed, how the entire city plans to generate finances, what expected future returns on equity will be for investors, and who will ultimately control the project.

At present, Masdar is 100% owned by the Mubadala Development Company, the investment and development arm of the Abu Dhabi government. And from what bankers say it will probably stay that way. The bulk of the balance of finance will come from big Abu Dhabi and UAE banks, including National Bank of Abu Dhabi, Abu Dhabi Commercial Bank, Emirates Bank, and First Gulf Bank. Nothing except smaller credit lines would be raised in the international capital markets at all to fund Masdar, according to a banker at a US bulge-bracket bank.

So for all of the international coordination on the design and construction side, and probably management, Masdar will remain a local play – international in importance, and perhaps ground-breaking in terms of its impact on the need to create better and more interlocuting, interconnected, sustainable cities, but certainly not international in its financial backing and management.

And while much of the attention has been focused on the city itself, it’s the softer aspects of Masdar that will probably make or break the vast, sustainability-focused project. After all, it’s one thing to build a huge, albeit sustainably managed city in the middle of a desert, and quite another to provide it with a raison d’être, and potential inhabitants with a reason – apart from prospective employment – to live there.

Take the $15 billion clean energy fund, which is central to the UAE’s determination to become the long-term global leader in the clean energy sector. Its aims are to promote more efficient ways of capturing, storing and transmitting wind and solar power, and hydrogen-based fuels, and on the development of new technology areas including energy efficiency, carbon management, water management and – a key aspect in a drought-ridden, desert nation – desalination.

Scientists at the Masdar Institute of Science Technology – a graduate-level institution to be built within Masdar, will focus on developing new forms of power capture and usage specific to the intense heat experienced by countries across the Middle East and North Africa.

Time will tell whether Masdar will live up to its huge potential. Many so-called 21st-century cities in the Middle East are already crumbling – undermined by shoddy construction techniques and low-quality cement and other inputs. International expertise has been used to design what should be the world’s first carbon-neutral city but the UAE government will need to ensure that the best global managers, financiers, consultants and non-government organizations remain on its staff.