Oil-rich Abu Dhabi invests in clean energy
The oil-rich emirate of Abu Dhabi has launched a $250m clean energy fund, hoping for the investment to propel it to the forefront of low-carbon technology development.
Money from the Masdar fund will go companies developing ‘cutting edge solutions’ in the fields of renewables, energy efficiency and carbon management, as well as water-related technologies like desalination.
Abu Dhabi, which relied on fishing as its main source of income before huge oil reserves were discovered in 1962, says it is looking to diversify its economy and respond to a growing demand for clean energy driven by concerns over energy security and climate change.
Sultan Ahmed Al Jaber, CEO of the Abu Dhabi Future Energy Company behind the fund, said that the oil and gas-rich state was investing in technologies that complement fossil fuel sources rather than rivalling them.
“The world’s needs are changing and traditional energy sources are insufficient to meet growing demand. This simple fact, combined with growing concerns over climate change, dictates the inevitable development of new and alternative energy sources.”
Although Abu Dhabi wants to promote technologies that meet its own region-specific needs, such as solar power and desalination, it wants the fund to have “global reach” and will fund projects across the world.
Masdar, which means “source” in Arabic, has an initial capital of $250m, with $100m coming from the Abu Dhabi government, $100m from investment bank Credit Suisse and $50m from UK environmental investors Consensus Business Group (CBG).
Of the initial $250m sum $175m will go to individual clean tech companies chosen for their “innovative solutions in sustainable energy,” and $75m will be distributed among other funds to give wide geographical coverage and a diversity of projects.
“Through Masdar, we are aiming to join the ranks of global alternative energy players and to take an active role in shaping this exciting new industry,” Sultan Al Jaber said.
Abu Dhabi is in an ideal position to launch itself into the alternative energy market due to its expertise as a major global energy exporter and financial resources from oil and gas exports, he said.
The fund could also help Abu Dhabi tap into an enormous potential in solar power generation and carbon sequestration, as well as helping resolve its water woes.
Apart from the founding partners, Abu Dhabi will be working on the fund with international academic institutions, industry and finance actors, including BP, Shell, Rolls Royce and Imperial College, London.
Masdar is ran by the Abu Dhabi Future Energy Company, which in turn forms part of the Mubadala Development Company, an investment organ of the Emirate of Saudi Arabia in the United Arab Emirates.
For more information on the Masdar fund and related organizations see here.