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Masdar City: Not a Showcase, but an ‘Entrepreneurial Eco-system’


By Bilal Zuberi
Strategy Insights
April 8, 2008


The world today runs on fossil fuel. Our food,
water, transportation, and quality of life are all
dependent on fuel that is primarily concentrated
in a few geographic regions. Middle East has been
endowed with vast reserves of oil and gas which
have been the primary source of the economy of the
region for the past few decades. It is estimated
that in 2007 the world consumed greater than 446
quadrillion BTUs of energy (EIA estimates), more
than 85% of which came from fossil fuels. This
natural resource has brought a boom to Middle East
economies. With oil prices above $100 per barrel,
Abu Dhabi for example collects oil revenue greater
than $200 million a day, giving it the 2nd highest
GDP in the region (after Qatar).

But here’s a problem that all smart policy-makers
in the oil producing countries are faced with: not
only are their oil reserves expected to eventually
run out (EIA estimates peak oil to be reached in
year 2037), but they face also a mounting
awareness around the world of the negative impact
of continued dependence on fossil fuel. The 446
quadrillion BTUs of energy used to fuel the global
economy also generated approximately 26,000
million metric tons of CO2, a greenhouse gas that
is considered to be the primary culprit of global
climate change. (Abu Dhabi is estimated to have a
CO2 emissions intensity of 34 metric tons per
capita, compared to a global average of 4.3 metric
tons per capita. Source: EIA).

Global warming would bring a disruption of
geological, climate and natural cycles that would
put the lives of billions of people at risk due to
changes in land temperatures, sea-water levels,
rainfall patterns, biodiversity erosion,
agricultural decline, spread of infectious
diseases, and increased intensity of extreme
weather events. It has become obvious that our
fragile earth cannot continue to depend on fossil
fuels and sooner or later, a sustainable energy
source must be found.

"Abu Dhabi is estimated to have a CO2 emissions
intensity of 34 metric tons per capita, compared
to a global average of 4.3 metric tons per
capita. Source: EIA"

So what is a country that is dependant on
extracting value from oil and gas to do? Abu
Dhabi, it seems, has found a path towards a
sustainable and profitable future. The Masdar
Initiative is Abu Dhabi’s way of investing in
their future, experimenting with technology and
business innovations that can lend to a
sustainable way of living for its residents, and
for the rest of the world.

Masdar City: World’s First Zero-Carbon,
Zero-Waste, Car-Free City

The word ‘Masdar’ means ‘Source’ in Arabic. Masdar
City is an impressively planned and funded ‘green’
city, to be constructed near the airport in Abu
Dhabi. Designed and managed by the Abu Dhabi
Future Energy Company and in collaboration with
the Worldwide Fund for Nature, it will be the
world’s first zero-carbon, zero-waste, car-free
city. Masdar will cover an area of roughly 6
square kilometers and will eventually be home to
approximately 1500 businesses and 50,000
residents. At the inaugural World Future Energy
Summit, the Crown Prince of Abu Dhabi announced
US$15 billion in initial investment through the
Masdar Initiative in projects targeting solar,
wind and hydrogen power; carbon reduction and
management; sustainable development; education;
manufacturing; and research and development.
The vision behind this unprecedented effort is
based on ten broad-based principles of sustainable
living, and on a desire to make Abu Dhabi a hotbed
for innovation in energy, environment, water and
sustainability - resources that are bound to be
scarce in the future.

The ten principals are (1) zero CO2 emissions, (2)
zero waste, (3) sustainable transportation, (4)
use of eco-conscious materials, (5) sustainable
food supply, (6) sustainable water, (7) protection
of habitats and wildlife, (8) integration of local
culture and heritage, (9) equity and fair trade,
and (10) overall health and happiness of its
residents.

Hope for an ‘Entrepreneurial Eco-System’
As I try to envision the success that Masdar aims
to achieve, I find myself asking what could truly
differentiate this initiative from any other mega
initiatives that are being contemplated in the
Middle East region – there are large projects
being planned in a few other Middle Eastern states
such as Saudi Arabia, Bahrain, Jordan etc. The
thought that comes to my mind is the building of a
sustainable ‘entrepreneurial eco-system’, an idea
that is novel to most sustainability projects
around the world.

I hope that Masdar City will not just be a
show-case for energy technologies and
environmentally prudent creative or far-reaching
ideas, but that it will cultivate an eco-system
that will give birth to technology, business and
policy innovations that can be implemented not
just in Abu Dhabi, but across the world. If it
succeeds in doing so, Masdar City will not become
known as a flashy project borne out of a state
flush with cash, but as the Mecca of
sustainability innovations that fueled the future.

The difference between the new cleantech
revolution that we are witnessing today, and the
environmental movements of the past is that it is
(a) market driven and not regulatory-driven, (b)
proactive in finding solutions and not reactive
and (c) is interdisciplinary and not engineering
oriented. The vision of the founders of Masdar
City is well aligned to encourage flag bearers of
this movement to find a home in Abu Dhabi. Masdar
City needs to host, sustain and invest in the
entrepreneurial mindset of this movement that not
only strives to achieve product and operational
excellence but also thinks big and bold for the
region and at a global scale.

Artist Rendering of Masdar City
Image source: www.masdaruae.com
Ingredients for an ‘Entrepreneurial Eco-System’
So what are some of the ingredients that Masdar
City might need to inject to develop such an
‘eco-system’ that will cultivate a ‘gene-pool’ of
excellence in energy and related industries? Here
are some thoughts:

Education and research: Masdar is already in
discussions with various internationally
recognized institutions to attract the best of
the best to the region and have them develop
local talent. The Masdar Institute is a
non-profit, independent entity established with
the assistance of my alma-mater Massachusetts
Institute of Technology (MIT) to assist in
graduate research and education.

Investment in innovation: I purposely place this
separate from research because an eco-system
such as Masdar City needs to encourage
innovations that are practical, affordable and
quickly deployable to make rapid improvements in
our global negative environmental footprint. The
success of Masdar City will not only be when all
the hand-picked residents of this transportation
island will be using electric-transportation,
but when such technologies will become
affordable for the billion+ people who currently
use polluting motorcycles and mopeds.

Stake-holder participation: While the planning
of a city is often a government enterprise,
Masdar is not expected to be an ordinary city.
Masdar should try to seek input from experts in
the various fields, including stakeholders who
have long term interest in Masdar’s success.
These stakeholders include not only those who
will reside within the limits and be a part of
this giant experiment, but they include the
innovators, entrepreneurs, policy-makers,
private investors, and the audience that will be
closely watching if the Masdar City projects
will deliver on the promise.

Equity for the local entrepreneurs: According to
a McKinsey report, while the region is flush
with cash, weak capital markets and an inability
to assess risk leads to a lack of investment in
small and medium sized businesses. This sector
is typically the engine of innovation, economic
growth, and stability. For example, 40% of US
GDP growth has come from this sector in the
past. Can the small guy with a crazy idea make
it big by utilizing the resources that Masdar
has to offer?

Supporting innovations stuck in the ‘Valley of
Death’: Clean-tech is ultimately an expensive
business that requires capital to scale and
become competitive with incumbent technologies.
Masdar City has the financial muscle to take
innovative solutions through the ‘Valley of
Death’, allowing innovations to develop
economies of scale before reaching
profitability. The Masdar Cleantech Fund, a $250
million diversified VC fund is one vehicle
already in place to promote such an effort.
Infrastructure development: The city, no doubt,
can and will be truly worth visiting and
admiring for its wow-factor. But I hope it will
go further and demonstrate how such
infrastructural designs can be implemented in
cities across the globe. Can Masdar show how to
make hydrogen-fueled transport infrastructure
economically attractive even for developing
parts of the world? How should crowded cities
with terrible infrastructure move their people
using mass transit programs? How can precious
water resources be transported, conserved and
recycled?

Building local, regional and global markets:
Entrepreneurship relies on quick market
feedback, brand development and management of
total risk. Development of local and regional
markets, in addition to support of projects with
a global view, is as important to the clean-tech
industry as any other disruptive
technology-based industry.

Positioned as the Global Center of Next Generation
Energy Industry

Masdar City is an ambitious project but there
could not have been a better time for such bold
vision to be implemented. Masdar’s visionaries
expect to nurture technological excellence, drive
innovations, support an industrial infrastructure
that leverages cheap energy inputs to reach scale,
and then invest globally in the resulting
breakthroughs to deliver long-term growth and
leadership. If done right, no better game-plan for
securing the future of Abu Dhabi could have been
penned.

From renewable energy generation (such as solar,
waste to energy and hydrogen) to energy
distribution and consumption (transport efficiency
and building design) and to energy intensive
chemicals industries and CO2 abatement – there is
tremendous room for defining the future of the
world. In the future, fuels such as solar, wind,
hydro etc but may be available world wide, but Abu
Dhabi is positioning itself as the center of the
next generation energy industry. And with Masdar
it will be possible for it to do so with a carbon
footprint that is as white as the color of the
dresses that its local wear.

Key Learnings:

Masdar City is being planned as the ‘greenest’
city in the world. Covering an area of 6 sq kms,
it will host 1500+ businesses and 50,000+
residents in a zero-carbon, zero-waste, no car
environment.

Technical and business innovations emerging from
Masdar are expected to not just promote
sustainable living within Abu Dhabi , but will
also position Abu Dhabi as the future center of
the energy industry for the entire world.
The Masdar Initiative will be considered a
success not if it brings a showcase to the world
for what can be done with a lot of money, but if
it allows an entrepreneurial eco-system for
clean energy, water and sustainable living to
develop and thrive.

--------------------------------------------------------------
Dr. Bilal Zuberi is a co-founder and VP Product
development at GEO2 Technologies, a Boston-area
materials science clean tech company developing
and commercializing high porosity high
temperature ceramic materials for automotive
emission control and novel chemical reactor
systems. Prior to joining GEO2, Bilal Zuberi was
a consultant in the Boston office of The Boston
Consulting Group,.. He has a Ph.D. in Physical
Chemistry from MIT. Dr. Zuberi has been an
advisor and consultant to private investors,
venture capitalists and entrepreneurs in clean
tech, esp. engine technologies, solar thermal,
and thermo-electric materials.. He also
maintains an online blog on related issues at
BZnotes.wordpress.com. He is married to Dr. Lama
Rimawi, a fellow MIT alum from Palestine/Jordan
and a pediatrician, and lives in Cambridge (MA),
USA.





 

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