Dubai is planning to build a power plant, which will be the world's largest carbon capture scheme. Saul Loeb / AFP
Dubai is planning to build a power plant, which will be the world's largest carbon capture scheme. Saul Loeb / AFP

Clean coal plant as important to Dubai as its landmarks



Dubai has become known worldwide for its ambitious projects - the tallest, largest, longest, most expensive or prestigious. Its latest venture matches all those superlatives - but is being adopted more from necessity than pride.

At its latest meeting early this month, Dubai's Supreme Council of Energy confirmed it is pressing ahead with a "clean coal" power plant. This behemoth will not only be the first coal power station in the Gulf, but also potentially by far the world's largest carbon capture scheme, three times bigger than any other currently planned.

Dubai's plant will be an innovative type which converts the coal to a gas before burning it, improving efficiency and reducing pollutants - poisonous mercury and gases responsible for acid rain - dramatically. Only a few of these are operating around the world.

This plant alone would more or less double Dubai's emissions of carbon dioxide, the main gas responsible for global warming. Dubai residents' carbon footprint is already one of the world's biggest.

To prevent this, the power station would have to be fitted with carbon capture - a system to trap the carbon dioxide so that it can be permanently disposed of several kilometres underground, in carefully chosen locations. Several schemes are moving forward in the United States, Canada and China, but there is so far no commercial-scale power plant with carbon capture.

Masdar, Abu Dhabi's clean energy vehicle, announced in January that it would move ahead with carbon capture at the Emirates Steel plant in Mussaffah. Almost 1 million tonnes of carbon dioxide per year will be used to increase recovery at the emirate's oil fields.

But that is tiny compared with Dubai's coal power station, which could produce some 30 million tonnes of carbon dioxide annually. Some of that could be used to revitalise Dubai's declining oil production. The rest will have to go to Abu Dhabi's fields or other safe disposal sites, as indicated by Nejib Zaafrani the chief executive of the Dubai Supreme Council of Energy. "We also aspire to play an active role at the federal level in the UAE's efforts to develop and implement carbon capture and storage activities," Mr Zaafrani said in February.

The project clearly fits in Dubai's tradition of groundbreaking endeavours. It is being pursued for solid economic reasons, not only prestige.

With Dubai's electricity demand continuing to grow, the emirate cannot continue to rely solely on increasing imports of expensive liquefied natural gas (LNG) for fuel. Enhanced energy efficiency will help, but clean coal, solar and nuclear power, presumably in cooperation with the Emirates Nuclear Energy Corporation (Enec), are needed to diversify supply.

In contrast to its bounty of oil and gas, the Middle East has minimal coal deposits. But the fuel is globally abundant and countries such as the US, Indonesia, Australia and now Mozambique export large quantities.

Coal power with carbon capture is on my calculations somewhat more expensive than nuclear power, but cheaper than solar or LNG. Relying solely on Enec's nuclear plants would be risky in the case of delays to the programme or a prolonged safety shutdown.

If Dubai is to secure attractive terms for new gas supply from neighbours such as Abu Dhabi, Qatar or perhaps Iran, or for nuclear-generated electricity with Enec, it needs a convincing alternative. Thus even if the coal plant is never built, its virtual existence is a key part of negotiations.

Building such a plant, operating it, ensuring coal supplies and potentially running the carbon capture system will be a formidable challenge. It will not be as aesthetically pleasing as the Palm Jumeirah or Burj Khalifa or as familiar to residents as the Metro. But it is as necessary to the city and, perhaps, even more ambitious.

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COMPANY PROFILE

Name: Lamsa

Founder: Badr Ward

Launched: 2014

Employees: 60

Based: Abu Dhabi

Sector: EdTech

Funding to date: $15 million

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If you go

The flights
There are various ways of getting to the southern Serengeti in Tanzania from the UAE. The exact route and airstrip depends on your overall trip itinerary and which camp you’re staying at. 
Flydubai flies direct from Dubai to Kilimanjaro International Airport from Dh1,350 return, including taxes; this can be followed by a short flight from Kilimanjaro to the Serengeti with Coastal Aviation from about US$700 (Dh2,500) return, including taxes. Kenya Airways, Emirates and Etihad offer flights via Nairobi or Dar es Salaam.   

Company Profile

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Started: Sept 2017
Based: UAE with a subsidiary in the UK
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Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.

Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.

Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.

Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.

“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.

Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.

From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.

Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.

BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.

Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.

Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.

“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.

Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.

“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.

“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”

The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”

CONFIRMED LINE-UP

Elena Rybakina (Kazakhstan)
Ons Jabeur (Tunisia)
Maria Sakkari (Greece)
Barbora Krejčíková (Czech Republic)
Beatriz Haddad Maia (Brazil)
Jeļena Ostapenko (Latvia)
Liudmila Samsonova
Daria Kasatkina
Veronika Kudermetova
Caroline Garcia (France)
Magda Linette (Poland)
Sorana Cîrstea (Romania)
Anastasia Potapova
Anhelina Kalinina (Ukraine)
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COMPANY PROFILE

Name: Xpanceo

Started: 2018

Founders: Roman Axelrod, Valentyn Volkov

Based: Dubai, UAE

Industry: Smart contact lenses, augmented/virtual reality

Funding: $40 million

Investor: Opportunity Venture (Asia)