Emirates wins UN carbon credits for reducing emissions

The UAE has become the first GCC recipient of United Nations carbon credits

ABU DHABI - 16JAN2011 - The Masdar Institute building at Masdar City in Abu Dhabi. Ravindranath K / The National
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The UAE has become the first nation in the GCC to earn credits from the UN for reducing carbon emissions.

The power-production efficiency project developed by Masdar, Abu Dhabi's clean-energy company, is expected each year to generate more than €1.5 million (Dh7.8m) of carbon credits at current market prices.

"It's a good start," said Shibu Davies, the regional general manager for TUV, the German company that audited the project for Masdar. "This will be a lead model for most organisations to follow."

The project, based 80km from the capital at a gas-burning power plant in Taweelah, uses waste heat to produce extra power and desalinated water, increasing the plant's production for every tonne of carbon dioxide that it releases.

Vitol, one of the world's largest energy trading companies, has entered into a contract to buy those credits to use in Switzerland and is awaiting the approval of the Swiss government.

Earning carbon credits is key to Abu Dhabi's aim to become a centre of clean energy and to diversify its economy away from oil.

Masdar has a pipeline of other such projects awaiting approval from the UN, which awards the credits to developing economies for confirmed reductions in emissions of greenhouse gases.

The developing countries can sell those credits to a set of developed nations - Japan, Canada, New Zealand and the EU countries - which can use the credits to offset emissions from their own industrial processes.

Masdar developed the project over several years and at an estimated cost of more than US$300,000 (Dh1.1 million) to file the paperwork and to verify the carbon emissions reductions, a burden difficult for smaller companies to bear.

"The whole process is too bureaucratic," said Shezan Amiji, the managing director of Ecoventures, a consultancy in Dubai that was involved in applying for such credits. "You have to make it more time-efficient, as well as from a cost perspective."

The credits are issued under a UN framework known as the Clean Development Mechanism (CDM), the future of which is uncertain after the expiration next year of the Kyoto Protocol on climate change. Government officials and environmentalists from around the world are meeting this week in Bangkok to work on the details of a replacement agreement.

The lack of certainty about the CDM's future has slowed Masdar's ambitions of developing other carbon-reduction projects.

"It's great to see the pipeline actually realised now, but I don't think it's going to kick-start investment in the region at all," Mr Amiji said. "You don't know what's going to happen post-2012, so how are you going to make that investment today?"