Dubai is to double its efforts to make money from cutting greenhouse gas emissions after a landmark deal in the global fight against climate change.
At contentious United Nations negotiations, which ended yesterday in South Africa, 38 industrialised nations renewed the Kyoto Protocol, the treaty to curb emissions that was to expire next year, while the world's biggest economies - including for the first time China and the US - pledged to create a successor by 2015.
The accord lends security to investments that rely on credits awarded by the UN for emissions cuts which developing nations can trade. Dubai had applications in the pipeline for 1.8 million tonnes of carbon emissions credits, and now on the back of the agreement the emirate plans to double that number.
"The industry woke up with a big fat smile this morning," said Ivano Iannelli, the chief executive officer of the Dubai Carbon Centre of Excellence (DCCE). "Starting from today, I would invest again."
The Middle East is the world's top emitter of carbon dioxide per GDP, according to the International Energy Agency. Dubai hopes to become a hub for carbon credit trading and clean technology financing. As in Abu Dhabi and Saudi Arabia, the underlying goal is to diversify the economy and free up limited gas resources, earning environmental credentials in the process.
Part of Dubai's plan is the work of the DCCE, an agency created this year with the backing of aluminium maker Dubal, petrol retailer Emirates National Oil Company and other government-owned companies, and has invested in the time - and cash-intensive process of applying for credits for the averted emissions from a proposed solar plant, energy efficient lightbulbs and other projects. Developing countries can sell those credits to industrialised nations under the Kyoto Protocol.
But in the past six months the price of the UN credits has fallen from EU13.64 a tonne to EU4.91 on the ICE Exchange in Europe, reflecting pessimism about the future of Kyoto and eroding the rationale for continuing to develop such projects.
"The whole market is looking for guidance and certainty," said Aaron Bielenberg, a founder of the Clean Energy Business Council, a trade group based in the UAE. "There still remain a lot of low-hanging fruit."
A 500km pipeline network to direct captured carbon from smelters and power plants to Abu Dhabi oilfields and plans to retrofit the emirate's oil and gas infrastructure also stand to benefit from yesterday's climate agreement. Masdar, the Abu Dhabi Government-owned company behind the carbon capture network and the majority of the emirate's UN carbon credit applications, did not respond to requests for comment.
Among the areas in which negotiators in Durban made progress was a fund to channel US$100 billion (Dh367.3) a year by 2020 to developing countries for clean technology.
Nations in the region are likely to finance climate target themselves rather than appear to be taking chances for funding away from poorer nations, said a Gulf climate official who requested to remain unnamed.
At least $12bn for renewables, efficient electricity grids and carbon capture projects is needed in the Middle East within the next decade, estimates Maher Chebbo, the regional vice president for utilities at SAP, a German software provider.
"Now it looks like things are moving in the right direction," he said.